Buying is an integral part of any money-making method. The less you pay, the more profit you're left with. Buying off the auction house costs the seller 5% of the sale price plus listing fees every time an item comes back unsold. If you're buying something from trade that's available from the AH, you can always ask for 5% off and it won't cost the seller anything.
You can, in fact, ask for considerably more than 5% off AH price. You'll often find people hawking things in trade chat that they just want to move quickly and are willing to negotiate on. BOE epics are a good example of this: The longer the seller holds it, the less he feels he'll get for it. He's right, but often you'll find someone who just chooses an arbitrary value for it well below what you know it's worth. Another factor is that a lot of people who don't count the time they spend earning something into the cost of the item they are selling prefer to use trade than the auction house.
When I say "what it's worth," I'm talking about market value. This is basically what you could realistically get for an item if you were to sell it on the AH. Market price is a vague number, though, because everything can be sold at a range of prices. The higher you price an auction, the longer it will take to sell. For every item, there is a price point at which it'll flat-out never sell except by an accident. There is also a point at which it will sell as soon as anyone in the market sees it. Somewhere between these two extremes is the market price.
The main disadvantage of using trade chat is that you have to be on at the same time as your seller. If you're not reading trade when the seller announces, you'll never hook up. The other disadvantage is that even if you do hook up, it takes a lot longer to complete the transaction. You need to negotiate a price, meet in person, and then use a trade window with only six slots. This is all perfectly acceptable if you're buying 30 Living Embers from a recent transfer; however, it gets old fast if you're buying Cobalt Ore half a stack at a time from people leveling through Northrend.
The main advantage of buying through trade chat is that you can often negotiate a better price. People seem to have a built-in expectation for the process of negotiation that goes like this:
Seller asks for a price.
Buyer offers a lower but not "insultingly" lower price.
Seller asks for half the difference.
Buyer accepts or refuses.
You can push some people harder -- the more they want the cash now, the more flexible they'll be. Also, don't underestimate the value of a true and believable "walk-away". If they don't get any bites after you've stopped responding to tells, they may break down and accept your last offer.
The process is different when you're negotiating with a farmer, though. First, you have a different set of goals. In addition to a low cost, you also usually need volume to leverage that cost as much as possible. Unfortunately, on the open market, the more you buy, the higher the cost gets. When you're negotiating with a farmer, you'll want to convince him to farm more while providing the same price. The only tip I have is to tip. Ask what he does when he's not farming, and provide a small incentive to him every time he CODs a large batch. I'll give a belt buckle, a flask, or a PVP enchant sometimes.
Selling on trade will get you your money immediately, avoid lost listing fees for unsold auctions, and avoid the 5% AH cut. It is also the only way to get people searching for certain items on the AH (rare, quest, pet, or RP items).
It looks great, but remember the disadvantages. You have to be on at the same time your buyer is reading trade, and you have to physically meet up and trade with the buyer to complete the transaction. Also, most people buying gear improvements don't wait for them to appear in trade; they get what they need from the AH. The biggest disadvantage of selling in trade, though, is that you need to beat the AH to get any business.
One addon I don't use but would probably be worth the time invested if you're serious about stalking trade chat but still want to, you know, play other parts of the game is Trade Forwarder
. You can't chat in trade from outside a main city, but you can read it and send tells to people you see.
Another addon I've toyed with is called SpamThrottle
. It can be configured to grey out repeated messages. Repeating messages are less of a problem now that people can only say two things in a global channel in a short period of time, but it's still annoying to have to glance over and disregard the same guild recruitment spam every 45 seconds. Proper application of this addon will show you each message once.
Maximize your profits with more advice from Gold Capped as well as the author's Call to Auction podcast. Do you have questions about selling, reselling and building your financial empire on the auction house? Basil is taking your questions at firstname.lastname@example.org.