Bidding on your own names at NameJet...?

[webquest]

Once in awhile I see people bidding on their own domains at NJ. I would think it would be frowned upon.

Today's seems more obvious than normal. Or am I missing something here?

Airlinejobs.com owned by Andy Booth at Booth.com and high bidder is BQDNcom (James Booth).

3 bids down we see Boothcom as a bidder.

Same thing with MovieZone.com. Owned by Andy Booth in which he currently appears to be the high bidder.

High Bid: $2,475 USD by boothcom

They actually won their own domain airplanesforsale.com. Im guessing it didnt get as high as they wanted so needed to protect it.

Bidder Amount Date
bqdncom $2,001 7/17/2017 12:23 PM
boothcom $1,950 7/17/2017 12:23 PM

 

[Michael]

First off, you are absolutely correct that since it is against Namejet TOS then the simple answer is that bidding on your own domain is wrong. But again, I'm not debating that. What I'm trying to debate is whether or not this should be changed.

You are NOT deceiving anyone in an open auction with no reserve by bidding on your own name. Nobody is being fooled. The owner is bidding for a domain no different and with equal chance like everyone else. This is a fact. It is not debatable. If he wins he buys the domain for (ex) $10,000. If he loses someone else buys the domain for $10,000. If the losing party thought the domain was worth more they would have placed another bid. That is the beauty of free market capitalism and market pricing.

When Tucows buys back their own stock from the market they are essentially doing the exact same thing. They have more information than the average investor in the market. They feel good about the future prospects of the business relative to the current share price and so they buy back shares for the benefit of existing shareholders. If they did NOT feel good about the future relative to the current share price than they would not buy those shares.

If I put xyz.com in auction on Namejet with NO RESERVE and the auction is about to close at $20,000 but I think this domain has a good chance of selling someday for $100,000 then why shouldn't I be able to buy it back for more than the current bid? If the high bidder also thinks it is worth more than they will outbid me (again). And again and again. At the end one party values the asset higher than the others and they win the auction and pay the price.

Who got fooled?

Your commission on NameJet is 10% so if you bid $10,000 you are really bidding $1,000 because you'll get $9,000 of it back when they settle up with you next month. That puts you at a distinct advantage over legitimate bidders because you're only risking that you marginally increase your cost-basis in the name.

Let's use actual numbers to make this more clear. Say you get lucky and score an LLL.com for $15k from an original registrant that you feel is easily worth $25k. You throw it in a no-reserve auction on NJ, and towards the end the bidding is at $20k and you're freaking out, so you decide to bid yourself.

You successfully drive the price up to $24k and leave someone holding the bag. You made an extra $4,000 and at your last bid of $23,800 you only risked adding $2,380 to your cost basis in the name. Although to drive the price up from $20k to $24k with one other bidder you'd have to risk more than $2k twelve times which is a little crazy. But if you're really good at maxing people out without winning (backing down before reaching psychological thresholds like $10k etc) or your mini-war causes other people to jump in, it could be really profitable for the seller despite the risk.

That isn't free market capitalism, that is an incentive to place fraudulent bids. If this rule existed, sellers would be bidding in their own auctions hoping to get second place, pushing proxy bids, etc. not submitting honest bids because they believe the market value is higher. Plus it wouldn't be clear to the other bidder(s) that the seller was participating, and they wouldn't know the "social proof" was bullshit.

Just set a reserve, or be willing to accept what the market decides it is worth without you "influencing" the results. Your example of forfeiture auctions doesn't hold water because the government or bank is the owner at the time of the auction. What it would actually be more akin to is selling your house, and telling someone who submits an offer that you received a higher offer when you actually didn't, just because you think the house is worth more.

Here's an example of a Real Estate agent being fined $10,000 for making up phantom offers:
https://www.thestar.com/news/2007/10/13/phantom_bid_victims_come_forward.html

So yea... I would say that is frowned upon and is an ethical violation.

Time to get back to reading the thread, only on page 3 out of 11. Just had to chime in on this.

 

[dordomai]

how is it possible to make money bidding and winning on your own domains?

You will always lose if you are on both sides of the deal. Commission will be the loss.

The only way to benefit from it financially is to make a small loss buying back your own name to prevent a large loss from having to sell it below market value.

