You have two days to spend $40,000 on eBay. What are you going to do? (Continuing an ancient post on Buying Big Ticket Items on eBay)

It’s not as fun as it sounds. I had this problem when I bought eSnipe.com, which when on sale on eBay 10 years ago. Forty grand will always be a lot to me, but it was a good chunk of the retirement fund back then. That was the number my wife and I decided to risk on the purchase. It was the very lowest point of the first dot com bubble burst. All I knew about eSnipe was that I liked it, and that the owner had posted a few honest remarks about troubles with the site on the home page, and suddenly there was a low-key announcement about the sale.

Usenet posters at the time thought it was a hoax. Perhaps they didn’t understand the depths of the market crash, and at the time any site run so well seemed like it must be a multimillion dollar corporation. It wasn’t. It was run by one very smart, very nice, slightly overwhelmed Web pioneer whose hobby had run wildly out of control.

I didn’t know that when I read the eSnipe home page two days before auction close. All I knew was that we had to make a decision so fast that we had to recognize it might be a scam. There was no time for the kind of due diligence one would normally allocate to an investment of that size. But that’s…

Tip #1: Never bid more than you’re ready to lose.

One thing I knew was that I had to learn more about the current owner: take the measure of the man. And fast.

Tip #2: Create a relationship with the seller.

Get the seller’s phone number. Ask hard questions (with the kind of politeness and respect you would like were you the seller), both via the phone and via email. If you aren’t satisfied by an answer, drill down. If you still aren’t satisfied, move on. I greatly respected the fact that the previous owner was willing to say he didn’t know something instead of making up what he thought what I wanted to hear. I talked to him several times over a period of two days and got lots of great information that he couldn’t put in the auction listing.

These days you have another option: getting the important points in print, even if they weren’t made part of the auction listing.

Tip #3: Use the eBay messaging system for any questions of material interest to the sale.

If the seller tells you on the phone that something is in mint condition and that’s a substantial factor in its sale price, then ask for a confirmation through the messaging. This gives you a paper trail. Another option is asking the seller to use the Q&A format on the auction page.

Tip #4: Be willing to walk away.

Easier said than done, I know. Very often on eBay we are pursuing hobbies we are passionate about.

My best house negotiation was when we decided to move for no other reason than we wanted a change of scenery. It was during the last real estate bubble. Because the move wasn’t necessary, I could look as long as I wanted, and sellers couldn’t manipulate me the way they could if it were, say, for a job relocation or because I needed a cheaper place.

I fell in love with the house.

Yes, I know you’re not supposed to. Prices were supposedly going up every day (my Spidey sense was tingling, though, and I was right. We bought at the peak. Luckily I drove a hard bargain and the house has never gone underwater) Still, at all times I forced myself to be mentally ready to find another one if I felt negotiations went off track. The same was true with eSnipe, but for other reasons: I kept it at arm’s length emotionally because the sale was announced so abruptly, and with so little fanfare. I had to be rational because I didn’t have time to fall in love with it!

Keep in mind that millions of items are listed on eBay each day. There is no serious competition for eBay anywhere in the world. It is everyone’s first choice for selling things like cars, electronics, musical instruments, or collectibles on the Web. Chances are, no matter how much you like that 1936 Mickey Mouse watch in such beautiful condition, another one will appear in the next few months. Step back, be honest with yourself, and think very hard about that likelihood before you get tempted to overpay.

Tip #5: Snipe the bid (place it just seconds before the end of the auction)

I use eSnipe to make the bid because you can change your mind anytime up to 5 minutes before the auction and cancel the bid, a luxury you do not have if you place it on eBay directly. eBay makes it hard to retract bids, for some very good reason (mostly related to fraud control). You can have your cake and eat it too by placing the bid with eSnipe instead. Because we don’t hit eBay until seconds before the auction close, you can always cancel the bid without eBay ever knowing should you come to your senses about that Mickey Mouse watch.

Trivia item: About 20% of eSnipe bids get canceled.

One obvious tip is to avoid sellers who insist on weird, off-the-books forms of payment or who need a cashier’s check overnighted to them. They should accept any form of payment familiar to most eBay users.

Bonus tip: Anytime you get even the merest hint of a gut feeling that something about the seller just isn’t right, pull out of negotiations immediately.

Remember, falling in love with something on eBay is dangerous. In every sense, put the Golden Rule to work. If you were a seller and accepted checks, you would of course want the check to clear before you sent the item. So don’t expect the seller to mail out that 1959 Fender Stratocaster until your check clears. On the other hand, if you were selling something expensive, you would surely accept escrow, PayPal, even a visit from an impartial third party.

Tip #6: Use PayPal if at all possible.

The bad news for sellers is that PayPal is pretty much a “guilty until proven innocent” operation on their side of the transaction. Which means that you, the buyer, wield a heavy cudgel. Buyers can return anything for just about any reason and PayPal almost always makes the seller eat it. Not really fair for sellers, a boon for the purchaser of an expensive item. Beware sellers who avoid PayPal because of the 3% fee. Sure, it’s more than one would like, but sellers who nickel-and-dime you may not be the kind you want to trust with your money in a major purchase.

Tip #7: Use an escrow service, especially if you don’t have the protection of PayPal.

I have used escrow.com a couple of times and it went well. They’re especially good for intellectual property items, such as domain names or websites. Less good for, say, guitars, because all they can assure is that the item gets delivered to you. They don’t help you in judging an item’s quality as compared to the seller’s description.

My $40,000 purchase went swimmingly, even though there wasn’t even a Businesses for Sale category back then. eSnipe supports our family well, and I’ve met lots of wonderful people over these last 10 years. Even now I browse eBay for businesses, but carefully. Seven years ago I dropped $10K on an awful charm bracelet site and lost another $8K trying to make it work. Five years ago I bought a $7000 DVD site and bungled that too. (What was I thinking?) At least both transactions went fine because I stuck to the principles listed here.

Have you ever made a big purchase on eBay? Tell me all about it, either in the comments or, if it’s compelling enough, in a guest post.