Trade & Barter (Arbitrage Is Free). Get Free Stuff By Playing "Bigger Or Better".

Trade and barter for free stuff in a process called “arbitrage”. Arbitrage is free.

At the basic level, you might think that making a trade is not actually free. By definition an item is not free if you have to give something for it in return. Most of the time the consideration is monetary, but even if you’re not exchanging cash for the item, you’re still exchanging something. However, there are ways of using trades to gain an increase. Since the increase doesn’t cost anything, it’s actually free. Here are three different levels of trading skill, each with varying benefits and risks:

Basic Trading – No Additional Monetary Costs

Even at a basic level, trading can be good for your budget. If you have something you don’t need anymore then you can trade it for something that you do need and then you don’t have to pay money for it. This also helps you avoid clutter since you’re getting rid of an item you don’t need at the same time you’re getting something that you do need. There is no additional monetary cost, but the item you’re starting with probably had a cost at some time (Unless you start with an item that you got for free, but for now let’s keep it simple).

Intermediate Trading – Stuff For Cash For Stuff

Besides a straight trade (your item for their item), there is another way that you might be able to get something that you want. You could possibly try selling your item for cash and then using the cash to purchase what you want from someone else. Instead of using the word “trading” you might just call this selling and buying, but when all steps are combined, the end result is the same for you. You got rid of what you didn’t want, and you obtained something you wanted and it didn’t cost anything out of pocket. There’s just an extra step here compared to the basic level of trading described above.

When my wife and I first got married, I wanted to completely refurnish my apartment. I had two couches, a small entertainment center, 2 sets of stereo speakers, a small media center, a mini-fridge, 2 TVs, a microwave, and a new set of Corningware Dishes. Each of these items was either collected while in high school or received as a wedding gift. I sold all of these items on Craigslist in separate transactions for $335 collectively.

By finding deals on Craigslist I was able to buy a flat screen TV, nicer stereo speakers, a bigger entertainment center and an L-shaped sectional couch all for $325. This price even included paying people for their moving services since I didn’t have a truck. That means I was indirectly able to trade all of my unwanted items, for items that I did want, and I even made $10. All of the items I received were better, nicer, more functional and/or more suitable for me than the items I sold. This is mostly an example of intermediate trading, but since I had an increase of $10 it was also slightly advanced as you’ll learn below.

These first two levels of trading are free, in that you have no additional or out-of-pocket costs, although it’s not actually free because an exchange is being made and the items you started with had a cost.

Stuff For Points For Stuff

There are multiple trading resources online that use their own point system instead of cash to facilitate trades. One example of that is Simbi. When these resources are discovered they’ll be included in the Community Freebies Directory.

Advanced Trading – Arbitrage Is Free

At an advanced level of trading, you can practice something called arbitrage. Arbitrage is generally a term used when trading securities, commodities or foreign exchange. A financial adviser would only think of the word in the context of trading in these markets. However, the principle is the same in any market where trading is a regular practice. This includes trading new and used items through a community site like Craigslist. Some dictionaries define “arbitrage” as “simultaneously buying a product in one market and immediately selling it in another market for profit”. Ultimately there were no out of pocket costs, therefore the profit is free. Also, it does not have to have the intermediate step of cash. You can trade one item of value for an item of higher value. Arbitrage could be defined as leveraging the difference between relative value and absolute value.

The relative value is the value of a particular item to the individual. For example, if a person already has two pairs of shoes, a third pair will not be as valuable to that person as it will be to someone who doesn’t have any shoes at all. Usually when you’re trading, you’re giving up something that you don’t want for something that you do want. The item that you don’t want has little value to you, otherwise you’d want it. But the same item has high value to the person receiving it.

The absolute value of a particular item is determined by the overall market for that item; you could also call it the market value. This is always the best price that the “market will bear”. Antiques are a perfect example of this. There are plenty of antiques that will seem worthless or useless to some people; yet you take an antique to the Antiques Road Show and some expert appraises it for hundreds or thousands of dollars.

A lot of people trade items below absolute value because their decision is based on their relative value. They don’t consider the trade on an equal cost basis; they just want to get what they want. A skilled trader can practice arbitrage in this instance and up-trade their way to get free stuff.

Bigger Or Better –  What Can You Get For A Paperclip?

The game “Bigger or Better” is a scavenger hunt often played by teenagers where they start with a paperclip, offer it as a trade to a friend or neighbor, and with each successive trade they try to get something bigger or better. Often two groups compete against each other to see who can get the best thing after a specified period of time. This simple game played by teenagers is a perfect example of arbitrage and a demonstration of how you can get free stuff by trading. Even if the best thing you end up with is a baseball, you only paid for it with a paperclip. A baseball is generally about $3, and a paperclip is 0.5 cents (half a cent). That’s an increase of 59,900%. Take it a step further and trade the baseball for something bigger or better.