Since you can set a reserve price that protects you froms selling below market value there is really no legitimate reason to bid on your names.

 

[Ategy]

@Michael's Math .. lol

First let me say I don't necessarily completely disagree with parts of what you're saying .. except that there are two ways of looking at the math. your way .. and @MediaOptions way which is:

If he wins the auction at $23,800, and the previous high bid was $23,600 (I'm assuming $200 minimum steps based on your math above) .. then he is losing $25,980 ($2380 fees and $23,600 from the money he didn't get from the other potentially winning bidder and was the theoretical auction market value).

As I stated a few times above .. you can easily argue the logic both ways .. it's not one or the other .. there's a who ton of grey in here.


Most importantly what people ignore .. is that this is most certainly already happening anyways. Whether the Booths are guilty or not, the domaining industry is small with lots of mini clans and alliances. AND .. there is no real way of stopping anybody from doing this if they really wanted to.

But to be clear .. I am most definitely not saying that it is ok in this specific case (and when you read past page 3 you'll see @MediaOptions isn't either) .. in fact as far as I know, almost nobody disagrees that *IF* they did it in this case .. it goes against Namejet Terms of Service and is 100% wrong. End of Story.


So in the meantime we wait for @NameJetGM to give us the justification and/or proof as to why he says he is 100% sure it was not Andy Booth's domain.

 

[Ategy]

how is it possible to make money bidding and winning on your own domains?

The only way to benefit from it financially is to make a small loss buying back your own name to prevent a large loss from having to sell it below market value.

Since you can set a reserve price that protects you froms selling below market value there is really no legitimate reason to bid on your names.

You answered your own question! .. That would be the main reason. But also to create market action and give other bidders a false sense of value. some people get caught up in auctions and might spend a little more if he/she sees other domains also value the domain at a higher amount.

Also .. some people don't set reserves because (people say) it will get less initial attention and in the end have less people competing for the name (which ultimately lowers the potential end price on some auctions)

 

[Michael]

@Michael's Math .. lol

First let me say I don't necessarily completely disagree with parts of what you're saying .. except that there are two ways of looking at the math. your way .. and @MediaOptions way which is:

If he wins the auction at $23,800, and the previous high bid was $23,600 (I'm assuming $200 minimum steps based on your math above) .. then he is losing $25,980 ($2380 fees and $23,600 from the money he didn't get from the other potentially winning bidder and was the theoretical auction market value).

As I stated a few times above .. you can easily argue the logic both ways .. it's not one or the other .. there's a who ton of grey in here.


Most importantly what people ignore .. is that this is most certainly already happening anyways. Whether the Booths are guilty or not, the domaining industry is small with lots of mini claws and alliances. AND .. there is no real way of stopping anybody from doing this if the really wanted to.

But to be clear .. I am most definitely not saying that it is ok in this specific case (and when you read past page 3 you'll see @MediaOptions isn't either) .. in fact as far as I know, almost nobody disagrees that *IF* they did it in this case .. it goes against Namejet Terms of Service and is 100% wrong. End of Story.


So in the meantime we wait for @NameJetGM to give us the justification and/or proof as to why he says he is 100% sure it was not Andy Booth's domain.

My math is correct. Opportunity cost is not a real cost... try amortizing that $23,600 on your taxes Your only real cost is the commission when you win your own auction.

Would it be nice to have that $23,600? Sure. But you could still sell the name the next day for that amount or more, so it is not a cost. By that logic, the "cost" of your portfolio is what you paid for every name in it, PLUS your expected sale price for all those names you haven't sold. That's like saying I bought a name for $10k, turned down a $30k offer, so now that name cost me $40k. That's just dumb.

Also you're double-counting the commission He wouldn't net $23,600 if that was the high bid, he would miss out on $21,240 in cash plus have to pay $2,360 in commission for a total fake "loss" of $23,600 using this backwards math.

 

[OralB]

The brothers have been shill bidding on their own auctions and sometimes on friend’s auctions for a long time but since many of us have the bad habit of idolizing and defending fakes in this industry, they went unnoticed till now.
Have a look at the comments made by James Booth on this February 2017 article by thedomains.com.

https://www.thedomains.com/2017/02/23/see-3l-com-prices-going/

Please stop defending fakes and rat them out no matter who they are to keep the industry clean.

