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Turning a No into a Yes and a $5,000 Profit. Ethical or Unethical?

Labeled as discuss in General Domain Discussion started by Arpit131, Apr 6, 2015.

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  1. Arpit131

    Arpit131 Top Member VIP

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    I stumbled upon this article published on Anticareer.com, where a person was able to sell a domain name which he did not own, for a $5,000 profit.
    The gist of the article is that the owner of a domain name tried to sell it to a company he thought was a prospective buyer. However, his proposal was rejected.
    As a response to this, he made a list of some 5 domain names(listed on marketplaces for sale) that he did not own, but the company might be interested in, and pitched it to them. The company finalized one of the domain names, offered $6,500 for the same. He bought the domain for $1,500 and flipped it further for $6,500, thus making a $5,000 profit.
    The author justifies his act as a good cash flow management.

    According to me, this practice is highly unethical. How can you offer to sell a domain name you do not own!

    What do you guys have to say about this?
     
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  2. yogiDomain

    yogiDomain Demoner VIP

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    Its just business for many people.

    Sometimes this strategy backfires. What if the domain which he pitched is not for sale!! busted!!
     
  3. JayJay

    JayJay Hello. VIP ★★★★★★★★★★

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    I imagine this probably happens every day of the week as unethical as it may be considered to most. I would never try this strategy either due to the above scenario...
     
  4. Ms Domainer

    Ms Domainer Top Member VIP

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    Unless the person pitching the name has the permission of the owner, then I would say "unethical" -- but karma usually has a way of biting back, maybe not this time, but another time.

    Spammers are always trying to pitch names to me that they don't own, for example, expired names for sale on Go Daddy.

    I have picked up some decent domains by simply bidding on the name at GD.

    :)
     
  5. johname

    johname Planet Futbol VIP ★★★★★★★★★★

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    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.
     
  6. abdussamad

    abdussamad Established Member ★★★★★★★★★★

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    It happens all the time in financial markets. It's called short selling. Borrowing stock/commodities/currencies and selling them now because you think you can buy it cheaper in the future when you need to pay back the loan and profit from the price difference.

    I don't see how it is unethical. If this is unethical then being a middleman is unethical. Reminds me of that quote in firefly where Nathon Fillion's character says that 50% of the human race are middlemen and they don't take too kindly to being sidelined!
     
  7. DU

    DU Secret Santa VIP ★★★★★★★★★★

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    It is unethical for two simple reasons (depending on timing and exact details).
    He's potentially misrepresenting his position to both the BUYER and the SELLER at the same time. You shouldn't give the impression of committing to sell something that is not yours rightfully to sell - the buying side is irrelevant if you follow that rule.

    It's nothing like a financial market short.
     
    Last edited: Apr 7, 2015
  8. carob

    carob Top Member VIP ★★★★★★★★★★

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    The author said this:

    So if that is so then the middleman author spent $1500 on a domain with no commitment from the buyer yet. And the buyer bought without doing any research.
     
  9. DomainGist

    DomainGist Top Member VIP ★★★★★★★★★★

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    Interesting, so like digital dropshipping.

    Happens all the time with physical goods though, there are even people who sell something for say $90 on ebay, and purchase it on Amazon for $50, entering their customers address as the shipping address and their own address as the billing address.

    Same thing really!

    Presumably with domains the ethical version of this is asking a portfolio holder permission to pitch their domains and using them as a wholesaler. Nothing much wrong with that arrangement, I wouldn't feel too comfortable with knowing that the people you are pitching to could find the buy it now price and see it being thousands lower though, is the type of thing which gives domainers a bad name.
     
  10. jamesosix

    jamesosix Top Member VIP

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    I dont see any issue here.

    The domain that was sold, was available - the guy selling it to the business had to do the leg work. Everybody won. The company got a domain they wanted, the seller got a sale he was obviously satisfied with and the "broker" got a tasty commission (per se).
     
  11. DomainGist

    DomainGist Top Member VIP ★★★★★★★★★★

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    Presumably the issue is if the buyer decides to check the whois of one of the domains they could be under the impression that they are dealing with the entity displayed in the whois details.

    Can think of some obvious potential tort law breaches. Imagine one of these scenarios:

    1). The domainer offers your domain to a relevant trademark owner. Immediately leaves the owner wide open to a trademark claim for trying to profit / cybersquatting, which they wouldn't have been left open to up until that point.

    2). The domainer contacts an individual that you have already offered the domain to / are in negotiations with. Interfering in business like this would be justification for a tort lawsuit.

