This caught me out too. I listed with a buy now and no reserve hoping that someone would see the value in the buy now. Ive got people asking about the buy now and its gone because someone has bid $1. Trademe really should be clearer with this for sellers.
How does Trademe handle sellers who are clearly bidding up their own items? They list a 1 off item (ie they can't have multiple to sell) for $1, no matter how high you bid you get outbid by an auto bid and as soon as the listing closes (and presumably should have been sold to this "highest" bidder) the item is relisted. How does one report this?