 

[Ategy]

Opportunity cost is not a real cost...

That's your opinion and way of looking at things .. and I'm not saying you're entirely wrong. But there certainly is merit in the opposing opinion as well.

The math behind both are right .. beyond that the real judgement that needs to be made is the morality question .. and again there .. I'm sorry to say .. that there are very real arguments to be made for both sides.


The one huge point in the view opposite to yours, is that in your preferred scenario (current NJ rules), there is no real way of stopping this thing from happening. NJ could have the absolute best of intentions and have a team of 10 people working on fraud prevention .. but at the end of the day if someone wants to pick up the phone and call a friend to bid on their auction with a different account, there is absolutely you, me or Namejet can do about it. Even if you made everybody's real names public there would still be ways around it.

so if it's going to be done anyways, why not take it into account and at least make it as transparent as possible (and yes .. i'll agree even then there will be people who do sketchiness .. there is not perfect solution .. just the better of two bad choices I guess is the best way of saying it).


ADDED: Note this is just one argument for a change .. obviously for Drew it's more the absolute raw free-market version he prefers for the reason it's the free-market version (not simply because people are going to do it anyways as I've mentioned here)

 

[Michael]

That's your opinion and way of looking at things .. and I'm not saying you're entirely wrong. But there certainly is merit in the opposing opinion as well.

The math behind both are right .. beyond that the real judgement that needs to be made is the morality question .. and again there .. I'm sorry to say .. that there are very real arguments to be made for both sides.


The one huge point in the view opposite to yours, is that in your preferred scenario (current NJ rules), there is no real way of stopping this thing from happening. NJ could have the absolute best of intentions and have a team of 10 people working on fraud prevention .. but at the end of the day if someone wants to pick up the phone and call a friend to bid on their auction with a different account, there is absolutely you, me or Namejet can do about it. Even if you made everybody's real names public there would still be ways around it.

so if it's going to be done anyways, why not take it into account and at least make it as transparent as possible (and yes .. i'll agree even then there will be people who do sketchiness .. there is not perfect solution .. just the better of two bad choices I guess is the best way of saying it).

I assure you the distinction between sunk cost and opportunity cost is not a matter of opinion or something that can be debated. Saying the opportunity cost is $23,600 is accurate, but implying that it means you are on equal footing with other bidders because of that is total bullshit.

I don't know how to make it any clearer than this, let's continue with his XYZ.com example and my numbers from the previous post:

Hypothetical 1: You win your own auction at $23,800.

Initial purchase price: $15,000
Winning the auction: $23,800
Returned from NameJet: -$21,420
Total cost of owning XYZ.com: $17,380

Hypothetical 2: Other person wins the auction for $23,600

Total cost of owning XYZ.com: $23,600

How is that equal footing, and where do you see "opportunity cost" playing in to the total cost of being the owner of XYZ.com? It doesn't... and either party can still sell the name the next day for more.

And your logic is truly, truly frightening. A few bad apples will shill on NJ or any other auction platform, and it is very difficult to detect; that's a given and I agree with you. But to make the leap that because it is hard to stop it should be allowed for everyone is insane. They should improve their detection algorithms and stay vigilant, not throw up their hands and give up.

ADDED: Note this is just one argument for a change .. obviously for Drew it's more the absolute raw free-market version he prefers for the reason it's the free-market version (not simply because people are going to do it anyways as I've mentioned here)

Free market does not mean a lack of laws, rules, or ethics. It just means that prices are set purely by supply and demand without restrictions like tariffs, anti-monopoly laws, etc. It does not mean "do whatever the hell you want to make a buck".

 

[Ategy]

... but implying that it means you are on equal footing with other bidders because of that is total bullsh*t.

You are right .. but the pure free-market argument for this doesn't care about equal footing. Free-Market simply implies that if you have the money to buy something, you can buy it .. and that if you have something, you can sell it for as much as you like. If there is only one of something (in this case a specific domain), then you can choose to sell it to whomever you want ... including yourself as strange as that may sound .. lol.

