Why are used iPhone 4 phones so expensive on eBay?

I'm thinking of upgrading my Verizon iPhone 4 to an iPhone 5. Thinking that I might be able to get a little something for my 2 year old phone, I checked prices on eBay. I was shocked to see that I could get more than just a little for my phone. It looks as if I could cover the cost of the new iPhone 5, including the upgrade fee through Verizon.

So what's the deal? Am I missing something? Why are these seemingly "old" phones fetching such a good chunk of change? Why do people want to pay a couple of hundred dollars for these phones? Am I right in saying that it is better financially to sell on eBay versus trading in the phone?

And what information do I have to provide I have to provide to sell on eBay? My phone is in great condition with no water damage or scratches. How do I list it to achieve a maximum return? Also, how am I assured that my information gets transferred to the new phone and is completely erased from my old phone?

Ebay rips you off simple as that

Iphones really hold their value well, even used ones are in high demand.

Ebay is what I consider "high retail." Meaning that its like shopping the priciest store when it comes to iPhones. The buyers are willing to buy at higher prices because they are assured that the purchase is good through eBay and Paypal and there's little issue with being sold a bad phone. Also when bidding there's some emotion involved in the pricing. It's not just trying to get the best deal for many consumers. There's the element of convenience as well. Even at 3am someone can shop and wheel-and-deal and find something that they want.eBay has a huge selection and it makes it more of a shopping experience for many and that could be why folks will pay more for their iPhones and other items as well on eBay.