I know that Go Daddy, NameJet, and Snapnames are well aware of domain investors who reach out to the owners of expired domain names in an effort to purchase them before they go to auction. This probably annoys the auction houses and it has spurred a debate about this practice on forums and in private discussions.
The rationale for domain investors doing this is simple. The domain owner may not have realized the domain name was worth anything, so a lowish offer could get the owner to renew the domain name and then re-sell it to the person who inquired about it. The buyer would then get to purchase a domain name in private before others had the opportunity to bid on it. If others pre-bid on the domain name, the buyer would know that there is interest from other parties.
There are a few downsides to this practice. For instance, it may cause the domain owner to renew the domain name after realizing there is value in his name. Additionally, the owner may not have even realized the domain name expired due to a variety of issues, but the email or phone call from the domain investor served as a reminder to renew the domain name, preventing it from going to auction. Oftentimes, more than one domain investor inquires about an expired name, and this makes the owner even more aware of the value in his domain name.
Obviously, if a buyer is able to get a domain owner to renew the domain name, it won’t go to auction, potentially taking money away from the auction house and domain registrar. Some domain investors get upset that this practice prevents them from having a chance to win a doman name at auction, or if the auction already completed, a renewal will prevent them from being able to transact.
As far as I can tell (with no legal background on my part), there’s nothing illegal about this practice, but it annoys the auction houses, registrars, and other domain investors.
What are your thoughts on doing this?