NameSilo

Fastest Flip in the West!

Labeled as question in Domain Buying and Selling Discussion started by Levi_charlz, Aug 30, 2019.

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  1. Internet.Domains

    Internet.Domains Top Member VIP

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    The views expressed on this page by users and staff are their own, not those of NamePros.
  2. EJS

    EJS DomainInvesting.com DomainInvesting.com PRO ICA Member VIP ★★★★★★★★★★

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    Yes, absolutely - with permission.

    In my opinion, it is unethical to try and sell a domain name owned by another person without permission. That was the crux of this discussion and I am not sure why this got muddied.
     
  3. Rob Monster

    Rob Monster CEO, Epik Epik.com Staff PRO Gold Account VIP

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    There is a process and a protocol.

    The person arbitraging the domain has to be in discussion with the registrant, and needs to have secured a purchase option in some written form which allows them to test the water on possible buyers.

    The person arbitraging cannot identify themselves as the "registrant" or the "owner" of the domain until they are actually the domain owner. The terminology matters and it is important to be on the right side of the law at all times.

    On the other hand, someone who has a written option, e.g. an email confirmation from the legal registrant, that authorizes them exclusively acquire a domain at X price within Y days, is in a legitimate position to arbitrage a spread.

    I personally don't do these deals as I don't have time for it. However, we have enabled such deals and don't have a problem with them as long as (1) the buyer gets his domain free and clear, and (2) the seller gets their proceeds with no delay.

    Arbitrage based on an honest protocol is a perfectly acceptable way for folks to bootstrap a domaining income. It involves a lot of leg work, but for folks that cannot afford to buy and hold a 5 or 6 figure domain, it opens up possibilities.

    As for the closing mechanics, it is 2 transactions: (1) a buy transaction, and (2) a sell transaction. The transactions closes almost concurrently. The deal guy pays the payment processing fees out of their spread.

    Quite frankly, this is no different than a general contractor who builds a house or does a renovation project. He puts the bid together, and charges the customer a fee agreed in writing. He then subcontracts to his suppliers and then banks the spread.

    Well-executed, legal arbitrage can serve to greatly increase the velocity of domain liquidity because it means a much large number of people can connect dots, across languages, time zones and currencies to complete safe transactions.
     
    Last edited: Aug 30, 2019
  4. Lox

    Lox ----- Gold Account VIP

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    How many registrars sell domain names listed via Afternic / Sedo (Fast Transfer) ... for 5-30% above the original asking price @ AN/Sedo. (e.g. Name.com extra 15%). Is your coffee gone?
     
  5. equity78

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

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    Rob what happens if the person who got the option can't find a buyer?
     
  6. equity78

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

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    It got muddied because I don't believe Rob thought he was describing what you were describing.
     
  7. EJS

    EJS DomainInvesting.com DomainInvesting.com PRO ICA Member VIP ★★★★★★★★★★

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    Even with your example, the buyer is doing something that has not specifically been authorized by the registrant. The "buyer" is putting the domain name at risk without the permission of the domain registrant.

    I also don't think your example is equivalent.

    If I hire you to be my general contractor to renovate my kitchen, you are taking responsibility for your subcontractors. My contract is directly with you, and you are directly responsible for your subs. If the electrician does not do the job correctly, it is on the GC to make sure the electrician fixes the issue or hires someone else to do it per the contract. This cost would be incurred by the GC and not the homeowner. I believe there are consumer protection laws that favor the homeowner in this type of situation, but that may vary depending on the state.

    With domain names, the legal risk of this goes entirely on the domain registrant if a third party files a UDRP or ACPA lawsuit because someone tried to sell a domain name that they believe infringes on a trademark. I think this is especially risky for 2, 3, and 4 letter and dictionary .com registrants.
     
  8. EJS

    EJS DomainInvesting.com DomainInvesting.com PRO ICA Member VIP ★★★★★★★★★★

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    Before I posted my opinion on the issue, I gave Rob a specific example to make sure he was describing what I thought he was describing, and he said "Yes, and that method is more commonly done than you might realize."
     
  9. equity78

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

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    Yes I agree but I think he misinterpreted that's just my opinion, @Rob Monster can clarify that.
     
  10. Rob Monster

    Rob Monster CEO, Epik Epik.com Staff PRO Gold Account VIP

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    In that case, no transaction happens. No fees. Everyone is back to where they were before, and other than a brief opportunity cost (e.g. 7 days), nobody was harmed.

