Dave's eBay Guide

Here are my methods for using ebay with a minimum of risk.

Know what you are after.

The first time you get on eBay, you see hundreds or thousands of offerings, each one of which describes itself as 'rare', 'mint', 'VHTF', or whatever. Make sure that you only go after the items that you really want, otherwise you will end up buying a lot of expensive stuff you don't need.
Once you have decided on a target, do your research. Try to figure out where the item you want should be coming from and anything else you may need to know.
Personally, I make it a point to never buy anything from eBay that I might still find out on the pegs where I live. This does mean that I pay a bit of a premium for items which are no longer commonly available, but it does mean that most of my collecting can be accomplished at retail cost. And generally the premium isn't much, rarely more than 200% (ie a $1 car can generally be had for $3, plus shipping).

Know your maximum buy price.

eBay is a distorted capitalist market -- when you engage in an auction, the supply is exactly one. (This one.) Sellers rely on this fact that people will become invested in winning this one and drive up the price. eBay will encourage this by sending you emails to let you know that you have been out-bid, hoping that you'll log right back on and bid more.
Always keep in mind that it would be very unusual to be bidding on something truly unique. Don't get caught up in a bidding war for something which you can get more cheaply from somewhere else. Look at the item, look deep inside your heart and decide exactly how much money you are willing to spend on this purchase. And then don't go over that price. Wait for another example to get listed, and repeat. If you keep getting bid-out at your price, then you'll have to decide if the item is worth more money to you.

Know your shipping costs.

Always always always make sure you know exactly what shipping costs are going to be before you bid. Some sellers will make up for low profit margins (and eBay and PayPal fees) by padding shipping and handling. I have personally have had shipping rates from the US to my home in Canada which have ranged from US$2.50 to US$15 for a single car.
Keep in mind that shipping is more than just postage -- the seller has to get a box, package your item, and then take it somewhere to put it in the postal system. This takes their time and money, and therefore it can reflect in the shipping cost they quote you.
If you have any doubts, ask the seller.

Know that you will have a mutually acceptable payment method.

Make sure the seller is willing to take payment how you want to send it, or make sure that one of the mechanisms that the seller accepts is acceptable to you. This ensures a smooth transaction after you win the auction.
In my case, I make it a point to only pay by PayPal, which is backed up by a credit card. As a Canadian buyer, this sometimes means that US sellers will not accept such a transaction from me because I am not a US resident. After I discovered this the hard way (by winning an auction from a seller who advertised PayPal) I had to use the Western Union BidPay service, which added an additional US$2 to the cost of my transaction. I now make it a point to ask sellers if they will accept payment from me in my preferred manner before I bid.
If you have any doubts, ask the seller -- everyone I've asked has supplied an answer either way without a problem.

Know your potential total cost.

Now that you have a maximum buy price, a shipping cost, and know if there are going to be any transaction costs for payment, you should have an idea what the maximum cost of the item is going to be to you if you win. Look long and hard at this number and the item. A $1 car isn't a deal if it is going to cost you $50 to get it.

Check out the seller.

eBay puts the feedback mechanism there for a reason. Yes it can be gamed, but you can detect most gaming relatively easily. See if the seller has a track record (ie more than four or six weeks of selling). Read up on the negative and neutral feedbacks if they have any. You can also usually check out the particulars of what the user is selling, so see if this seller has a positive track record of selling items similar to what you are interested in buying.

Ask the seller questions.

