Domain Cost Club

Bidding on your own names at NameJet...?

Discussion in 'Domain Marketplace Reviews' started by webquest, .

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  1. zurc.net

    zurc.net Top Member VIP ★★★★★★★★★★

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    @equity78 That is an interesting way of looking at it. While I still don't agree with the practice, he brings some valid points.

    And ahh... Halvarez... that brings back memories.
     
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  2. promo

    promo Domain investor and broker VIP ★★★★★★★★★★

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    Come on now @zurc.net . Valid points?

    Yeah they are valid.. Like the US president makes valid points..

    If you are selling a domain name, dont bid on it. Easy as that. You can convolute and deflect sure. But anyone with half a brain knows whats right and whats not.
     
  3. alcy

    alcy ASSETDN.COM VIP

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    we all have opninions

    somtimes maybe the answer whether its right or wrong lies in the fact how many places do and do not allow it.
     
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  4. Hemanttilotia

    Hemanttilotia Established Member

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    Okay, so I have bought meatloafrecipe.com on NJ, while LACollege has gone to user 411. The strange part is despite leading, booth brothers didn't make any follow on bids thanks to this thread.
     
  5. MediaOptions

    MediaOptions Member MediaOptions.com DomainSherpa PRO ICA Member VIP

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    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
     
  6. Grilled

    Grilled Active Member VIP

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    Isn't asset forfeiture auctions a bit different than domain auctions, in that, the owner (who may bid at auction) isn't actually the owner of the item anymore due to whatever caused said asset to be forfeited? (note: I'm only referencing this knowledge from Happy Gilmore. See below)



     
  7. 3sixty

    3sixty Established Member

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    Precisely, it is comparing Apples and Apple.
     
  8. zurc.net

    zurc.net Top Member VIP ★★★★★★★★★★

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    The comparison to individuals bidding on their auctioned property... yes, I know there's a difference. Usually it's another party that owns and is auctioning the property, but the comparison is there.

    I actually had a family member that invested heavily into the real estate market before the crease and bought back all his properties at a fraction of their original cost after he lost them during the melt down. Made a killing.

    This domain scenario just seems too suspicious and close to collusion for comfort, but let's see what NameJet finds.
     
  9. JB Lions

    JB Lions Top Member VIP

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    The only thing that matters are NJ rules on this. They said "Please do not backorder your own domains, as this is strictly forbidden." Maybe @NameJetGM can clarify for everybody that you're not supposed to bid on your own names. That seems obvious, since allowing such practices is a good way to wreck the business. We could poll this but again, I imagine the overwhelming majority would not be ok with owners bidding up their own names. It would be a Captain Obvious type poll.
     
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  10. MediaOptions

    MediaOptions Member MediaOptions.com DomainSherpa PRO ICA Member VIP

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    @promo At no point did I say I support the practice or that I think Namejet should support the practice. I'm posting my thoughts on the topic because it is actually something I think about often. Before you post negative comments, you should think about this more as well. Did you read what I wrote?

    I would HIGHLY encourage anyone who has a constructive criticism of my thoughts to explain why my assumptions are wrong. I truly encourage a constructive dialogue on the topic.

    In fact, I would actually LOVE to see this post and this discussion lead to industry norms. Wouldn't that be amazing? A consensus of industry participants through open discussion leading to the creation of industry norms and standards? Especially if they were well thought out and backed by real economic theory?

    What exactly about my thoughts do you disagree with? Please don't answer that you simply disagree at face value. That is not constructive.

    The only argument that I can come up with against my theory is sour grapes because without the owner bidding they would have won or without the owner bidding they would have won for a cheaper price. But that is NOT a sound argument. An auction is all about free market capitalism. If you value the property higher than the owner then you win. If you don't then you lose. Sour grapes doesn't play a part in right or wrong.
     
  11. Grilled

    Grilled Active Member VIP

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    Good point, in that reserve price, is just another way to say the lowest price domain owner is willing to accept. If the owner, doesn't set a reserve, and is willing to pay fee's on sold price to retain the domain, is there an issue?

    Say, while an auction is live, a major company (NetFlix) comes out and says they are changing names to MovieZone. Maybe Netflix contacts the WHOIS (which in this case would be Booth since Booth didn't push the domain with new owners WHOIS info) and offers 10 times the amount of reserve price. Can the domain owner, add a BIN on the auction, and immediately purchase it at BIN so they can be allowed to pull the auction and sell directly to NetFlix? Or... would they have to be high bidder at the end of auction?
     
