It works like this:
You say "hey, I see you have an axe. Nice, but a little used. Look, I have a wonderful +1 sword. I know usually you'd say you already have a weapon, but look at it as an upgrade. I'll even make it a little cheaper."
You offer an item for sale as normal, except that you also select which item to replace.
They will think about it. They will consider the old item. Someone without weapon will be willing to pay more for the +1 sword than someone who already has one. Basically, he'll be willing to pay for the difference he gets, not the whole thing.
The old item is lost on replacement.
