No shops regularly trade in magic arms or artifacts, as they’re too rare & precious to sell. Larger towns and cities may have shops that sell spell reagents, implements, alchemical supplies, potions, charms, and the like, but you won’t find a +3 battleaxe or flying carpet at the local Spell-Mart.
Not all magic items are purposely crafted by wizards in their laboratories. Items can also gain potency through great deeds, like a lance used to slay a dragon, or association with great individuals, like the crown of a legendary king. An item may be an inherited heirloom, channeling ancestral spirits to grant its magic to the rightful heir.
House Rule: Improving Items with Level
When you level up, choose one of your items of your new level or below, and raise it’s level by 1. Usually, this will not increase the item’s enhancement bonus until you have raised it 5 levels. This rule allows characters to keep their signature items without having to trade up to new equipment as they gain levels. Items can be advanced to higher-level items with similar powers, but not completely different powers. For example, boots of striding may become boots of striding & springing, but not winged boots.
Sometimes wielding in an epic battle, the blessing of an elf queen, the unlocking of hidden lore, or similar events, can improve an item by a level or more, in the same manner.
At the same time, the full potency of an item is not accessible until its wielder has achieved sufficient greatness. The effective level of a magic item you use cannot be greater than 4 higher than your character level, even if its actual level is higher. For instance, if a 6th level character finds a +3 cloak of resistance (item lvl 12), he treats it as if it were a 10th lvl +2 cloak of resistance. When he reaches 8th level, he will be able to unlock its full potential.