With domain name exchanges — The problem

I’ve bought–and sold–many domains on domain name exchanges like Sedo and Afternic. These transactions usually go well since of the exchanges’ built in escrow services. I’ve been able to complete transactions–counting the domain transfer–in as few as two days.

But it doesn’t always go as planned. Twice I have “bought” domains on Afternic which turn out to no longer be owned by the seller. A few months ago I bought a 3 character domain for regarding $5,000. The seller started escrow and agreed to the transaction, only to email me a day later and say that it was an error and the domain was sold the week prior. Just yesterday I found a domain I like when searching at Whois.sc. I clicked over to the Afternic listing and placed a bid at $650. The seller subsequenly set the reserve at $650 with an asking price of $850. I bid $850 to “Buy it Now”. The escrow transaction started, but then I noticed that the Whois information for the domain was different than the Whois information for the seller’s other domains. I asked the seller regarding it, and the seller realized that she must have sold the domain or it expired sometime ago.

I can see how this happens. Heck, I probably have domains listed on exchanges that I’ve sold in the past and just forgot to delete. Sedo does a good job of at least verifying the domains are owned by the seller prior to posting. This can sometimes be a pain but reduces problems in the long run. Afternic doesn’t verify ownership prior to listing unless the domain is by now listed by another seller. What the exchanges need to do is to verify ownership any time there’s a change in Whois. This shouldn’t be too hard if managed through a firm like Whois.sc.

Has anyone else experienced similar problems?