Domain Auctions Should Hold Domain Names in Escrow

Earlier this year, I won an auction at Sedo’s Great Domains. Immediately after I received the email confirming my auction win, I sent payment to Sedo. Unfortunately, the domain name was never transferred, the transaction was cancelled, and my payment was refunded.

I’ve heard many stories about deals not being completed after auctions conclude, and it happens at all auction houses. Although buyers may have legal recourse, that option is generally expensive, time consuming, and it’s not usually worth the effort to complete the deal.

I believe there is something that domain auctioneers can do that would mitigate this issue.

If the auction house takes possession of the domain name prior to the auction, the domain owner would not have the ability to back out of the deal. Since the owner has already committed to completing the deal, the only issue post auction is the follow through, and if the auction house has possession of the domain name, completing the sale wouldn’t be an issue.

Of course, taking possession of the domain names requires additional resources to ensure the domain names are pushed to the auction house accounts at various domain registrars. I would bet that expense would be covered by the commission from completed deals that may have fallen through.

It’s 2012, and there’s no reason domain auctions should fall through. It’s disappointing as a buyer, and I am sure it’s also frustrating to the auction houses.

Elliot Silver
Elliot Silver
About The Author: Elliot Silver is an Internet entrepreneur and publisher of Elliot is also the founder and President of Top Notch Domains, LLC, a company that has closed eight figures in deals. Please read the Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest. Reach out to Elliot: Twitter | Facebook | LinkedIn


  1. That’s fine and dandy for the buyer. But it’s kind of a two way street and sort of cumbersome. What if the name is in escrow safely but this time, the problem is, the buyer doesn’t pay?

    Not sure how to “escrow”, or should I say, guarantee payment from the buyer at the conclusion of the auction…

    Ay yi yi, the complications of auction transaction completions!

  2. @Elliot

    That’s true. They could even make it so that once the auction commences, they have a certain amount time to push it into the escrow account or it will cancel and the seller will never truly know how much their name could have fetched. Also it may be a good way to weed out names that are no longer valid listings.

  3. For auctions that have reserves this would be a nightmare. If it doesn’t sell then I have to transfer it back and wait out the locked period. Great idea, understand your point, but won’t work. What would work is if Sedo actually manually checked to make sure domains are really owned by seller and are available to transfer. They often don’t. If they verified every domain at auction manually there certainly would be less problems.

  4. @ Shane

    There could potentially be an issue at Godaddy, but since that’s an internal issue, I would imagine the Sedo escrow holding account could be white labeled at a higher level.

    At Enom, you can’t push a name more than once in 7 days. Perhaps it’s similar at different registrars.

    Since this isn’t an ICANN issue and it is an individual registrar issue, I am sure Sedo could work with the registrars to ensure names pushed into their account can be released earlier.

  5. @ Shane

    LOL… I’ve had a few instances where GD unlocked names for me when confirming with the former owner. The problem is that it can take a bit of time, and when you have a high value sale on the line, minutes feel like days, especially when you know everything is legit and feel like you need to ask for the biggest favor in the world.

    That said, I don’t see why GD and Sedo couldn’t work something out.

  6. @Elliot

    “There could potentially be an issue at Godaddy, but since that’s an internal issue, I would imagine the Sedo escrow holding account could be white labeled at a higher level.”

    AFAIK, at GoDaddy, domains that have been pushed can’t be transferred out for 60 days, but you can still push them to another GD account, can’t you?

  7. @Elliot

    I agree with you, but I also think that if someone *really* likes a name and decides to buy it, should be able to wait 2 months before taking it to their registrar of choice. Just like men and women: if one falls in love with someone, they’ll be able to tolerate their partner’s faults and not just for 2 months 😀

  8. @john: Domain sales should be no different than real-estate sales. Buyers making offers should put a down payment on the name that is almost always non-refundable. Owners should be sign a contract that states they can not sell that domain to anyone else during the transaction period.

    Domain sales and ownership transfers can happen much faster than a home sale if all parties are available and payment can be procured.

    I think there are far too many buyers out there walking away from what are binding agreements to purchase a name. If I had even just 50% of the gross figures I have lost in the past year to dead-beat-buyers, I wouldnt have to work for the next 2 years.

