When you are shopping online and you have crawled through various classifieds and visiting endless sales or you are just eager to get rid of some, then online auction might be the thing you are looking for. It is primarily aimed at individuals and also provides a virtual marketplace for both the buyers and the sellers.

Since it involves low fees and also an opportunity to reach the huge potential customer, it is really an economical way to sell for buyers and for buyers to choose from a wide list of items at bargain prices. For making a purchase, you need to nominate a price that you would prefer to pay as against other interested competitors.

You can bid only on the items you want to have and therefore an auction is a binding contract. Although most of the auction sites function in the similar way, you should always read the instructions and the fees and charges before you start trading. You can easily get more out of the auction if you take the time to read for any special services being offered. Some of the businesses use the auction websites to sell old, surplus or other stock with a view to check the popularity of upcoming products.

Commonly used terms for online auctions
1. Bid Increment is the smallest amount with the help of which you can increase a bid.
2. Escrow service is the third party organization that holds your money in trust until the merchandise is delivered.
3. Paymate is a third party payment system that makes it possible for the sellers to accept credit card and also direct all the debit payments.
4. Proxy bid is the maximum amount you shall pay for any particular item. Any website shall automatically bid for you until your nominated price is reached.
5. Reserve price is the lowest price that you are willing to sell to the buyer.