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The first step is to find out the time the auction is ending. About 20 minutes before the ending time, make sure you're logged on and ready to go. Keep an eye on the item, and open up 2 windows. The first window is just to watch the price of the item, as sniping is common among eBay veterans. Keep hitting Ctrl and R or F5 to refresh your screen. With the second window, go to place a bid, and enter the highest amount you're willing to pay. Click continue, but don't hit confirm bid. Keep refreshing your other screen, and with less than one minute to go in the auction, maybe even downwards of 30 seconds if you're risky enough, hit confirm on the window you have open. If your bid is higher than all others, you should have successfully sniped the item without getting into the mess of a bidding war.
Sniping by hand has its problems: getting distracted at the last second can cost you an entire auction, some auctions end at 5 am in the morning, etc. The easiest way around this is to use an eBay sniper tool. This automated sniper will bid for you at the very last second, and you won't even have to be there. For a list of the best snipe tools out there, see eBay sniper programs.
There are those who believe that sniping brings about ethical concerns--that sniping cheats other users of a chance to bid. You might agree with this, but remember that eBay is a free market system. Sniping is always a threat in a timed auction, and those who want to win use everything in their disposal to do it.