  9. Just had a $2,000 transaction cancelled by Sedo this monring (on top of a $7,000 Non pay reneg last month)…as Sedo collections dept. threw in the towel on gettng payment after 4 plus weeks effforts of trying… Buyer would not give any clear rational for not paying…just that he won’t honor Agreement an make payment

    Same A-hole contacted me last week trying to buy same domain from me directly for $500..suggesting payment via PayPal…uses same type of language in Sedo bid thread comments and E-mail to me

    Buyer has an Austrailia address on his Sedo account but a phone number with an India Country Code… at least that’s what’s in the phone number in the E-mail he sent me directly off of Sedo…but when dialed it never picks up ..just rings but no voice mail…. IP address in parked page inquiry form has Australia IP address…. the jerk uses 3 diffent names in the E-mails to me from same G-mail E-mail address –> Sam, Sudip Sen (same names as in SeDo contract) and Rana Kumar

    Anybody else have dealings with this renegger ??

  10. @Mike-

    I hear ya! I think a bunch of us would be rich if we actually earned from all the deadbeat payers lol.

    But what Elliot’s talking about, is an auction situation of completing a winning transaction. Transfer of the name, etc.

    What you’re talking about is more of a private sale or brokering scenario. I do agree with you on that one.

  11. @ John

    Yes I know exactly what Elliot was referring too… but the cancelled transaction and “back out of the deal” stuff just got me lamenting & venting about broken transactions & Agreements on the same platform

  12. @JNet

    I do know what you’re feeling. What really sucks is, all the signs were there that the deal was “going through”. You can taste it. then….nothing.

    Such is the nature of this business.

  13. Its happened to me.
    Had won the auction on an expensive name,
    and the seller never delivered.
    I was pretty surprised how little the broker did to
    complete the transaction. As in nothing.

  14. I was notified by SEDO on Dec 20 thhat my domain listed at fixed price was sold.To this date, Dec 27, the buyer did not pay. The buyer was sent notices by SEDO on 20th, 23rd ,and 26th Dec. Toray I noticed that SEDO did not list this name as sold in its report this week.

  15. Great point, Elliot! I totally agree and my firm offers domain holding escrow services, especially when there is a structurd payment arrangement but this is something where the expense of doing it should be on the buyer just like the majority of escrow services.

  16. Sedo really should run a tighter ship in my opinion.

    Aren’t these legally binding agreements? Seems to me that these deadbeat buyers and scammy sellers could be taken to court with a slam dunk case, but maybe I’m missing something.

    My last deadbeat buyer has bought a number of domains at Sedo, but obviously never gets booted. The least Sedo could do is boot the deadbeat sellers/buyers. If people are going to enter into a contract then they need to complete the deal. Why does Sedo keep these losers around to muck up more deals and waste time/energy and cost people legitimate deals in the meantime?

    I say they publicly release the names of these deadbeats. The auction privilege and anonymity should be reserved for ethical buyers and sellers.

    The commission that Sedo extorts is more than enough to cover expenses related to running an ethical auction house. There’s really no excuse in my opinion.

  17. Thanks for the constructive feedback with regards to Sedo’s auction platform. We are constantly looking at ways to improve our services, including our auctions, and it is great to hear ideas from our clients. With regards to the specific points Elliot raises, it is possible that we may look into taking control of a domain prior to its being sold at auction. However, as many commenters have mentioned, there are potential registrar and legal implications for both Sedo and our customers, which can make this impractical.

    However, we do have a dedicated Security & Compliance team that monitors all open transactions, and any instance where a buyer or seller reneges on their contractual obligations results in that party being blocked from any future activity on Sedo’s marketplace. We recognize that this kind of behavior can undermines the integrity of our services, and so it is not tolerated. Unfortunately, because we are a global, open marketplace, there will occasionally be a buyer or seller who does not honor an agreement. This is certainly not a typical occurrence, and we want to assure you that when something like this does happen, we do not hesitate to take action.


  18. I guess it all depends of what your definition is of “take action.” I’ve never seen Sedo take action against deadbeats. The domain forums also tell this common story.

    The way I see it, the two issues are related and would need to be treated as one common issue.

    Sedo won’t take possession/control of domains because they would then have to take ownership of the non paying buyer issue. Much easier to simply collect the commission and tell the sellers/buyers that they are on their own as far as collecting from the deadbeat members.

    I like the idea, but unless there’s a big shift in values at Sedo, it’s never going to happen.

  19. Sellers? What about Buyers????? We’re getting shafted left and right with deadbeat auction winners. No one wants to protect sellers I see.

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