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

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Arpit131

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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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Yikes, that's a short sighted way of looking at the relationship you have with your clients. But tell me, how did this deal evolve after the buyer agreed to purchase the name?

Seller: Okay great, please pay me so I can go buy the name really fast.
Buyer: What do you mean? You want a full payment before I get the domain?
Seller: Yes, sorry that's how the deal goes.
Buyer: No, we can use Escrow if you want.

From my experience, selling domains at this level requires trust. Even if Escrow is involved the buyer needs to be reassured their time isn't being wasted. This isn't hustling, hating would imply caring, and clearly you have a different set of ethical standards than most of the veterans working in the space.
Ethics lol! If you don't lie or cheat or misrepresent anything, there is no ethical issue!

You can make a deal happen the same way you could set up two people on a date. If someone is going to overpay and not do due diligence, then that is on them. Our dialogue and your example in your last post shows your instincts to 'assume'. All I'm saying.. there are ways to do this in an ethical way.
 
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Ethics lol! If you don't lie or cheat or misrepresent anything, there is no ethical issue!

You can make a deal happen the same way you could set up two people on a date. If someone is going to overpay and not due diligence, then that is on them. Our dialogue and your example in your last post shows your instincts to 'assume'. All I'm saying are there are ways to do this in an ethical way.

There is no way to present this deal ethically. You are simply okay with withholding relevant information in order to extract profit, most long-term businesses don't want to do this because it creates an environment of high risk behavior. You might not get caught doing it once, twice, but the third time might result in a massive storm. There are no assumptions here, I'm speaking from personal experience, and it's the reason why I almost never provide BIN prices to inquiries coming from random Gmail/yahoo accounts. Almost always you will find scummy domainers trying to front-run inventory they don't own.

A better long-term strategy is to take on the risk of owning a domain, then find interested parties. Taking shortcuts to owning good domains has burned people, but I guess that's the way the market goes. In all sincerity, I'm not interested in teaching why it's unethical to front-run domains, if the concept isn't ingrained in you already, it will be once you take a massive loss.
 
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I agree with most of this
There is no way to present this deal ethically. You are simply okay with withholding relevant information in order to extract profit, most long-term businesses don't want to do this because it creates an environment of high risk behavior. You might not get caught doing it once, twice, but the third time might result in a massive storm. There are no assumptions here, I'm speaking from personal experience, and it's the reason why I almost never provide BIN prices to inquiries coming from random Gmail/yahoo accounts. Almost always you will find scummy domainers trying to front-run inventory they don't own.

A better long-term strategy is to take on the risk of owning a domain, then find interested parties. Taking shortcuts to owning good domains has burned people, but I guess that's the way the market goes. In all sincerity, I'm not interested in teaching why it's unethical to front-run domains, if the concept isn't ingrained in you already, it will be once you take a massive loss.
 
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Not having complete knowledge of the status of a domain or it's sellers/selling agent, falls withn the umbrella of due diligence for the buyer. For the most part, the information is out there.

If a buyer doesn't do their DD then the onus is on them. Even if the middleman explicitly misrepresents him/herself, it's ultimately the buyer's choice whether to accept a complete strangers word as fact and not persue any additional research.

My 2 cents
 
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Even if the middleman explicitly misrepresents him/herself

I think that's a problem if they are explicitly misrepresenting themselves. If there are any problems down the road the cost could be much greater than the profit on the name.

Or let me flip the script, are all Namepros members allowed to do that in the marketplace here, I don't think that would that be cool, you take your chances on the people that do their homework vs don't do homework.

And today with the disappearance of whois a lot harder for most, especially outside of domaining to do the homework and it be completely accurate.
 
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I think that's a problem if they are explicitly misrepresenting themselves. If there are any problems down the road the cost could be much greater than the profit on the name...

I'd agree that explicitly misrepresenting one's self is totally unethical. But that still doesn't change the fact that it falls on the party on the other side to do their due diligence. What ever the amount of DD they do or don't do is the amount of risk they are willing to accept, the end. The more DD you do, the less chance there is of issues down the road.

As to the third party not directly involved in the negotiation/transaction, if they make a sale at a price they were willing to accept, then I believe they have nothing to complain about as they were the one that set it. If they felt they should have received more, then they shouldn't have sold. I'm going to go out on a limb and say I suspect no one put a gun to the seller's head (except for possibly one exceptional situation...)

...Or let me flip the script, are all Namepros members allowed to do that in the marketplace here, I don't think that would that be cool, you take your chances on the people that do their homework vs don't do homework.

And today with the disappearance of whois a lot harder for most, especially outside of domaining to do the homework and it be completely accurate.

Namepro'r or not, my level of trust, due diligence and acceptable risk runs along a sliding scale. The more money at risk, the less I trust things at face value and the more due diligence and protective actions (i.e. escrow) I'm likely to undertake.

As you said, sussing things out can be a bit more difficult now with the change in the availability of whois data. I'll likely have to adapt my levels of risk acceptance and DD efforts going forward as a result.

From a couple of the GREATS...
Agent Mulder, "Trust no one."
Ronald Reagan, "Trust, but verify."
 
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