That's why i'm saying it's not a logic argument. If anything Free-Market rational certainly is simpler and cleaner. But I will most certainly agree that there is a morality question that needs to be asked .. and I can appreciate an open minded opinion the has moral issues against this sort of process.

But to make the leap that because it is hard to stop it should be allowed for everyone is insane.

You are most certainly right .. if that was the only argument it would be silly .. but it's more the Free-Market ideology argument that really is the counter-point to your argument here. And again let me be very clear that I don't entirely disagree with you. My very first post on this stresses how I don't think either side is entirely right .. but I also think it's wrong to completely dismiss the other point of view.

What I do think .. is that because both sides have merit .. that maybe we should explore a system that takes as much positive from both sides.


Again though .. none of that matters here .. even @MediaOptions says that the current NJ rules are what should be enforced here ... the rest is just a theoretical discussion ... to be continued here ...

https://www.namepros.com/threads/le...s-idea-of-owners-bidding-in-auctions.1030988/

 

[nicedomains]

In early 2016 when I was bidding for 6N Chips at NJ, I was puzzled at @MediaOptions bidding on his own names. Now I know why he did because system allowed it. Sorry to say @NameJetGM , its very unethical.

@MediaOptions, have you ever won your own names at namejet?

Are you going to address this question @MediaOptions?

 

[Michael]

You are right .. but the pure free-market argument for this doesn't care about equal footing. Free-Market simply implies that if you have the money to buy something, you can buy it .. and that if you have something, you can sell it for as much as you like. If there is only one of something (in this case a specific domain), then you can choose to sell it to whomever you want ... including yourself as strange as that may sound .. lol.

That's why i'm saying it's not a logic argument. If anything Free-Market rational certainly is simpler and cleaner. But I will most certainly agree that there is a morality question that needs to be asked .. and I can appreciate an open minded opinion the has moral issues against this sort of process.



You are most certainly right .. if that was the only argument it would be silly .. but it's more the Free-Market ideology argument that really is the counter-point to your argument here. And again let me be very clear that I don't entirely disagree with you. My very first post on this stresses how I don't think either side is entirely right .. but I also think it's wrong to completely dismiss the other point of view.

What I do think .. is that because both sides have merit .. that maybe we should explore a system that takes as much positive from both sides.


Again though .. none of that matters here .. even @MediaOptions says that the current NJ rules are what should be enforced here ... the rest is just a theoretical discussion ... to be continued here ...

https://www.namepros.com/threads/le...s-idea-of-owners-bidding-in-auctions.1030988/

I'll repeat this because you might have missed it, it was an edit added after your edit:

-- Free market does not mean a lack of laws, rules, or ethics. It just means that prices are set purely by supply and demand without restrictions like tariffs, anti-monopoly laws, etc. It does not mean "do whatever the hell you want to make a buck".

I would argue that a seller bidding in his own auction, with the advantage of only having to pay a commission, is the opposite of a free-market. The market is being unfairly influenced by someone with an economic advantage. By that logic, NameJet employees should be allowed to bid in the auctions as well in a "free market", even though they have the advantage of knowing exact reserves and people's proxy bids. Again, free market doesn't equate to "anything goes".

Let me put it another way. Let's say I actually own an auction house, so I directly pocket the commission from sales. Should I be allowed to bid, even though I'm getting a 15% discount on every purchase and I'm not on equal footing with other bidders? By your understanding of "free market" that would be totally cool. Would you actually argue that this would be ok?

Put yet another way, let's look at brokerage which is Andrew's main game. Let's say someone asks him to represent an LLL.com and agrees to a 15% commission, then he finds a buyer looking for LLL.com and tells him he charges a 15% buyer broker fees. He connects the two parties and double dips. I'm pretty sure he would frown on such activity, but nobody held a gun to anyone's head and "free market" and all that bullshit. So it's ok, right? Don't think so.

Or getting even more unethical, let's say he represents the seller of the LLL.com and tells the seller he got $30k, but really he sold it to another party for $50k and he himself was the buyer at $30k. So he pockets $20k plus the $4,500 in commission on the $30k sale. You might say "free market", the seller agreed to $30k and the other party agreed to $50k, nobody held a gun to their heads. But it is still wrong.