    The point is that if such transactions need to happen, Epik is in a position to protect buyer, seller and market-maker.

    The largest risk is actually to Epik because (1) we have to validate the domain has clean title, and (2) we have to validate that the buyer is using valid funds to purchase.

    However, since Epik is the counter-party for all sides of the transaction, we are in a reasonable position to protect all parties. That can be useful.
     
  11. Kassey Lee

    Kassey Lee 域名世界 VIP

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    You discard the option and lose the option money. That's what I understand about options.
     
  12. Rob Monster

    Rob Monster CEO, Epik Epik.com Staff PRO Gold Account VIP

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    Here we go again -- someone wants to make a storm in a teacup....

    The transaction structure I am describing with a near-simultaneous close between multiple 2-party transactions is (1) legal, and (2) harms nobody.

    The arbitrager added value and everyone sovereignly decided to participate because it benefited them.

    If a forager goes out into the woods and picks free wild mushrooms and you pay $50/pound at your deli, did someone harm you? No.
     
  13. EJS

    EJS DomainInvesting.com DomainInvesting.com PRO ICA Member VIP ★★★★★★★★★★

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    The bigger area of concern for me is illustrated here:

    You agree to sell me ABC.com (hypothetical domain name you own) for $1m with a 14 day close. Maybe you sold me the option or maybe I just have an email from you stating that you will sell me the name.

    I reach out to a bunch of companies called ABC to try to sell it for $1.5m.

    A major company called ABC replies to me "ABC is our trademark, and we will filed a UDRP if you do not give it to us for free."

    I disappear and nobody hears from me again.

    ABC files a UDRP against ABC.com and you need to hire a lawyer because someone tried to sell it to a trademark interest without permission.

    Keep in mind you never reached out to third party trademark interests because you know of the risk, but someone else did it without your permission.
     
  14. EJS

    EJS DomainInvesting.com DomainInvesting.com PRO ICA Member VIP ★★★★★★★★★★

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    Again, this is not an equivalent example. The mushrooms are wild and not owned by a third party. The only risk would be if he accidentally picked them on a SuperFund site and the mushrooms were toxic, but I digress.

    I see you as a leader in the domain space. People look up to you. If they see you recommending this, they may not think about the repercussions. They don't necessarily look at it from the perspective of the registrant whose domain name will be put at risk.

    I do not think people should try and sell things that are owned by others without their explicit permission.
     
    Last edited: Aug 30, 2019
  15. Internet.Domains

    Internet.Domains Top Member VIP

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    So under your hypothetical scenario you are describing a domain that is a TM. I understand this to be an issue greater than the discussion here.
     
  16. TCK

    TCK NameOptions.com VIP ★★★★★★★★★★

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    This sounds to me like that the person arbitraging the domain is actually acting like a broker with no experience.

    This is the danger of hiring an inexperienced broker.
     
  17. Rob Monster

    Rob Monster CEO, Epik Epik.com Staff PRO Gold Account VIP

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    Dear Elliott

    You are an intelligent person. How likely are you to extend to a purchase option to some random idiot who is going to play fast and loose with your 7 figure domain?

    In the unlikely event that you would have extended an option to some wildcatter, who then caused a UDRP to be triggered, I assume you would disavow whatever they sent.

    If some bootstrapper has the time to connect buyer and seller, and do it in a lawful way, I would consider that useful.

    Consider this:

    What broker will sell a $1000 domain for a 15% commission? Almost none.

    What arbitrager will try to sell a $1000 domain for $5000? Many.

    This is useful.

    You can pontificate if you like but unless someone can show me that empowering such transactions is illegal, we'll do them.

    Thanks
    Rob
     
    Last edited: Aug 30, 2019
  18. EJS

    EJS DomainInvesting.com DomainInvesting.com PRO ICA Member VIP ★★★★★★★★★★

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    Almost every single dictionary word, 2 letter, or 3 letter combination has at least one trademark associated with it. Some have many. The more common the combo the more common the TM.