  12. promo

    promo Domain investor and broker VIP ★★★★★★★★★★

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    Yes there is an issue..

    If you list a name without reserve but you keep a secret reserve by shill bidding on the name, you are in fact deceiving people to think they have a chance to buy the name at a certain price point when no chance is there.

    It makes it okay to deceive people if you are willing to pay the auction house commission??

    @MediaOptions
    I dont want to go into a head to head with you on this. I am myself a party to behind the scenes info on this and I would prefer to keep out as much as possible.

    Two things though:
    1: I know you cant teach business ethics to someone who does not want to hear it.
    2: its against the TOS you agreed to when you signed up at NJ. I know you do it yourself since its not more than 3 months since you bid on one of your LLL.COMs you had another seller put up. Not sure what came of that and frankly at this point I dont care.

    So there. I said my peace. If you want to have further discussion with me, we can have it through PM.
     
  13. Grilled

    Grilled Active Member VIP

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    Well said.

     
  14. xn--v4h.com

    xn--v4h.com Emoji domains at Punycode.com

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    Andrew,

    I don't know as much in domaining as you but one thing I know is right and wrong. You are wrong! If the seller doesn't want to sell at a certain price then PUT A RESERVE! Don't trick bidders into bidding in the hopes of hitting a jackpot. If YOU are the face of domaining and this is standard practice then domaining is one sleazy industry.
     
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  15. MediaOptions

    MediaOptions Member MediaOptions.com DomainSherpa PRO ICA Member VIP

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    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?
     
  16. zurc.net

    zurc.net Top Member VIP ★★★★★★★★★★

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    Whether or not who is right or wrong in this argument at this point, it's against NameJet TOS and if they are going to let this slide, that sets a very bad precedent for the rest of its members.
     
  17. andyboothsi

    andyboothsi Member ICA Member

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    I am in agreement with Rosener's point here, but it is beside the point in this case because everyone is choosing to ignore the facts presented. Despite what the 'optics' might suggest, the domain name is in new hands. If that owner chooses to list names without reserve, it's a free country. It's a new owner and has transferred from my Godaddy account to the buyer's Enom account. And yes, if myself or my brother can buy the domains formerly owned by me for a reasonable price, we will. Bidding activity is not related to this thread. If there's a deal, I'm having it.
     
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  18. MediaOptions

    MediaOptions Member MediaOptions.com DomainSherpa PRO ICA Member VIP

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    Actually this is not correct.

    When you put something up for auction or sale WITH NO RESERVE then you are essentially no longer the owner. It enters an "in between" stage. You have put up an asset on the table and the market will put up a value. One will walk with the asset and one will walk with the value. Either party has an equal chance of being buyer or seller immediately upon a bonafide buyer and seller coming to the table.

    This is not something I am making up. This is real economic theory.
     
  19. equity78

    equity78 Top Member TLDInvestors.com TheDomains Staff PRO Business Account VIP ★★★★★★★★★★

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    Technically what you said is true, I don't think anyone in the business looks at this way. If Rick auctions property.com everyone calls Rick the seller, not the guy who used to be the seller and now the ownership is in limbo. Technically you are correct but optics matter, they matter in this current world more than ever before. Again IMO
     
  20. zurc.net

    zurc.net Top Member VIP ★★★★★★★★★★

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    Hopefully you can provide proof of the sales to NameJet and this is cleared up. But I think anyone here who is concerned, has a right to be and I would think anyone in your position would be understanding to that.
     
  21. andyboothsi

    andyboothsi Member ICA Member

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    Namejet know the new owner and that the domains are not being sold by James or myself.
     
  22. Sanwal

    Sanwal Sanwal Memon VIP

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    I actually respect you a lot, but this statement just disappoints me as a domainer or another person who does business. I thought a lot before posting this but i had to be true to myself.

    It's one thing about justifying something and another to be an inspiration. Your justification may be somewhat comprehensible with people but imo not ethical from a business perspective. It's just my opinion and may be highly debatable.
     
  23. Grilled

    Grilled Active Member VIP

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    In the example (asset forfeiture) the winning bid (minus auction fee's) goes to the gvt or whomever seized the asset.

    Whereas, if you bid on your own domain, the winning bid (minus auction fee's) goes to the domain owner.
     
  24. zurc.net

    zurc.net Top Member VIP ★★★★★★★★★★

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    Well, sales confirmation I believe would be essential, considering you can transfer your domains to anyone you like and have them auction them for you.
     
  25. Haris

    Haris Best Domainer Of The End-Times VIP

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