Diablo – How does augmenting ancient items work

As of the 1.04 patch on 8/21/2012, each party member gets their own magic find and gold find value applied to the items that drop for them.

Prior to 1.04, magic find in a party was averaged between party members. So if you had a 4 person party, one had 40%, one had 20%, and the other two had none, everyone would have an effective magic find of 15% for their own drops.

The same thing applies to gold find bonuses and bonuses to XP.

For single player with a follower, you get your own value, plus 20% of the bonuses on your follower's gear.

Source

Magic Find improves the chances that you will find magic/rare/set/legendary items. It also affects the number of affixes that a rare item will get [source]. It does not affect the item level of the loot that is dropped, which affixes the item gets, or the random values associated with those affixes. It does not affect gems or potions things or other types of non-equippable items. It does not affect the amount of items that you find (only their quality).

Here's a recap of how magic find works.

Magic Find has always been one of the most popular item attributes in Diablo. Magic find helps increase the probability that a higher quality item will drop from monsters.

• Magic Find helps increase the likelihood of Magic, Rare, Set and Legendary items dropping.
• The Magic Find attribute can be found on any items that are high enough to support the affixes.
• Magic Find is based on a percentile increase.
• You get 20% of the MF found on your follower (source)
• When played cooperatively items drop separately for each player. This means each player sees their own loot and not loot that has dropped for the other people in the group. When picked up and dropped on the ground or traded the items obviously become visible to the other players as well.
• Players will find stacking Magic Find gear more difficult than Diablo II due to the sacrifice of other important attributes.
• Topaz gems will add Magic Find when socketed into a Helmet.
• There is a 300% cap on Magic Find. Magic Find attained from Nephalem Valor is unaffected by the cap, so you can effectively get as high as 375%.

Keep in mind that your chance of getting a certain item type is multiplied by your increased magic find. For example, if you have +100% magic find, then you won't find magic items all the time. Instead, if a legendary has a 0.1% chance to drop off of this particular monster, then it will instead have a 0.2% chance to drop (an extra 100% of it's base chance).