Extreme traders And Advanced Tips

Bigger or better does not have to be a game that is only played by teenagers. Arbitrage can be practiced by any freebie hunter of any age (generally teenage or older). How far do you think you could go? Do you think you could eventually get a house, or a Porsche? (Teen trades cell phone for Porsche NBC LA, Huffpost)

Craigslist has a specific section for trading. You can find it by going to Craiglist.org, clicking the location that is nearest to you, and then click on “barter” to see all the trades that are available. Since Craigslist is a free classified ads site, you can also use it to post classified ads and advertise what you’re offering for trade. You’ll notice that Craigslist also has a free section. You could potentially get something for free in the free section and then use that to trade. There are also other sites like Craigslist where you might get lucky, but Craigslist is by far the most popular place for this. Read more about Craigslist. Find other resources like Craigslist on the Community Freebies Directory.

Extreme Traders know the absolute value of what they’re getting and they have no emotional attachment for any of the items they’re trading. They know that the higher they can raise the absolute value, the more flexibility they have of getting whatever they want. This practice is actually perfected by pawn shop owners because they create contacts in different markets for different products on a regular basis. They know where to sell the gold, the antiques, and so on. They have a good idea of what the absolute value is for anything. And if they don’t, they might have friends that could tell them. See also the Cash For Goods Directory.

Skills in negotiation may come in handy, but you’re not buying a car at the dealer; these are regular people living at home. Negotiating for trades is a slightly different art. Many of the trades will be a friendly offering of an item that someone just doesn’t want anymore, and if you come off as pushy or unfriendly, then they won’t want to give you anything. Since you’re leveraging the difference between the relative value and absolute value, take the time to discover what the relative value is. Listen to the person and consider why they feel the way they do. It may be that they have to many of that item or not enough, or they want a new one, or they want something different. Whatever it is that motivates them is information that can help you make the trade.

You don’t always have to complete all your “transactions” in the same market. You might get an item from Craigslist and sell it on eBay. Or, like the pawn shop guy, you might become familiar with many other markets. You know where the gold collectors or the antique collectors are. You might obtain an item that you don’t re-trade on Craigslist; you might sell it at a local auction. When looking at alternate markets, you can probably rule out the pawn shop if you’re trying to practice arbitrage, they’ll probably be better at it than you. You’ll get cash for the item, which is great if that’s all you want. But you won’t get the absolute value and you certainly won’t get an increase over the value. Amazon to Ebay arbitrage is actually not uncommon.

Extreme Traders are extremely patient. Up-trading isn’t always easy and sometimes you’ll have to wait a long time for the right trade before moving forward.

Get creative. As one extreme trader explained in his Ted talk, he received a neon sign, an empty keg of beer and an IOU to fill the keg at a later time for one of his trades. When he advertised that, he called it a “party for trade”. That grabbed someone’s attention more than if he would’ve just called it an empty beer keg and neon sign.

Trades don’t always have to be for used items. Services can be traded. If you don’t want your cell phone contract anymore, you could trade with someone else who is using the provider you want (this is less common now that cell phone providers are paying people to switch). You can also trade your car lease. Businesses can especially leverage the services they provide as a trade. One time I needed my car fixed, so I traded digital marketing services with a mechanic. I got free car repair and his business tripled within about 8 months.

One particular arbitrage freebie strategy involves buying lots on ebay or Craigslist. Instead of buying or trading one item, you buy an entire lot of items, such as a “lot” of 37 video games, or 1,000 baseball cards, and so on. Then you sell a portion of that lot for the same price and keep the portion that you did not sell. Here is an example: you buy a “lot” of 3 video game consoles for $200. Then you sell 2 consoles for $100 each and keep the third console, which was free. When making cash transactions there is always the possibility that the strategy won’t work. When it doesn’t, you’ll be paying out of pocket, which is not actually free. That’s why part of the skill and art is knowing the prices (absolute value) of the items you’re dealing with. Although working with cash can be risky, it also introduces the possibility of making a profit. In this case arbitrage is combined with wholesaling or it becomes wholesaling altogether. For example, let’s say you buy a lot of 1,000 baseball cards for for $1,000 ($1/ea), then sell 750 baseball cards for $2 each ($1,500) and keep the other 250 baseball cards. In this case you’ve gained a $500 monetary profit by wholesaling and 250 baseball cards by arbitrage. Read more about eBay Lot Freebies.

Think big. It’s possible to get a free house by up-trading a paper clip as extreme trader Kyle MacDonald explained in a Ted talk. Yet, there is another way to get free housing that’s even more likely to happen. In most states lenders will give you a home-owner’s loan even if you’re moving into a duplex, triplex or fourplex, (and if you qualify for lending). Home owner lending has the best rates compared to commercial loans and they require a low down payment. If you were able to buy a duplex where the mortgage is the same as the rent for the second unit, then you could live in the first unit for free while the tenant is paying off your house. This is even more possible when the cost is split between 2 or 3 units. There is more to consider when buying property, such as maintenance. However, the main point is that arbitrage can be used to get a free house.