So a debate is starting to stir on a topic I wrote about back in 2015. Selling A Domain Name You Don’t Own – Cool or Not Cool ? My article was sparked by a post written on AntiCareer.com.
There was a blog post by AntiCareer.com which talked about buying and selling a name that they did not own. The post titled “Turning A No Into A Yes and a $5,000 profit.
Morgan Linton had touched upon this a few years earlier. Back in November of 2012, Morgan wrote, “You should only buy a domain if you have at least some form of expressed interest from one or more parties if you are looking for quick flips. If your time horizon is longer then you could buy names knowing that you’ll sell them over the next couple of years but I’d only recommend that once you have a few good sales under your belt.”
A commenter replied, “Am I understanding this right… you call businesses trying to sell them names that you don’t own??”
Morgan replied back,
@Mike – you are correct. Definitely don’t lie to anyone, just let them know that you can acquire the domain for them. AntiCareer.com discusses this technique as well in this post – http://www.anticareer.com/how-to-make-money-by-flipping-domain-names/
That being said, once you get a few solid flips under your belt you might feel comfortable buying the names and taking the risk since you’ll have a better understanding of what sells.
Now there is a discussion on Namepros with the latest AntiCareer post if this is ethical ? Namepros member Johname was correct in saying we don’t exactly how things went.
The person not clear on how the $6500 number came along and when was the money paid. This is the crux of the ethics.
There are collector car ‘finders’ that have buyers lined up before they pull the trigger on a purchase. but they offer a service their buyer cant do themselves. (unlike purchasing a domain from Sedo) And they fully paid for the car before they sell it to buyer.
This person’s premium for just looking on Sedo (or wherever) is not a ‘fee’ but instead just grabbing for all one can.
Default User had this to say, If you make the offer as if you are the owner of the asset you are lying. I don’t believe there’s any way that’s ethical – ever. The whole practice of brokering would be non-existent if this was not considered generally unacceptable. Why would anyone work for commission if they could command the entire profit margin?
If you approached a client saying that you would try and acquire that name on their behalf, or you were employed/contracted by them as a finder, then it’s different. Now you’re a broker for the buyer and how much profit you make is between you and them.
It’s subtle but important distinction.
Some people feel it is totally ethical and others don’t. I think this version of Name Arbitrage can be risky because there are certain variables, one is theft. What if the domain was stolen and listed on Sedo ? Eventually that buyer may lose the domain in a UDRP from the original owner, now how does the arbitrageur or middle man explain that ?
Another scenario, what if the seller refuses the transfer ? I had that happen on Sedo, years ago, hit the buy it now, when seller was told to push the domain refused to transfer the name. They set their buy it now too low probably and then decided to not sell.
There is also the other scenario that plays out everyday, not related to the AntiCareer post, but people trying to sell domains they don’t own. There are plenty of people who send out emails trying to find buyers using the inventory of someone they don’t know.
Example, go check the buy it now listings for LLL.com on Sedo, not make offer but pure buy it now. Then email a ton of people at a healthy profit and if you get lucky, buy the name on Sedo and push to your new buyer.
There are a lot of things potentially damaging to the original owner. What if this unknown broker/spammer happens to contact someone who has a TM on those three letters ? They may file a UDRP and use the email, it would be interesting to see if the panel listened to the original owner or just transferred the domain. At a minimum the owner may now be looked at as a spammer.
Years ago I laughed as I got an email on a .TV domain, I knew the person who owned the name for years, it was a very good LL.tv. The email was trying to sell me on the name, but the contact info made no sense. I emailed the person who I knew and asked if he hired a broker ? He replied, “No Raymond why?” I said because someone just tried to sell it to me asking if I was interested at $50,000?
I think a lot of people would be surprised to know how many of their names are getting pitched without them knowing it. Problem is you really can’t find out unless you or an associate gets the spam.
Leave your thoughts on selling a domain you don’t own.
There is a post today on Namepros where people were talking about quickest flips. Rob Monster gave a scenario:
That’s easy.
We see these deals all the time:
1. Broker finds a buyer at Price X
2. Broker finds a seller at Price Y.
3. Simultaneous close via intermediary (e.g. Epik)
4. Broker banks the spread net of fees.
There are some smart domain guys doing this on a regular basis and banking large spreads with relatively little risk because they own the domain for about 1 minute.
And now you know.
Elliot Silver did not like the example provided by Rob, echoing a lot of the sentiments I wrote about back in 2015.