Again... free market is not a free for all, throw ethics out the window, laws be damned type of situation.

 

[domeen]

To me there is this question. Are they really thats stupid to bid with those alieas on names thats shows theyre own whois? I mean you got to be ...

 

[Wannabean]

WINNER WINNER CHICKEN DINNER! Yes, you are exactly right and pat yourself on the back for being the only person on this entire forum to actually understand the logic of my proposal.

Thank you

Firstly, economic theory often falls down because it assumes that all participants make rational choices.

Secondly, reserve auctions exist so an owner can insert their maximum bid from the outset. This is already transparent and saves the owner paying commission if their maximum bid is not exceeded.

Thirdly, with the numbers of chancers floating around in the lower tiers of the market, allowing owners to bid on their own names is going to get farcical. There are enough problems with non payers as it is without the actual owners bidding sums they don't have in order to push up legitimate bidders.

I don't mind what your saying as a mechanism for pure efficiency and the theory is sound but everything that has a use has a misuse and when you put it in to practice the benefits are often diminished, sometimes in to the negative, by the cost of policing the irresponsible.

 

[Ategy]

Well .. you're taking things much further .. his arguments also included full transparency .. and ironically he did include an example that worked with the auction house and employees being able to bid.

Deceit and lying are another thing .. you're mixing in things that shouldn't. As a broker you have a certain set of rules that are part of contracts. But actually yes .. there are times when he does buy a domain from someone himself. As long as it is clear and transparent then that is fine.

And I'll agree .. I used "Free-Market" because it seemed like the best way of describing it .. but also certainly did not imply it to mean there should be no rules .. just less restricting (free-er rules .. how the heck do you spell freeer .. can't be 3 E's? Let's say freer ... lol). Would "Libertarian" be more accurate?


and again .. don't think of me as the crusader for that opposing view .. I just think there is merit in both .. and to complete say either is completely right or wrong is .. wrong .. there are aspects to both sides that are better as well as worse. The logic and math can also be argued either side. The ultimate question is the values .. and again .. it's not that one is good and one is bad .. they are just different .. VERY different. lol


ADDED .. also .. the opposing approach in question most certainly assumes everybody participating still has equal information .. so no reserve and no access to proxy/advance yes staff can bid .. otherwise I'd think not.

 

[promo]

As an official statement from NameJet – our policy is clear that sellers cannot bid on their own domains, period. The integrity of our platform is of utmost importance to us and we do not condone shill bidding of any kind. From an ethical standpoint, it is unfair to the other participants, and from a practical standpoint, a few extra dollars on a few sales is simply not worth the potential damage to our reputation and business. Again, our stance is clear and we take immediate action whenever we have any reason to believe that there is inappropriate activity occurring on the platform. Bottom line – we take these matters very seriously!

With that said, it is my understanding that Andy and James Booth are not the sellers or current owners of the domains at issue. Andy did own them recently, but per him (both to me privately and in this thread) the domains are no longer his to sell, and he was interested in reacquiring them at what he felt were good prices. However, the WHOIS still reflects Andy as the registrant and that has made this whole thing confusing and problematic.

And while I have no reason to dispute Andy’s claims, we will cancel the remaining auctions involving these domains. To put things in perspective, there are not many domains involved, so it is not some large coordinated campaign to improperly inflate auction values. And it looks like they won nearly all of those domains auctioned, which further speaks to their legitimate interest in them – and for anyone negatively impacted we will look to address that.

Moreover, we will take steps to further outline and clarify our rules around this over the next few weeks to help eliminate any ongoing confusion. In the meantime, we will continue to investigate and monitor this issue (as well as any others brought to our attention) to determine if any further action is necessary.

Thanks everyone and have a good evening.

-Jonathan
GM, NameJet

Thats it folks. Nothing to see here. NJ asked if they scammed and they said no. All is good then. Pheew I was getting worried. Glad this was resolved so professionally!

 

[promo]

Hi all,

Sorry if I wasn't clear - they are definitely not the seller of the domains. It is 100% a different seller.

Thanks,

-Jonathan

What kind of crap is this. WHO IS THE OWNER?

We dont care who put them up.

 

[slader23]

That's your opinion and way of looking at things .. and I'm not saying you're entirely wrong. But there certainly is merit in the opposing opinion as well.

