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Chapter 19 - Public, Online and Reverse Auctions

19.1 Public and online auctions

When agencies look at the price of IT auction items, the savings may seem substantial; however, often the reasons for the low price(s) at auctions are a result of disadvantages such as:

  • Limited warranty or no warranty,
  • No return policy,
  • Advance payment requirements,
  • Items of uncertain history or conditions,
  • All auction items are purchased on an "as is/where is" basis.

Usually a day or two before an auction, the auction house (if a public auction) or an auction website will set aside the day(s) for review and evaluation of the IT goods that will be auctioned. Agencies should take advantage of this pre-auction inspection period to confirm that what appears to be a good value online or in a catalog is really as represented. This preview period can avoid costly technology mistakes.

Before bidding, agencies should become familiar with the rules and practices of an auction house or online auction site. Buyers should determine what protections the auction site offers auction purchasers. Some auction sites provide free insurance or guarantees of items if they are not delivered, not authentic or not what the seller claims. Buyers should make certain that the auction house/auction site offers some protection against purchasing defective or erroneously described merchandise. All agencies should be keenly aware of exactly which technology items they are bidding on during the auction. Look for words like "refurbished," "close out," "discontinued" or "off-brand" to get a better idea of the condition of the technology item. Buyers should try to determine the relative value of a technology item before their bids are placed.

Agencies should avoid doing business with sellers that they cannot identify or sellers who try to lure buyers off regulated auction sites with promises of a better deal. Buyers should check on the seller's return policy. Make sure that it is possible to return an item for a full refund if the agency is not satisfied with it. Determine if the agency will be required to pay shipping costs or a restocking fee.

When purchasing technology though an online auction or auction house, buyers should consider whether the item comes with a warranty and whether follow-up service is available if needed. Buyers should document and understand fully all warranties and other protections offered by the seller or auctioneer. Many online and auction sellers do not have the expertise or facilities to provide services or maintenance for the goods they are selling. Agencies should decide if they are willing to forfeit support, warranties and maintenance services before placing a bid.

When bidding, buyers should establish a top price for the technology item desired and stick to it. This will enable the agency to get a fair price and protect it from "shill bidding." (Shill bidding is when fraudulent sellers or their partners, known as "shills" bid on sellers' items to drive up the price.) Buyers should not bid on any item that they do not intend to buy. If the agency is the highest bidder, the agency is obligated to follow through with the transaction. Remember to save all transaction information regarding any technology auction purchase. Print and save the seller's identification, the item description, and the time, date and price of the bid. Also, print and save every e-mail that is sent and received from the auction company or the seller.

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