Do you think it is ethical to solicit offers for someone else’s domain name without their permission?
Do you think it is legal to try and sell someone else’s domain name without their permission?
I have seen quite a few UDRP cases where the complainant cites an outbound sales pitch as evidence of bad faith. Imagine if a UDRP was filed against your name because some unauthorized third party tried to aggressively sell your domain name to a trademark interest without permission from your or regard for harming your rights. Not only would defending a UDRP incur legal costs, but even if the registrant prevails, it could devalue the domain name because a future prospective buyer would know there risk for a subsequent UDRP exists.
The intermediary also runs the risk that one party backs out of the deal and he or she could be on the hook. If the buyer backs out, the person could be left with a domain name they bought for too much money hoping for that flip. If the seller backs out, they will not be able to fulfill their sale obligation.
By calling people who do this “smart domain guys,” it might encourage someone to think this is a widely accepted practice. I do not believe this is ethical (not sure on the legal aspect ), and I presume others might feel the same way as I feel. I also think this is a risky practice, especially if they are caught doing it.
I think this can be reputationally damaging, if not financially damaging.
So do you think it’s a legit practice to sell a name you don’t own, even if the name is listed for sale?
Penalties for Fraud
Fraud can be both a criminal and civil offense, so if a prosecutor does not pursue criminal charges, victims of consumer fraud may file suit in civil court. … Generally, however, fraud is a felony charge with a potential sentence of six months to five years. IMHO trying to sell something that you don’t own, or have a contractual agreement to represent for sale, is Fraud
Harry,
I have no idea if you are actually a domainer, but the mechanics of how some folks are doing this are typically like this:
1. They secure a written exclusive option to buy a domain within a period, e.g. 7 days.
2. The secure a lease with an option to buy for a set price.
In either case, the arbitrager is employing a capital efficient method to be able extract value from a domain by connecting current registrant, with the final end-user who values it most highly.
There is nothing unethical about securing an option or lease. In no ways do I condone or enable blind misrepresentation by domain sell arbitragers.
The domain arbitrager needs to have a legal basis upon which they can assert that they have the ability to deliver a domain to a would-be end-buyer. Options and leases can do that very well.
The simply fact that too many people overlook as that most mid-market non-premium domains don’t sell because nobody wants to do the legwork to connect the current registrant with a retail buyer.
I believe there will be a very significant book in (.com) domain liquidity precisely because there is an abundance of new talent from emerging markets who have the hustle to find those deals.
I see emerging market bootstrappers, being able to get big doing two things:
(1) They can do legal domain arbitrage.
(2) They can look for low cost 1st domain promos and then hustle to find a buyer within year 1.
Epik is actively empowering both models. And we are doing it happily and doing it responsibly because we know that all parties benefit when lawfully supply meets demand.
All of your examples are spot on. My statement was for someone attempting to sell a domain without any of those. Yes, I’m a domainer. Bought my first domain in 1995 and currently own over 250, many which are built out.
Thanks Harry.
Good to “meet” you — I don’t run into too folks from the 1995 domaining vintage that I have never come across before. Better late than never!
It sounds like we ended up on the same page after all. Domain arbitrage can be done right, and it turns out that Epik is actually equipped to power it for those who want to do the leg work.
>They secure a written exclusive option to buy
> a domain within a period, e.g. 7 days.
Or, they create a disposable email address and account on say Afternic, and hit “BIN”.
Then when the buyer does not buy (ie their attempt to pre sell fails), the “sale” eventually falls through. On SEDO that could take a very long time … Lots of games get played here, not just by “partners”.
Fortunately Afternic changed their system so the domain stayed listed until money was received. Previous to that the pending sale removed the domain from view.
Harry that’s true, but as I read things it seems the name is for sale, that would be open for anyone to see it for sale no? I personally believe Elliot just wanted to go after Rob nothing else.
If the pretend seller is truthful with the potential buyer there wouldn’t be a thing wrong with that scenario. Where I see the problem, is representing that the domain is owned by the pretend seller and he or she is offering the domain for sale.
I don’t know if Elliot was going after Rob, this is a topic that’s been discussed before, my article was in 2015.
Just because something is listed for sale, does not mean it is available.
Well this is a quandary because I never want to be seen in agreement with Elliot Silver on anything. I do agree it can present potential problems for the owner like a udrp. So I will say not legit.
What about marketplace “partners” that markup the prices we state on the marketplace?
They are acting as a broker while creating the spread, and doing so without notification to the buyer.
