Domain investor, Abdu Tarabichi, made an interesting post at his blog, regarding bidders that inflate prices at domain auctions.
According to information relayed to Abdu, certain participants of those auctions engage in the ‘noble sport’ of bidding up auctions they cannot otherwise afford, just to spite those that can.
In my opinion, this argument does not hold much water, and I will explain why.
First of all, a responsible bidder – that is, one that intends to pay for the domain – risks their money: if they bid higher than the top bidder, they would have to come up with the cash.
At NameJet, where identities are easily disclosed by following several auctions and a few days later seeing who owns the domain, competition is tough.
Just yesterday, I lost a virtual ‘boxing match’ with some of the ‘usual suspects’ – catchname, domainbank, homer, and others. I bid as high as my budget allowed, occupying the top spot of these auctions temporarily. These folks eventually exchanged punches among themselves, as there can only be one winner.
The notion that someone plays a game of cat and mouse with the other auction participants in order to cost them more money, is absurd; despite the bidding patterns of some domain investors, there is no warranty that a particular bidder will enter a high reserve, for example. Every bid placed comes with the obligation to pay for the domain should it be won, or risk being banned.
Bidding at auctions means just that: it’s a live competition about who will get the domain at a price they can afford. So far, I have not witnessed any complaints from those that consistently win domains at auctions such as NameJet.
I think this happens, look at Storage Wars on tv. Sometimes you know if someone really wants a domain they will keep outbidding you, and you ring up the price on them either to force them to have less cash for another auction or out of spite. I’m pretty sure I got a domain or two rung up on me.