The math behind both are right .. beyond that the real judgement that needs to be made is the morality question .. and again there .. I'm sorry to say .. that there are very real arguments to be made for both sides.


The one huge point in the view opposite to yours, is that in your preferred scenario (current NJ rules), there is no real way of stopping this thing from happening. NJ could have the absolute best of intentions and have a team of 10 people working on fraud prevention .. but at the end of the day if someone wants to pick up the phone and call a friend to bid on their auction with a different account, there is absolutely you, me or Namejet can do about it. Even if you made everybody's real names public there would still be ways around it.

so if it's going to be done anyways, why not take it into account and at least make it as transparent as possible (and yes .. i'll agree even then there will be people who do sketchiness .. there is not perfect solution .. just the better of two bad choices I guess is the best way of saying it).


ADDED: Note this is just one argument for a change .. obviously for Drew it's more the absolute raw free-market version he prefers for the reason it's the free-market version (not simply because people are going to do it anyways as I've mentioned here)

So basically, your saying it can't be fixed so let's make things even worse?

 

[Ategy]

So basically, your saying it can't be fixed so let's make things even worse?

OK .. for the 20th time .. lol .. I am not saying this should be done .. I have very VERY expressly stated that there are valid points on both sides of the argument. What I'm saying is let's try to understand the alternative and see if we can take various elements from the various options to maybe not get a good alternative .. but maybe at least a better one than what we have now.

I'm not even just talking NJ .. there are transparency issues at GD as well .. and Flippa also has issues. I'll be the first to say (I already said it in my first post in this discussion) that there is no perfect solution .. neither argument has all the pros .. nor the cons. So let's discuss them all and figure out if we can find a better solution. But to that people need to at least try to fairly understand the other point of view .. and the only reason I'm repeating points for that other side .. is that many are dismissing it before even exploring it (admittedly NOT EVERYBODY before you all go jumping the gun again .. lol)

What you're describing is actually restrictive to market activity because it drastically limits the utility of bidders. In this particular case full transparency only gives the illusion of a fair and free auction environment. In reality it is a nightmarish scenario where everyone is allowed to "cheat" and domains under no reserve only sell if you can outbid the owner. No one wants to be a part of that kind of system. I would abstain from participating under such conditions. I don't like the circus.

That would certainly be your choice .. but the illusion card is even more in play under the current system. Don't forget that the owner and his bids are public in this alternative .. and more importantly pays a penalty (aka commission aka clawback whatever) .. AND .. they obviously don't get what would have been actual market-value for the domain if they bid higher than the last bidder.

That's one point everyone is conveniently missing .. that the real market-value is what the last person would have paid .. so by bidding higher they pay the penalty .. just to put it on auction again and theoretically get the same price (the domain doesn't actually change .. so theoretical value is the same).

 

[Marshall]

"It Ain't a Crime,
'Til you get Caught"


"And it's still ain't a Crime,
If you can Cover it Up"

 

[domeen]

But at least we know now why they sell so much they sell between each other. Easyest way. You could be the next broker of the year.

 

[Ategy]

But at least we know now why they sell so much they sell between each other. Easyest way. You could be the next broker of the year.

lol .. I can't afford to pay commission on domains I don't actually sell!

 

[domainscot]

Good guys? People used to say the same thing for Adam Dicker, Shane Bellone until curtain fell...

We are not talking about that group of people if your stupid to fall for crap then sometimes you deserve shite to happen.

 

[domainscot]

Your statement is actually inaccurate, "If you want to bid on yor own names then thats your personal choice. Its a ethics question"

We are talking about NameJet and personal ethics do not factor in, on NameJet it's against their TOS.

Also said people from different locations ethics are not the same. personally I would not bid on any domains that I had up for auction if your telling me this never happens. suggest you check out all big auctions when premium domains just fall short of the reserved bid. mmmmmm

 

[domainscot]

Good guys? People used to say the same thing for Adam Dicker, Shane Bellone until curtain fell...

I think pretty good judging people thats why I dont get ripped off. If you were stupid to fall for some crap from those so called leaders of the domain world. then your as blind as a bat.

