Seller has sent me a second chance offer.

[insertwittynicknameHERE]

I would love to take her up on it but I don't have enough money now so I am not able to. Do I need to let her know by replying to the email or is there another 'protocol' I need to follow?

you don't have to do anything. It will expire depending on how long she has set it to be valid for. I usually set it to 24 hours so I'm not hanging around for ages waiting to hear if they want it.
I suppose it would be polite to reply but I've never received a reply so I don't think it is expected.

No, you don't have to do anything - it works like a buy it now, based on your highest offer for the original item.

I wouldn't bother to reply unless you really want the item and want the seller to wait a bit longer than the second chance offer is valid for. They might agree to wait, you never know.

Thanks, I will reply anyway and let her know that I can no longer have it.

Once I was sent a second chance offer which I missed.

I then found it was relisted and this time I won it and actually got it cheaper !

That would be nice, lol.

Its worth checking out the history on a 2nd chance offer. I'm sure they're often the legit, but the two occasions I've had them, the seller was shill bidding. (Depressingly obviously, in fact.)