In any given week, I read through hundreds of listings on Flippa — primarily because I’m looking for a good buy. But going through all these listings has two significant additional benefits: I’m able to learn a lot about how other successful online ventures operate, and I’m also able to learn a lot about selling.
It’s fascinating to see the different approaches used to pitch domains and websites for sale (and to see which ones get copied). Lately, I’ve noticed an influx of a specific style — more particularly a specific phrase — occurring in a lot of .net and .org domain listings. The phrase is:
Godaddy says SomeRandomThing.com is worth $48,000 and now you can get SomeRandomThing.net for just $1,999!
This is a scam, and it’s BAD for business
The sales “technique” being employed comes from Ryan Deiss’ product Domain Scalping (I refuse to link to it, as I think it’s encouraging the wrong types of business behavior). The scam, as far as I can tell, is pretty simple:
- Go to GoDaddy and find a .com domain that someone has listed in GoDaddy’s “premium” listings (ideally at an outrageously high price).
- Buy the .net or .org version of the same domain.
- Place it for sale in a marketplace with a lot of uneducated or undereducated buyers (like Flippa).
- Set the BIN price somewhere below 5% of the .com domain you originally spotted.
- Hope for a sale.
In fairness, when done properly, this wouldn’t be a terrible tactic. If you could find TRUE premium .com domains and register their available .net counterparts, you could certainly make a multiple of your registration fee back. Most of the names reference by these sellers, however, are far from premium.
The real problem, however, is with the representation of GoDaddy-appraised pricing. None of these names are actually owned by GoDaddy and GoDaddy has no say in how these names are priced. I know, because I’ve sold domains through GoDaddy’s premium marketplace. It allows the domain owner full discretion over pricing. In short, GoDaddy doesn’t “say” the name is worth anything — they simply allow the owner to say that he’s willing to sell the name at a specific price.
The worst offenders include statements like, “GoDaddy will be pretty annoyed with me for this,” or “Looks like GoDaddy left its back door open.” They are very actively promoting the incorrect assumption that GoDaddy is responsible for the .com domain listings and prices. It’s fraudulent.
An honest listing would require them to look up the owner’s information (and get permission to use his name) and then state:
John Doe says ReallyCrappyDomain.com is worth $37,500…
Naturally, that’s not going to occur because there’s no appearance of authority when you just leverage the domain owner’s name — as opposed to the colossal marketplace. Still, there needs to be some accountability for truth in advertising.
Why I’m So Upset About this ‘Domain Scalping’ Scam
Experienced domainers and developers aren’t going to fall for this trick. They’ll look at the listing and instantly see the flaw. It’s clear, however, that there are a lot of people who will fall prey to this type of scam — they’ll end up “investing” in an asset that has almost no chance at providing a real return… and that’s just not right.
It’s not right for the person getting stuck with the domain, but it’s also not right for the person doing the selling. Frankly, the margins on these names aren’t high enough to justify selling your reputation. And it’s a shame that a paid information product would try to convince people otherwise.