Asking the seller questions gives you a couple of pieces of information: first, that there really is a seller at the far end of a particular email address, and second that they really have the item in question.
I find that as a Canadian buyer, I usually can just ask about shipping costs and PayPal acceptability, but even if these are spelled out there are almost always things you can ask the seller. One favorite tactic of mine is to ask the seller for the Mattel part number (like B1234). 99% of the time the seller has not listed this info, and has to look at the item in order to answer your question. You can then verify this on sites like hotwheelscollector.com to make sure they are feeding you the right information.
Give the seller some time to get back to you -- they are busy and have lives like you do. I will usually wait a couple of days (remaining auction time permitting) before trying to follow up asking again. Always be polite.
Using this strategy means that you will probably miss some shorter auctions (or auctions that you catch near the end), but be patient and another item will get listed.
If you have any doubts about the item or seller, don't bid.
If the item looks too good to be true, or the seller doesn't describe the item accurately, or doesn't get back to you in a reasonable time, or you just don't have a good feeling about the seller -- don't get involved in the sale. Be patient, 95% of the items will be up for sale by someone else in the near future (and most of the rest at some point in the long term future). There are almost no once-in-a-lifetime offers on eBay.

Know your buying strategy.

Some people have elaborate schemes for ensuring they win the item in question. For example, there are 'snipers' who wait until the last possible moment and then try to sneak in a last-second bid for the item. This may be necessary for high-demand items, but to me it always seemed way too involved.
My strategy is to decide what I'm willing to pay, then bid that amount. If someone else wants the item more, you know that they have to bid more than that amount in order to win it, and to me that just means they wanted the item more than I did. I know that another example will come up eventually, I just have to be patient. To date, every single item that I've wanted but passed on for one reason or another or been out-bid on, has come up again. I had to wait a year for one item, but an acceptable deal eventually came along.

Keep track of your auctions.

Know what you are buying and the time frames that the auctions are ending. Never over-extend yourself with too many potential wins.
The My eBay screen is a great tool for this purpose.

When you win: Pay the seller as quickly as possible.

If you are sure you know what the total amount is going to be, send the payment to the seller right away. If you don't know the amount, ask for an invoice total right away, and then pay the total as soon as you receive it. These actions show the buyer that you are sincere about completing the deal as quickly as possible.
You shouldn't be surprised by anything at this point because you have asked the seller for a shipping total (right?) and know exactly how you are going to pay the seller (right?).
If you are sending something which is time-delayed, such as a money order or BidPay that takes time before the seller is to receive it, wait that length of time and then email the seller asking for confirmation that they received payment.

Be patient for the seller to ship the item to you.

Give the seller some time to get the item to the post office. Then give the post office some time to work. I will typically wait three weeks from the auction win before I start trying to chase down the seller for information. The vast majority of my wins arrive within this window; on the few occasions this time has run out, I've received apologies from the seller for a slow shipment.
Always, always be polite if you are asking about a delayed shipment.

Leave positive feedback for the seller.

Once your item arrives, go back to your My eBay page and make sure you leave positive feedback for the seller. This helps show the rest of the eBay community that this seller is a good member to do business with.
My feedback almost always is something along the lines of received item as advertised in good order -- thanks. I don't like the AA++-ad-nausium that some people put in their feedbacks, but that's purely a personal taste. If I'm doing business with someone for a second (or more) time, I'll always mention that I am a happy repeat customer.
Check the feedback left for you by the seller.
Hopefully the seller will have left positive feedback for you -- if not, politely try to ask for details if there was a problem.
In the one occasion I didn't receive positive feedback, I left a follow-up to his feedback briefly outlining the nature of our dispute and underscoring that I was still happy with the item he'd shipped. I did make a mental note to avoid doing business with him again in future, but there is no point in antagonizing anyone.

So what if we get screwed?

Well personally, it hasn't happened to me (yet) so I can't really speak from to this. How much effort you expend to get your item or a refund is purely a function of your motivation and the amount of money involved. It occurs to me that the risk of getting ripped off is lower for a $5 HotWheels car than it would be for a $500 computer, and as long as I am buying this small-beer stuff the risks are pretty low -- and if I do get ripped off, then I am out all of $25 on the outside.

Well that's it from my perspective. I have managed to be a successful buyer since October 2002, so far without getting ripped off. I attribute this to caution and attention to detail, and not being afraid to avoid a sale for any reason down to and including 'because I had a bad feeling about it'.