 

[richface]

I want to start off saying EXPLICITLY that I am NOT supporting or against Andy or James Booth with this comment. I do in fact think they are putting their foot in their respective mouths with the way they are responding to these accusations whether they are true or not. But thats not the point.

With that being said, from a more philosophical point of view and a matter of interest and best practices; and a topic I give a lot of thought to, I personally do not find any fault or problem with an owner bidding on his own domain or other property in auction.

Here is a comment I just posted on TheDomains article about this topic which explains my perspective (I will comment and criticism as long as constructive. The first person to act like a troll I'm out and will no longer participate in this dialogue). Here are my thoughts:

If a domain is listed for sale with no reserve I actually don’t see the problem with an owner bidding for the domain. In a city tax auction or any other type of asset forfeiture auction it is standard that creditors or prior owners would be bidding in the auction right up against other unrelated bidders. Very standard.

As long as they have to pay cold hard cash to buy the name back like everyone else, then where is the problem? They are creating no economic damage, in fact they are actually creating benefit to the overall market. In fact it is just another form of “reserve” pricing and actually is more economically accurate and beneficial to the market.

With a reserve auction, nobody wins if the auction doesn’t hit reserve. You do not even get an accurate picture of the market value of the asset because the bids don’t mean ANYTHING until they are over the reserve. At least with a no-reserve auction where the owner is allowed to bid, you have real economic advantage and productivity. The owner must authentically create a value threshold. If owner buys it back, the auction house still gets their commission creating economic benefit. The market gets a true picture of the value of the asset. And the owner re-acquires the asset that they value higher than the market does.

When you have any deal for ANYTHING and you have a bonafide buyer and a seller at the table then one of them will walk away with the property and one will walk away with the money; but BOTH the property and money are on the table and up for grabs by either party. Read that again because its important.

If the “Seller” doesn’t accept the offer from the buyer than, in essence, they have just paid whatever price the buyer offered to buy their own property back. Quite literally, there is no buyer and no seller, there are only two parties (or more in the case of an auction) who assign value to a particular piece of property. One party has money (or other consideration) and one party has the property. At that exact moment in time, you have two equal parties who each need to decide if they value the offered money or the property higher. One walks away with the property and one with the money. Its really that simple. Either party has an equal chance at both.

Example:

Lets say that we put Murphy.com for sale in auction or in a straight listing and we receive an offer of $150,000 for the domain. We have have only two options and possible outcomes:

1. We accept the offer, transfer the domain and walk away with $150,000 (in this case we become the Seller).

2. “Buy” the domain for $150,000 ourselves (In this case we become the Buyer; by turning down the bonafide offer of $150k we in essence bought it ourselves for that price).

This may not be immediately obvious to most folks but every time you say “NO” to an offer, what you did was buy your asset or property or contract for whatever the offer price was that you turned down.

If an auction has a reserve price and the owner is bidding below the reserve price then that is a totally different story. I actually don’t necessarily see the issue with an owner bidding below the reserve either just to create “momentum” in the auction, but since the domain can not be sold below the reserve anyhow, it is not financially harming anyone involved. But I fully understand that this practice is more controversial and does create some false illusion of the value of the asset in the event it does not sell.

Outside of the domain industry it is common practice that an owner would be able to bid for their own asset in lieu of setting a reserve. If they buy the property back they still have to pay the full commission to the auction house or broker. Again, that is real money paid and keep in mind that if they had let the #2 bidder win, that would have been real money in their pocket (opportunity cost). So the price paid by the owner is actually HIGHER than anyone else would have paid because they are paying the purchase price (opportunity cost) PLUS the auction commission (actual out of pocket cash). If that makes any sense…

So while I’m sure my post will cause controversy, I must say, I think it is silly to worry about owners bidding on their own domains in either scenario. The only ones you need to worry about are the auction houses themselves and making sure there is no INTERNAL shill bidding (like Halvarez). But Namejet is NOT a problem and in my opinion the single most liquid marketplace in our industry and an incredibly valuable asset to this industry.

@NameJetGM

Lost all respect for you with this point of view. I regarded you in high esteem bidding on your own names give me a break if you place a domain up at no reserve you should Honor that not turn around and place a bid as a reserve so what no reserve means there could be one? Disgraceful .