One Week into the AH: Diablo 3 Auction House Tips

This gem commodity looks like a good sell - better produce them before the selling price goes down. (Today's deal: Perfect Square Rubies - between 5-7PM PST producing 28k gold per gem produced)

I've heard from one of my friends that he was able to sell off $600 worth of gear after quitting. Wanting to try the same, I got my copy in December. I realized a lot has changed in seven months since the AH was first available - gold is a lot less and you can't profit from gems. Still, I manage to find ways to profit from this economy, despite the fact that making good money here is nonexistent at this time (at least until PvP comes out). Within two weeks (one was spent building up my character to 60), I have approximately 36 million gold in assets. Most of it was not from gold farming.

My Tips for Profiting and getting the most out of the D3AH (updated Jan 2013):

• Find cheap legendary items with good stats (under 1M) and sell them back on the RMAH. You should research the average price on both the RMAH and the Gold AH beforehand. For anything less than 1M, selling for two dollars is sufficient enough to cover the costs (this equates to > 3M gold at the time of writing). They don't sell often, but when they do they pay well.
  
  
• Upgrading your gear: Typically the three most important attributes that you want will give you cheaper costs than you expect. The highest stats are typically (but not always) the most expensive. Something like 20% less stats could be much cheaper. It took under 5M in gold total to upgrade my Barb to 96k dps, while still being able to survive Inferno, only one item bought was 1M.
  
  
• Basic Stuff on Auctions: The auction runs on a proxy bidding system - only the second highest bid is displayed. If you place a bid, and it doesn't beat the other person's max bid, it will show your bid, since the system automatically bids for them in 5% increments (up to their max bet). If you win the auction, the cost is what the second highest bidder put down (the difference between your max bet and the actual price is given back to you via a refund).
  
  
• Pinning Auctions: When you place a bid, whether you win or not, it will be pinned in the 'active auctions' category (even if you don't win) so you have a chance to bid again closer to the auction end time.
  
  
• Bid Sniping: Place a large bid (up to what you want to spend) seconds before the auction ends). You'll want a watch with a second hand to do this. A well timed snipe almost guarantees an instant win. If not, you at least raised the cost of the item for the person who won. Tip: Copy your max bid to the clipboard and paste it in to bid faster. There is a few second delay before your bid is actually placed. (Note: The time before auction ends doesn't refresh on your bids until you scroll down, and in results until you search again or flip through pages)
  
  
• Mass Bidding: If you see a lot of extremely cheap items with a few hours left to go and are not planning to be on the auction house at the time it ends (like 2AM-7AM) don't be afraid to put a larger bid on those items. (ex. if the item is worth 1M and the cost is below 500k, place 500k bids on all cheap items that end during that time). If they don't win, you'll get your gold back.
  
  
• How Selling Works: If you want to list an item, for equipment the suggested bid cost is the sell price of the item, with the buyout left blank. For commodities, it is the value of the Last 10 Trades (this can be manipulated - see below) and is your sell price. They last for 36 hours either way, and the item is returned to you (or for commodities, what you didn't sell, as well as gold for what sold).
  
  
• Bid or Buyout? You have two options for selling items: You can either set a decent buyout price, or have the people build up the price for you via bids (it is recommended you start your bid at the price you originally paid for it, plus 20%). This avoids the 'too high, didn't sell' situation.
  
  
• Flipping Items: It is very possible to flip items for a substantial profit, especially when it comes to amulets (and rings). Anything with a 45% gold find should sell for at least 500k, and even more with a good crit chance/dmg. However, you can only have ten auctions active at one time, so you'll need to do a tradeoff between high profits and faster selling. My strat would be to keep two items selling above 1M, seven in the 300k-1M range, and one for something else (like gems or TOS). There was one instance where I bought a 3M amulet with a good crit chance / dmg for 3M and proceeded to sell it for 5M.
  
  
• Flipping Gems: This is faster than item flipping, but although profits are significantly lower per gem sold and makes up for quantity, you'll have to spend a lot of time clicking to craft each one (if you have a laptop, you can read some articles to pass the time while you're crafting away with your other hand). Input the prices of all grades of a gem color you're interested into a gem calculator of your choice and TOS costs (mine above was built from scratch). Buy gems and craft them up to the level where the most percent profit can be made. If there's any higher grade gem with a -17% or lower profit and a higher level gem has over 4% profit, buy that grade instead as it saves the time used to craft that gem, (if the estimated price is below -15% profit, buy as many as the AH will allow, but read the footnote below)
  
  
• Commodity Supply and Demand: The supply and demand system works a bit differently for commodities at the AH. The 'Price per Unit' is the maximum amount of gold you will pay for a single item. The reason why the supply of trades goes up is because if gems are bought faster than they are listed, eventually the buying price will be higher as supply runs out, based on what people list their gems as. (Some testing with buyout values indicate most of the time less than 3000 perfect square gems of a single color are in the market at one time, and less than 1k gems with a grade of Star or higher are being sold.) The only reason why prices goes down is that people want get their gems sold first, and they try to price competitively. When two or more people are in a price war, the selling price for a gem can go down quite a bit (for a Perfect Star Ruby, 6.8 mil -> 6.5 mil)

  (The 'price wars' are more prevalent when it comes to plans in the RMAH, as there is a huge price difference between the GAH and RMAH when you do the conversion, typically in the millions for a single plan. The most I've gotten out of one trade was 22 million gold profit from selling a Demon's Skin Plan for 15 bucks... after buying it for 32 mil.)
  
