Backorders are only effective on domains not registered at GoDaddy.
Before GoDaddy launched its domain name aftermarket TDNAM, I used to backorder a number of domains from the registrar. They were fairly good at grabbing expired domains, especially non-.coms. But then the company started sending its own expired domains to auction at TNDAM, which seems to conflict with placing a backorder.
I placed a backorder a couple months ago for a domain at GoDaddy that was expiring. After the grace period I received an e-mail stating that the domain was going to auction at TDNAM and that a $10 bid had been made on my behalf. A backorder costs $18.95, and if no one else bid on the domain then I would get it for that price ($10 plus $8.95).
So why would you place a backorder if the domain will be sent to auction anyway? By automatically placing a bid for you, GoDaddy draws attention to the domain.
I asked Elizabeth Driscoll of GoDaddy to clarify the backorder and expired domain process at GoDaddy. This is a great explanation to help you get expired GoDaddy domains:
A backorder at Godaddy.com is $18.95. Once purchased our system monitors the status to see if the domain has become available. If it is registered elsewhere we attempt to capture it when it becomes eligible.
Domains at Godaddy.com do go into the expiring domain auction on TDNAM on the 26th day beyond expiration therefore the backorder holder is provided the initial opening ten-dollar bid as well as an opportunity to place a proxy bid for the maximum amount they would be willing to bid. The proxy bid allows us to bid on their behalf, in five-dollar per day increments, should another party bid on the name.
On the 43rd day past expiration the domain would go first to the auction bidder (which may be the backorder holder if they participate) or should no auction winner exist, the name would then be awarded to the backorder holder.
Should neither exist the current owner would have approximately 30 additional days during which they could redeem and renew the name before it enters the pending delete status with the registry.