    Here's a UDRP for a two letter .com domain name where the complainant cited a third party solicitation: https://www.wipo.int/amc/en/domains/search/text.jsp?case=D2015-1470
     
  19. EJS

    EJS DomainInvesting.com DomainInvesting.com PRO ICA Member VIP ★★★★★★★★★★

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    I am more concerned about the one word or 3l .com names that were acquired in the last year or two where there could be senior rights holders that claim an outbound solicitation is bad faith. I don't want to have to pay $5-10k on a legal defense because someone tried to sell my name to a TM holder when I wouldn't even do that due to the risk.

    Again, my opinion is that it is unethical to try and sell someone else's domain name or property without their permission. If someone hires a third party as a broker, that is a different story. It is when the outbound solicitation is done without permission.

    I am not implying that what you are doing is illegal at all. You are the intermediary. You wouldn't be expected to know what terms a buyer has with the first seller or the seller has with the buyer. People look up to you as a leader in the business, and I wouldn't want them to think it is okay to try and sell someone else's domain name without permission.

    I am headed out with my family for movie night so unlikely that I will be able to respond to anything more until tomorrow. Enjoy your weekend.
     
    Last edited: Aug 30, 2019
  20. Internet.Domains

    Internet.Domains Top Member VIP

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    Right. Regardless of a broker there remains a risk of UDRP to many domains. I don't see how discussions outside of the domain owners control will influence a UDRP more than the owners own actions.

    I suppose with so many variables it is hard to blanket all situations with hypotheticals.
     
  21. bmugford

    bmugford www.DataCube.com PRO ICA Member VIP ★★★★★★★★★★

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    I agree with Elliot here. (I posted this in the other thread and will paste it here, as it is relevant)

    If I own a domain I don't want some random third party to represent me or my domain without my permission.

    Domains are not are a reproducible product that can be drop shipped. A domain is a one of a kind asset like many types of art, collectibles, etc.

    I have dealt with this in the past. It can go anywhere from unethical to outright fraud when a third party represents themselves as owning or having permission to offer your domain for sale.

    The domain owner is then on the hook for the actions of these unauthorized third parties.

    Any negative repercussion such as legal issues will fall on the domain owner.
    It can also damage the domain when it comes to potential end users.

    Brad
     
  22. equity78

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

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    Have fun at the movies and I would like to add, I don't own ABC.com but I do own ABC.media and will accept your $1million offer.
     
    Last edited: Aug 30, 2019
  23. Rob Monster

    Rob Monster CEO, Epik Epik.com Staff PRO Gold Account VIP

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    I think people should use discernment as to who they should make an offer to. Many sellers of premium domains don't even give prices. They force the buyer to make an offer. That is one way to prevent being arbitraged. I think it may cause that owner to wait a lot longer to get a sale, but it is certainly a safer method.

    We own about 9000 O&O domains. We also manage inquiries for many customers who are not interested in replying to inbounds since most are tire-kickers anyway.

    When someone asks me about a domain, I might typically say something like this in response:

    ###

    You are probably looking at somewhere north of $100,000 for this domain.

    Alternatively, it is sometimes possible to do a domain lease with a purchase option.

    Depending on your budget, happy to advise.


    ###

    Now that response forces the buyer to commit to a price, and then if they want to buy it, they have to fund that purchase.

    On the other hand, if that buyer has a string of inquiries that go nowhere, you are going to quickly figure out that the guy is all hat and no cattle and stop giving them quotes.

    Enjoy your movie.
     
  24. equity78

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

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    Rob I think you are running a legit shop, I think Elliot was really worried about what I wrote about years ago, it started here https://tldinvestors.com/2015/04/selling-a-domain-name-you-dont-own-cool-or-not-cool.html

    discussed here https://www.namepros.com/threads/tu...d-a-5-000-profit-ethical-or-unethical.854301/
     
    Last edited: Aug 30, 2019
  25. TCK

    TCK NameOptions.com VIP ★★★★★★★★★★

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    I agree with Elliot as well here because I would not want some "arbitrageur" selling my hard earned domains and putting them at risk.

    But I see that your point, Rob, is targeting registrants with medium to low grade domains.

    From the perspective of the "arbitrageur", the question should be, how many potential buyers are there for a $1000 domain that would pay $5000? And how do you secure a purchase option with legal authority and then would you go to the trouble to exercising it should the registrant back out of it. It just does not seem worth the effort.

    The buyer can simply type the domain in the browser, land on the sales page, and get the same price as the "arbitrageur". What will keep the seller from selling direct and maybe get a little more?
     

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