    Probably numerous other possibility problems, the whole thing stinks actually, so I see plenty of issues..... Simply not their domain to offer until they have purchased it, not before.
     
  12. johnn

    johnn Top Member VIP ★★★★★★★★★★

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  13. Nazz

    Nazz Top Member PRO VIP

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    People shouldn't be surprised by the individuals business ethics. Typically, it happens in most industries and is happening in the world of domains without being publicized nor recognized.

    Quite a strategy I must say, but could have severe repercussions.

    Is it worth it..?

    Well that's for you to decide.
     
  14. DU

    DU Secret Santa VIP ★★★★★★★★★★

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    Cool.

    I'm selling BestUAVs.com

    Please PM your offers.
     
  15. jamesosix

    jamesosix Top Member VIP

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    let me know when you get an offer. I see no problem here. :)

    In all seriousness I do accept both of Pugdomains points and what he says. I can see how this could be detrimental to somebody without them asking for said situation. However, I can also see how it could be benefit sellers, which can also be a very good thing.For example, the guy who asked for £1,500 and got it.

    So, yeah, if you get an offer default, happy to discuss. If you say its a solid 'go' to a end user for a profit and I end up not selling it to you, its you that has to explain yourself to your client. :)
     
  16. cocaseco

    cocaseco Top Member VIP

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    I dont see it as unethical, but it is risky. Its not really any different than NameJet charging me to backorder a name that isn't likely to ever drop.
     
  17. johname

    johname Planet Futbol VIP ★★★★★★★★★★

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    Namejet has a set fee system, What the other guy did was not fee based, but grab as much as he could.

    This could be done ethically but we cant figure that out based on the info we have.
     
  18. DN_Hunter

    DN_Hunter Top Member VIP ★★★★★★★★★★

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    I get the feeling this happens with the "Names Wanted" section here at NamePros.

    The "Thread Starter" says "looking for such_and_such domain names..., blah, blah, blah..."

    I send a PM of a few names that meet their criteria.

    Wouldn't you know it. I check my GoDaddy "whois" lookups on a daily basis. And almost always each of the names I offered get 3-5 lookups over the next few days (where before they would get zero lookups). Maybe just a coincidence (couldn't be the Thread Starter is shopping around my names, could it?)
     
  19. cocaseco

    cocaseco Top Member VIP

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    The fee, or lack of, is irrelevant to my point. No matter how much information you are given you won't ever be able to decide if its ethical or not, its a subjective bar. What is ethical for me, may not be for you. I have plenty of information to know that I dont see it as unethical. I wouldn't do it though, but that's because of the risk. The guy is just hustling and he's confident in his abilities, all pluses in my book.
     
  20. johname

    johname Planet Futbol VIP ★★★★★★★★★★

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    We have zero knowledge of what either party said in the emails.

    It could very well been an ethical situation in all peoples view if the email exchanges were worded a certain way and the type of sale the domain was purchase from the first owner. But none of us can really make that judgement.

    The fee is relevant to your trying to compare it to namejet.

    I get the "one of us got some great fast cash, great" point of view.

    Yes he does look like a guy hustling

    Absent new info I wont debate this anymore
     
  21. Tia Wood

    Tia Wood Business Website Consultant VIP ★★★★★★★★★★

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    I don't agree with it.

    I don't know if it's technically legal or not but I can only think of the bad scenarios:

    What if the business backed out of buying the domain?
    What if the flipper was outbid by someone else? Or someone else purchased before he could?
    What if the business did a 5 minute search and found the domain for cheaper?

    So many scenarios that could go wrong.

    If you're that good at selling domains it's better to contact the owner and offer a brokerage agreement. Would have to do more selling that way but at least you get to keep your money and not worry.
     
  22. StoneRoses

    StoneRoses Top Member VIP ★★★★★★★★★★

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    No different to what GD do with expired auction names they do not own ,They even take your money and put it in their bank account before the name is even theirs to sell to you.

    I'm sure anyone saying it's unethical, doesn't ever buy domains from GD expired auctions for the same "ethical" reasons.
     
  23. DU

    DU Secret Santa VIP ★★★★★★★★★★

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    Except you've signed an agreement that allows them to do that. In other words, they have permission.
    Front running on the other hand is brokering without permission.

    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.
     
  24. Vinod R

    Vinod R Upgraded Member Gold Account

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    Ethical and Unethical depends on your own perspective.
     
  25. kawalsukhi

    kawalsukhi Top Member VIP

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    We can take this case as an Exception and it is hard to say about Ethical and Unethical things as it may varies with people!
     

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