Fire Walker, Texas Ranger

Remember these from a couple of posts ago? Yup, I flipped 'em. Hard. See how much I sold these for after the jump.

Only Chuck Norris can roll 242 Strength boots

Previous posts in this series:
http://diabloshit.blogspot.com/2012/07/flipping-part-1.html
http://diabloshit.blogspot.com/2012/08/flipping-part-2.html

The end of the journey

I along with my 5 wives, all died of dysentery

We're finally wrapping up the series about auction house flipping! In this post, I'm going to go through a real life example of flipping, in proper theatrical fashion.

Let's jump right in.

Pulling tricks for cash

The act of flipping items is really a magic trick. In a clever, almost fiendish way, you're turning a pile of nothing into Chipotle burritos a profit.

Every great magic trick consists of three parts or acts. The first part is called "The Pledge". The magician shows you something ordinary: a deck of cards, a bird or a man. He shows you this object. Perhaps he asks you to inspect it to see if it is indeed real, unaltered, normal. But of course... it probably isn't.

When a magician executes the Pledge, he is showing you something that is unordinary. But you don't know that; it looks normal to you. 

To succeed in this step, you have to figure out how it's unordinary. In terms of AH flipping, the Pledge refers to finding those unordinary deals. The auction house is filled with ordinary deals. To flip properly, you need be able to separate the ordinary ones from the extraordinary ones. How do you do this?

The 90% search.

Last night, I played the AH for an hour while chatting with a friend who contacted me through the blog. We theorycrafted a little bit. He was very big on doing the pad-fail or gem-missing search technique to find deals, whereas I stuck mostly to my 90% search. In that hour, I made 2 buys (an 8$ item and a 20$ item), which I immediately put back on the RMAH for 24$ and 29$. They later sold that evening. (24 + 29 sell price) - (8 + 20 buy price) - (1 + 1 fees) = 23$ profit in an hour? Not bad for a children's video game.

Note: I also bought a bunch of small upgrades for my characters that's not worth talking about. I don't usually just stare at the AH looking for good deals. Finding good deals usually comes naturally when I'm searching for items for my characters.

Besides the techniques I mentioned above, there's plenty of other ways to find deals, like the gold-find search or the end-time search. These are all described in detail in part 1 and part 2. Remember, you can't flip if you can't find cheap things to flip.

The techniques you use to find deals correspond to the Pledge. By finding these unordinary items from the masses of ordinary ones, you are taking the first step to turning a profit.

The Pledge

I wasn't looking for Fire Walkers. They found me. Hell, before the Fire Walkers came into my life, I would've had a hard time believing that Legendaries were actually better than rares. I simply happened to do a lucky 90% search when these showed up.

It was after a good crafting run. I had crafted a good pair of boots and had just finished throwing them up on the AH. A hard day's work. Ok, not really. Crafting took a grand total of 5 minutes and I stood to make at least a 100$ profit from my lucky rolls.

As I finished listing my boots, a thought ran through my head.

These boots are actually pretty good. Maybe my barb can actually use them. Maybe I should cancel my auction...

...

Naaah, I want the money.

My greed took over. My barb could wait. It's not like an invincible whirlwinding barb had much of a need for the best items.

But I would do my barb one favor. I would do a bit of window-shopping on the AH to see if there were any cheap upgrades on the horizon. So I started plugging away for my 90% search.

Barbs need strength. 90% of the 200 Strength maximum for boots is 180. I typed in 180 Strength as the first criteria.

The second criteria is naturally resist-all. Barb gear needs resists; it's how they stay alive. They need armor too, but resists are more important. In any case, I can always use the hidden 4th search criteria to sort by armor later.

What else do barbs need? Hmm.

Movement speed?

The Whirlwind build thrives on movement speed. Moving faster allows you to chase down moving targets, as well as clear the areas faster. But most importantly, the number of sprint-tornadoes spawned is dependent on how far you move. With a faster move speed, you can generate more tornadoes and deal more damage!

Note: This is a perfect example of how knowing different builds can help you determine which gears are in the most demand.

So I plugged in 12 movement speed as the third criteria. Then I pushed search.

The first things I noticed were the 2 pages of search results.

Seems like the 90% search is too strong for strength boots with these affixes. 

I made a mental note to drop it to an 80% search next time. But for now, I had 2 pages of results to comb over.

The next thing that immediately hit me were the legendaries. Legendaries in the search results for a 90% search? A light bulb exploded in my head, canvassing the inside of my brain with imaginary shrapnel. I lurched awake and straightened up my hunched-over posture.

WTF? This is not normal.

I quickly glanced over and looked at these legendary boots. There was maybe half a dozen Fire Walkers on those two pages.

Because the search results were guaranteed to be strong from the criteria I used, my eyes went directly to the buy-out prices. I noticed that some pairs of Fire walkers boots went for a 100m, and others went for 10m. The lowest one had a buyout of 5m. I hovered over them, and took a brief look at each pair. For some reason, there were Fire Walkers with Strength rolls over the maximum value of 200. Interesting.

