Telling a domain owner you have a buyer for their domain when you don’t is unethical.
I want to highlight a domain broker practice that gives the industry a bad name.
I’ll call it the “phantom buyer”. Here’s how it works.
A domain broker contacts a domain owner and says they have a buyer interested in their specific domain name.
The broker doesn’t really have a buyer for the specific domain, but wants to get the domain owner to agree to have the broker find a buyer for it based on this lie.
Essentially, the broker uses the lie that someone is interested in the domain in order to get a “listing” from the owner. He then works his contacts to try to sell the domain shortly after getting the commitment.
If you’re a broker and want to try to sell someone’s domain, be honest with them. Tell them you have a number of buyers that have purchased domains like theirs in the past (if that’s true) and you want to present the domain to them. Even give examples of deals you’ve been able to close. Don’t lie by saying you have a buyer that wants their particular domain. That’s unethical.
Or pay the seller a fee to get buying exclusivity for a short amount of time:
This is called optioning.
Such deals can be secured at eCOP.com
Any negotiation that starts with a lie will not end well.
Unethical or not isn’t even the question here. Everybody lies, what’s new? Sellers should read contracts before agreeing to anything, not listen to what someone says.
Common real estate agent ploy.
This is called fronting, hot-air selling and it is indeed unethical. Here’s another twist to this despicable practice: http://acro.net/blog/domains/dont-go-domain-bargaining-without-the-money/
I represent the Brokerage and Acquisitions division of Moniker.com – a top 10 ICANN accredited registrar here in the U.S.
We wanted to see if you would consider selling this domain name _____ as we may have a buyer.
Please let us know if you would be interested in selling this domain and the approximate price range where you would seriously consider selling and respond to offers.
We try to get you the most possible and may consider privately brokering or auctioning the domain to get you the absolute best price.
I look forward to hearing from you.
Thank you.
If someone wants to sell their domain name for a profit and someone else is willing to do all the legwork for them who cares how they get to the end result as long as they get it sold. Its about money and nothing else.
@ Todd – yeah, but if the broker doesn’t get a deal done because he didn’t really have a deal to begin with, and you as the domain owner wasted your time on it under the false pretense…
@Andrew – I understand what your saying but how much time is wasted by someone saying “yes you can sell my domain” and signing a quick contract. I think if a broker is going to take the time to approach you about selling your domain than chances are the domain is pretty good and will sell regardless at some point.
I dislike working with most domain brokers because of how unethical they have proven themselves to be.
Do your research before doing business with any domain broker. Get closed sales references and references of others in the industry.
Watch out for them taking a commission from both the buyer and seller.
Watch out for them lying about the actual sale price.
Watch out for different contracts used between different parties and make sure they don’t change any language.
Use an escrow service they have no vested interest in.
It goes on.
@ MAY have . . .
Yeah, I got the exact same wording in an email and upon much closer scrutiny I now see the important words “…as we may have a buyer.”
Wasn’t referring to that specific case/email.
Timing was dead on as that email came yesterday. Someone is trawling
Ppft. . You want me to pay you to sell your car too? How about your house. Will pay you 20k if I can just please just make a business deal for you.? Crazy. Domainers should just be grateful anyone is doing any leg work and giving time/money to you for no assurances. You don’t like the deal,then say no but don’t bitch that you’ve wasted your valuable time answering the phone. Your margins are falling daily, the domain was never going to sell in the first place, and you really think this industry should be opening up ethics debates?
Typical Broker mentality.
They want a reward without taking the risk.
Amen
It is common advice to be wary of placing trust in someone who makes it a point to tell you how honest they are. The same is true when someone tries make a big point of appearing religious in an effort to establish their honesty…
On a different note .. domain owners should watch out for and report when a broker obtains an exclusive to sell a domain for a certain number of days and then use various tactics or threats to obtain a commission on a sale that occurs outside of those number of days in connection to a sale they had nothing to do with and contrary to the deal that the broker made with the domain owner.
I’ve had this same experience with a broker who had a buyer for one of my names. The broker sent me a “standard” six month exclusive contract to sign. I offered a 14-day exclusive plus an exclusive in perpetuity for that specific buyer – which the broker didn’t want to accept. Funny thing happened after that; the unnamed buyer never made an offer. Almost as if that buyer never existed…
Meh. Simply thank the “broker” for their/their clients interest, and tell them they’ll need to get their commission from “their” buyer; as they’re a buyer’s broker.
A serious, qualified buyer has no problem with doing so (they’ll just factor the commission in to the price they’re willing to pay for the domain/s).
There’s no need for you (the seller) to sign a contract; the “broker”/buyer came to you.
Problem solved.
Given that DomainTools now has a link to a broker who offers to help acquire the name you are searching – domain owners should expect more approaches where the broker purportedly has a prospective buyer.
The simplest, most effective, and most ‘commercial practice’ like approach is simply to tell the approaching broker to get their fee from the buyer. That way the inherent conflict of interest of broker representing the buyer, but getting paid by the seller is removed.
“Buyer Broker” concept in its purest form follows from common law ‘law of agency’ concept. In a case of approaching buyers agent, the Agent is acting for his ‘principal’ in this case the buyer; not the seller – hence, his/her fiduciary duty is to his/her client – in this case the buyer.
Most brokers have no clue about the concept of fiduciary duty; hence breach it constantly. Speaking from 25+ years experience/perspective in the comm real estate brokerage industry.
New to the Industry, Thanks for the Info!