  

  • Example: 100 P Square Ruby gems are selling for 40k. 50 others list for 45k, 20 for 50k, and 10 for 60k. The avg last trades are 40k.
  • Without doing any additional research, people will usually craft P Squares and list for 40k (at a 1k profit per gem made), although most guides indicate you can't make such a profit, with a large enough stockpile of gold you can on average make more gold per hour from crafting than you can with gold farming.
  • Suppose no new gems were listed and 100 people buy gems. Price per unit (PPU) is raised to 45k. Last 10 trades remain the same.
  • 5 more people buy it and the PPU is still 40k... but the avg last 10 trades is now up to 42.5k for future gems. People may sell for a higher price as a result.
  • 52 others buy and the price is raised to 50k (avg at 48k). At this point the profit margin is 30% for each gem made and now the market floods with gems from buyers hoping to get a profit.
  • The average sell price gradually drops as people are pricing their gems lower than the average in order to get theirs sold first. Others may pull out their original offer and price it down to below their average too, especially when selling large amounts. The average price goes down to 35k or so (at this point they are losing money from these sales)
  • Some people buy these gems seeing the costs are lower than usual)
  • The cycle repeats.
  
  
• How price manipulation works: In the above example, if they are selling on average at 75k, and a few people plop them down at 30k, and two are sold, then the average becomes 66k. Unsuspecting sellers who didn't do the research may sell at the new price, bringing the price down faster than usual. In markets where people are accustomed to buying in bulk (like Tome of Secrets). more may be required to bring down prices, and the lower average price needs to be kept down constantly or the commodity price will go back up to normal prices. Conversely, others can be tricked into buying bulk at regular price thinking it was a good buy), which can raise the price up, at which point sellers can profit.

  Price manipulation has been typically seen on Tome of Secrets and Flawless Square gems (by setting a extremely cheap price (such as 100 or less than 50% of the current trade price) to reduce the average trade price - this can be seen when you query the price for buying a gem/TOS and it has a large price variance between the average cost and the estimated cost. They are rarely seen in Perfect and Radiant Square gems and almost never seen in grades higher than that due to the fact that they are much more expensive (they are crafted by players for a substantial cost and do not drop in the game) and are resistant to dropping below the production cost of the gem (cost to buy flawless squares + TOS + crafting fee + 20%) for obvious reasons.
  
  

• Quantity or Quality? When crafting gems, analyze your percent profits, and sell the gem quality that clearly has a higher margin of profit. If the difference is small, it would be better to sell off the highest grade gem you can afford. However, the selling rate for gems drop off dramatically (it takes around 2-3 minutes on average to sell a Flawless Star Gem, 10-15 mins for a Perfect Star Gem, and around 2 hours for a Radiant Star Gem) so you'll need to find a balance between the two.

  People don't typically buy gems higher than Flawless Square in bulk because there is no profit from crafting at that point, so people usually buy one to socket it with their character. As a result, it would generally be better to sell a Flawless Star Gem at 8% profit rather than 9 Radiant Square Gems at 10% profit. After that point (like Perfect Stars), players are a lot less willing to pay the extra 6 million for a marginal increase in stats (+4 of a main stat) and instead go buy some better gear with this (I, in my opinion, would rather get a IK Eternal Reign for 10M than a Radiant Star.) However, with the future introduction of the next tier Marquise Gems (with a base crafting cost of 85 million, minimum, if you bought all the materials to craft one at current market prices after the 1.0.7 preview post), gem stats might increase dramatically.

  If you don't have a large stockpile of cash, resort to the JIT (just in time) strategy by buying gems as you finish up your order, unless you know the price of a crafting material will increase greatly. Else you might end up with a huge stockpile of gems you can't sell (I had 200 Perfect Square Topaz gems ready to sell, and then the market dropped to the point where I was going to lose money if I sold it at that price...), and had to do a bit of gold farming to get more gold for other ventures and to craft them into higher grade gems.

Good luck in the markets, and remember it might take a bit of time to build up a huge fortune, but you'll get there.

Footnotes:

• Price Per Unit (PPU) refers to the upper bound that you will pay for each unit when you click the search button.
• Buying commodities in bulk warning: When you buy a commodity, you will buy out the lowest priced commodity currently on the market. If the estimated cost is higher than what you will buy it for, then the transaction will fail. Note that the support site / game does not cover 'in between cases', so if you buy enough of a particular item so that at least a few items bought go over the estimated cost, you will buyout as many commodities that were below the estimated cost, the remaining gold will be refunded to you, and you will be disconnected in most cases.