That's when I hovered over these pair of boots.

They had a bid price of 10m and a buyout of 30m. I quickly did some mental math and realized that 30m was about ~70$. Comparing the Fire Walkers against the boots I just listed 5 minutes ago, I made a snap judgement and valued these boots at around 100$. At this moment, I knew that I had found a deal opportunity: I knew I was going to make money, but just wasn't sure how much yet.

The Pledge was complete.

Listen to your heart, not your mind

The second act is called "The Turn". The magician takes the ordinary something and makes it do something extraordinary. 

A piece of gear only becomes extraordinary when you purchase it. If you don't buy it, then there is no flipping, there is no magic show. The single action of pushing the buyout button or placing the bid is the crucial step between money earned and a lost opportunity. 

The Turn refers to the mental process that leads up to purchasing the item. Before you buy something, it's just a seemingly normal item sitting on the AH. This moment is crucial because it's the point of no return: If you walk away right now, there are no repercussions. There is no loss or profit from a flip that never happened.

But once you buy it, you're committed. You can't back out. There are no undos, much like theres no undos in life. You must follow through and seal the deal.

The turn is a mental battle. It's the part where you must convince yourself that the sale is cheap yet sellable for much more. Most of the work required for flipping happens here. There's 3 things you have to convince yourself of:

1. Prove to yourself that a deal lies in front of you. You must make a self-guarantee on the value of the item. Either by using the rarity of the item as a way to guarantee value, or simply through experience with handling an item before, you must place a value on your item. You can't flip something that you can't price.
2. Justify to yourself that you can buy the item. If I only had 11m gold, would I spend 10m on a pair of boots? Probably not. Without gold, I would cripple my crafting business and stop my main revenue stream. On the flip side, what if I don't even have the gold to buy the item? Is it worth it to buy gold via RMAH?
3. Have a strategy for resale. RMAH or gold AH? Bidding auction or buyout only? You can't flip an item if you can never seal the deal. The most important part of this is knowing how much your item is worth to the eyes of the beholder. If you can't figure out a valid sell price, then you will never sell it.

Let's look through my thoughts after I had found the Fire Walkers.

The turn

My thoughts after I found the Fire Walkers

 I know there is a deal here. These boots are amazing.

But exactly how amazing?

The first thing you're probably wondering is, "242 Strength, is that really possible? I've read this post, I know that boots can only roll with a maximum of 200 Strength!"

Yea, it's possible. 

Take a look at the official item stats for the Fire Walkers on your right. See if you can tell what the +2 Random Magic Properties are for my pair of Fire Walkers on the left.

I'll wait.

Got it?

Well, before we talk about that, let's look at the other mods. The Fire Resist roll (49) on these boots are top notch; just one off. The Damage Reduction is a perfect 4%. And the Defense roll is only 1 away from being perfect. Nice! Can you understand my excitement when I saw these on the AH?

Ok. I'm sure you've figured out by now what the +2 Random Magical Properties are:

1. 23 Resistance to all Elements. That's an easy one.
2. ~80 Strength. This one is difficult to see because it's stacked on top of the existing strength roll. What happened is that (let's just say) the boots rolled 160 Strength, and then the Random Magic Property rolled as Strength, and rolled an 82 value. This caused the total strength to come out to (160 + 82) = 242 Strength.

Update: What about the 61 Dex roll? The answer is half-rolls. Half-rolls are affixes that provide 2 "half-rolls". Like someone pointed out in the comments, the Vaunted affix is provides a half-roll of ~60 intelligence and ~60 dexterity. In the case of the Fire Walkers, we have a str/dex half-roll affix (of which I don't know the name; does anyone know it?).

What does all of this mean for this humble pair of boots? Well, the fixed rolls are amazing. But even better, the 2 random affix rolls are even more amazing! Fire Walker boots really need resist all or vit to bring them into usable range, and the resist roll gave just the right amount of plausibility. But what brings it over the top is that Strength roll. 

242 Strength. 

Absurdly high. We have a legendary item that beats the best possible rare roll. It's like we're playing Diablo 2 all over again. Time to whip out your occies and sojs.

The first step of the Turn was complete: Prove to yourself that a deal lies in front of you. I proved it to myself by googling the official blizzard stats and confirming the super-rare rolls on these Fire Walkers. I had previously estimated a value of 100$ during the Pledge. Now, after confirming the rarity of the rolls, I confidently bumped my estimate to 200$+.

These boots are perfectly rolled Legendaries. A 200$ sale price is a matter of course, I thought.

Let's go look through that list again.

1. Prove to yourself that a deal lies in front of you
2. Justify to yourself that you can buy the item
   
3. Have a strategy for resale 

The last step is simple. I would list it on the RMAH to avoid the 15% gold fee. Done and done. Because I had an extremely rare roll, I could price it at whatever I wanted. My resale strategy in this case was to simply list it at around 200$ and drop the price by 5% every couple of days. Because the item is so rare, I did not have to worry about item devaluation, and could afford to let the boots sit there until the right buyer came along.