I agree. I noticed this on the fast transfer network on Afternic.
Many of their partners have arbitrary prices that are far higher than my actual asking price.
Brad
I have written about this before and have a new article coming on the topic. https://www.thedomains.com/2017/07/19/lot-shady-things-coming-light-week/
Hi Brad,
Would you mind pointing me to a partner or two where I might compare prices with Afternic?
Thank you!
Charles
I don’t have a comprehensive list, but I know Epik and Name.com do it. I am not sure how many others do it as well.
Here are some examples @ Epik –
$3,500 Afternic – $4,025 Epik
$7,500 Afternic – $8,625 Epik
$9,500 Afternic – $10,925 Epik
It looks like they just tack 15% on to the asking price. I checked Name.com and the $9,500 domain was $10,925 there as well.
I have contacted GoDaddy about this before as I was not thrilled with it. If they want to give a partner a cut it should be between them and the partner. They should not be adding their own commission on top of the price.
Brad
Thank you Brad!
Shocking that Rob and Epik do this. Not! Lol
MLS fraud is rampant — people list a domain at Sedo and then buy the domain via a marketplace using a stolen credit card.
It is possible to use domain sale proceeds and buy MLS domains commission-free. Just contact us to get your account verified and the markup is zero on your account.
However, better yet, just list domains in our marketplace with make-offer pricing and our free SSL landers where we show you the full details of the inquiry.
Example:
https://laptopcomputers.com/
Agree Christopher, I brought light to it 2 years ago, nothing changed, new article coming. https://www.thedomains.com/2017/07/19/lot-shady-things-coming-light-week/
Sending emails out offering domains for sale is spam and illegal. Those supporting the ‘offering items one doen’t own’ is a pretender and a spammer. Worse, spamming someone elses domain, potentially ruining the *actual* domain owners reputation. Anyone with domains that had been spammed by someone you know should sue the person whom acted fraudulently to represent your ‘property’. Morgan Linton is a worm and like a total loser, and should stick to spamming his own domains lest he wants to get sued.
“Another scenario, what if the seller refuses the transfer ? I had that happen on Sedo, years ago, hit the buy it now, when seller was told to push the domain refused to transfer the name. They set their buy it now too low probably and then decided to not sell.”
Had that happen to me at eBay. Buyer was apparently unhappy that no one else offered a better price and simply refused to transfer the domain. He/She was in another country and eBay simply said there was nothing to be done.
Fair game…just like dropshipping.
Task method, Benefits driven marketing by Epik CEO. Increasing advantages that will increase sales and activities of the firm. Seen before , there are many disadvantages that a drummer can use and turn them into advantages.
I think the best scenario and idea for this kind of domain flipping is often talked about by Andrew Rosner ,Buying a domain from a reputable seller via installments ,they hold the domain name till it is paid for and you are free to sell it for any amount.If you decide the domain is too hard to sell ,stop paying and the deal is off everyone’s happy. Example buy domain for 4K on a 3yr plan for approx 125 a month after 3 months of marketing you sell the domain for 20k for a 16k profit which only cost you 375 to carry ,so you secure the funds from the buyer and pay the owner the balance of the 4K and the seller transfers the domain to the buyer,The seller should be reputable and the domain will be in a clearing house status so the sale will be guaranteed. If the buyer tries to sell and can’t seem to find a buyer he can just drop the domain by stop making payments and opting out of the deal. The domain goes make up on the shelf 4sale. I think this a great way of selling domains,everyone’s happy. Look for interviews with drew for better explanations than I described.
Domain brokers do this all of the time, in one hand and out the other.
Majority of the people that voted yes were probably brokers.
My personal feeling is it is unethical when the intent is hidden. If your intentions are out in the open and you went as far as signing agreements etc, all the best to you but to keep it hidden from the owner of the domain or even the seller, unethical. The risk you put both parties in is terrible.
As far as the different strats I am seeing floated above, y’all crazy and love wasting time. My advice would be find a great domain you can buy and sell based on your knowledge of the market. If you cannot do that you are NOT educated. Educate yourself and grow ethically. There is no get rich quick scheme in the above unethical approaches I am reading about.
When it comes to businesses tacking on, that is something I imagine is legal do to a TOS? If so and you missed that small print and now know of it, make your choice from that point if it’s a service you want to use.
If you have to ask yourself in life “is this really ethical” I think you answered your own question and even if legally allowable it doesn’t mean you didn’t just sell a piece of your soul.
Take care folks.