The only thing left to do now was step 2: Justify to myself that I can afford the item. 30m gold was no problem for me. Because I valued the item at 200$+, I would ignore the 10m bid price, and just buyout the item for 30m and flip it right away.

But then my greed kicked in.

10m is quite a bit of away from 30m, perhaps I could save a bit of money by bidding.

This would normally be a stupid idea. Once you find a deal that is flippable, don't get greedy. Just take your money and go home. If anyone else realized the value of these boots, then I would be screwed. But there was one raging clue that caused me to eventually bid for these instead of paying out the 30m. Can you guess what it was?

The auction had 2 hours to go.

That means for 34 hours, nobody paid a single shred of attention to these boots. AH sharks and bots will snipe an item within the first 5 minutes. 34 hours is a lifetime of chances that nobody jumped on.

This is another reason why I decided on selling this item using a buyout-only auction. A bidding auction would have resulted in catastrophic failure because there wouldn't be enough viewing traffic to cause a bidding war. If the item at 10m didn't cause a bidding war, then it surely won't push the 200$ that I want for my auction.

I felt like I was in the clear to win these boots.

So, I anxiously waited until the last 5 seconds and sniped a bid at 30m. I wanted to make sure that I would win these boots if a bidding war actually occurred.

Luckily, my theory was correct. Nobody gave a damn about these boots. Not a single bid besides mine was registered, and I took these home at 10 million gold.

The Turn was complete.

The profit prophet

Now you're looking for the secret... but you won't find it, because of course you're not really looking. You don't really want to know. You want to be fooled. But you wouldn't clap yet. Because making something disappear isn't enough; you have to bring it back. That's why every magic trick has a third act, the hardest part, the part we call "The Prestige"

Alfred is completely right when he says this: The Prestige is the hardest part. Being a magician isn't about dressing up like a goth douchebag and causing people to magically lose their wallets. It's about convincing people that you've turned something ordinary into the extraordinary, with class. The entire act must be structured properly to amaze the audience.

In the flipping world, the Prestige phase has 2 parts:

1. Making the final sale. You must complete the entire "trick".
2. The value of the profit. You have to make a profit that was worth your time. 

I interpret the Prestige exactly like the word means. How much prestige would you earn for this flip? If there is none, then is the flip even worth your time? Don't try to flip every deal you see. Find the deals with the most profit margin, the most prestige, and execute on those. That's why the 90% search is so damn important: They give you the largest margin.

The Pledge, the Turn, and the Prestige are not to be taken chronologically; the Prestige, being the most important, needs to be considered at every point during a flip. A magician does not begin to perform a trick where he doesn't have that final surprise. A comedian doesn't go on stage without punchlines to his jokes.

In the Pledge phase, don't look for crappy items. Flipping crap only leaves you with a mess. You can only make amazing flips if you can find amazing items. You never know when someone mislabels a ridiculously strong item; you should be looking for those and nothing else.

In the Turn, the margin should drive your purchasing decision. If an item costs 5m gold, don't buy it if you can only flip it for 6m. My margins are around 400% for items under 20m, and around 80% for items over 20m. The higher your possible margins, the safer you are from mistakes. Prestige keeps you safe.

In the Prestige, the profit potential should drive the way you manage the sale. If you stand to gain hundreds of dollars, then it's probably okay to slowly lower your price if it doesn't sell. If you're making a bare margin, then you can't make your losses greater by dropping your prices. Why do this to yourself?

Here's the great takeaway: Don't flip if you aren't going to make a huge profit margin on the item. It's a waste of time and the potential for loss is huge.

Remember that example from before? I played the AH for an hour and made 2 buys. I didn't buy 20 things. I can't manage 20 things. If I ignored the Prestige, then I would be constantly trapped with an inventory full of small things that I would have to spend my time on. That's not fun.

The Prestige

Mind you, the Fire Walkers didn't sell on the first day. It didn't even sell on the third, or the fourth. But this wasn't a big deal for me because I had a self-guarantee on it's value from the Turn. I was not worried because I knew my margin was enormous. This flip had all the Prestige that you could expect: It only cost 10m and I was standing to make around 180$. I was sitting on a gigantic buffer of profitability, so lowering the sale price every couple of days was no big deal.

When everything is said and done, the final phase of flipping is quite cathartic. It's like taking an exam that you studied hard for, or running in a race which you've trained for. You're just sitting back and letting it all happen, knowing that you can't do that badly.

Scroll down to see how much the Fire Walkers sold for.

150$ before fees, purchased at 10m gold

Disclaimer:

This post is clearly referencing the movie "The Prestige". Go watch it. Or not. In either case, I structured the 3 acts of the Fire Walker story around the 3 acts of that movie. It's meant to be a bit of a joke, and a bit of a way that you can relate and understand the concepts in a different way.

I might actually have gone a little too far with the parody, in that my last act also makes no logical sense whatsoever. Seriously, I ain't cuttin my hand off. Crap. Spoiler alert.