There’s been a lot of discussion and near-obsession lately about alleged “shill bidding” by a certain domain auction company executive, but most domainers didn’t know there was a larger and more relevant news report about live auctions by the company that bought the domain, Auction.com. On its face, it seems this story eclipses the “Halverez” scandal by a long shot.

“Inside Edition“, a TV news show, investigated home foreclosure auctions held by the Real Estate Disposition Corporation (REDC), the buyer of the currently 4th-ranked highest-priced domain name sold this year, AUCTION.COM. This nationally reported story aired on November 25, 2009 on  “America’s NewsMagazine”, as Inside Edition calls itself.  The televised story was also transcribed in its entirety on Inside Editions’s website.  Although the show seems nebulous, it has been a CBS-syndicated program for 22 years. It covers stories on consumer reports, hidden camera investigations, and celebrity gossip.

Here’s are portions of the transcripts on the broadcast story from INSIDE EDITION‘s website:

“Airdate: 11/25/2009

It’s fast-paced, loud, a total frenzy, and when the gavel slams down, you could be a homeowner.

And business is booming. Every weekend in ballrooms across America, hundreds of people flock to foreclosure auctions, hoping to get a piece of the American dream at a fraction of the price.

INSIDE EDITION went to auctions in New York City and Dallas, and right away, we noticed something curious.

As soon as the bidding started, men in tuxedoes began pointing and yelling into the crowd as if they saw someone bidding. Maybe they were seeing something we didn’t.

“…It was as if they were screaming and yelling and pointing and shouting, but you couldn’t see anyone else they were talking to,” says real estate expert Jim Randel, who attended an auction with INSIDE EDITION. He says he believes auctioneers create this hysteria to get people to bid.

There’s another thing we found curious. The brochures showed hard-to-believe starting bids, $500, $1,000 for nice homes. But when those homes came up for auction the auctioneer started at $1,000, but immediately jumped to $10,000, then $20,000. INSIDE EDITION saw that time and time again.

The auctions are run by REDC, Real Estate Disposition Corporation. The chairman, Rob Friedman, says there’s nothing wrong with generating interest in the homes with low starting bids, and they are legally allowed to bid up the price themselves. “People are getting great values at these auctions. We have sold houses for $500 in several auctions,” he says.

…(responding) “Here it is on your brochure and you need a magnifying glass to read it,” says INSIDE EDITION’s Chief Investigative Correspondent Matt Meagher.

“It’s announced at the auction, it’s on our website, it’s literally in seven different places.  We really do want all buyers to be informed,” Friedman says.

But Jim Randel warns consumers if you’re thinking of attending an auction, it’s buyer beware: “You might be able to pick up a good deal here but at least know what the rules of the game are,” he says.

As for those guys in tuxedos who appear to be pointing to no one, the company (REDC – AUCTION.COM) says they (the “ring men) are not always responding to someone in the audience, but they are legally allowed to do that.”

Auction.com was reportedly purchased by REDC (located in Irvine, California) on March 24, 2009, for $1.7 million.  Auction.com now points to REDC’s company website at REDCGROUP.COM, where they indicate they have the required licenses and regulatory affirmations to hold live auctions:

“Real Estate Disposition Corporation (REDC) is a fully licensed and bonded real estate auctioneer and sanctioned real estate broker. With our recent partnership with Stone Point Capital, LLC, whose experience and relationships will assist REDC’s goal to grow our business worldwide, we look forward to an opportunity to serve your needs and invite you to join the list of financial institutions who have experienced outstanding retail reserve auction events with REDC.”

As listed on their website, REDC (Auction.com) claims to have created “innovative” auction programs:

“Using the auction-marketing process we pioneered and have since perfected, REDC has sold more than $5 billion of real estate assets, including a staggering $3.4 billion in 2008 alone. REDC conducted a record 300 auctions in 2008 and auctioned 32,800 homes, another industry record.”

Their website boasts they “pioneered” and “perfected” the auction-marketing process. REDC works with banks trying to recover funds from the tens of thousands of foreclosed homes in the country. They do this by promoting and producing their “innovative” high-powered auctions to consumers and investors, where they claim you can buy a home for as little as $500.

Some of REDC ownership subsidiary companies also own FOOTBALL.COM and LANDAUCTIONS.COM. Those entities as listed on whois are REDC, LLC; NRP, INC.; and NETAD,LLC.).

I wrote to REDC over two weeks ago asking for confirmation and clarity on this “legality” they claimed about self-bidding, but as yet I have received no reply.

The story has been reported and commented on in many other websites, including San Diego’s real estate blog. REDC also has an international reach, and at least one negative response to their auction procedures. REDC upset some people in the UK earlier this year according to this report in the Guardian dated Feb 28, 2009 on their auction tactics.

The purchase of Auction.com by REDC back in March of 2009 was reported in most domain blogs and news sites. Most featured a statement from Friedman saying REDC was “really wanting this domain”.

Another story by DSNews.com reports:

“In less than four hours this past weekend, Real Estate Disposition Corporation’s (REDC) online foreclosure auction generated $14.9 million in foreclosure real estate sales in Dallas, Houston, and Seattle. The sales activity produced by Auction.com boosted the company’s total sales to more than $2 billion in 2009, REDC said.”

SUMMARY: In this remarkable investigative report by Inside Edition, you can watch Auction.com’s selling techniques through hidden cameras videotaping some of their events. In what was alleged by Inside Edition to be a common occurrence,  the Auction.com “ring men” (guys dressed in tuxedos “pointing” out the bidders) were yelling and pointing into the crowd as if there was a new bid on a foreclosed home, when there seemed to be no person actually raising their paddle. Inside Edition’s story has REDC disclosing that it’s legal for them to do this. This sounds to me to be saying that the formal-attired “ring men” can indicate that someone has “made a positive bid” on a foreclosed home price during the auction, even though there is no auction attendee actually bidding.

However, the biggest surprise reported by Inside Edition was the comment by Chairman of REDC (Auction.com) Rob Friedman stating they were legally allowed to “bid up the prices themselves” on the properties they were auctioning.

AUCTION.COM WHOIS INFORMATION:

Registrant:

REDC, LLC RED, LLC

1 Mauchly

Irvine, California 92618

United States

Registered through: GoDaddy.com, Inc. (http://www.godaddy.com)

Domain Name: AUCTION.COM

Created on: 17-May-94

Expires on: 18-May-17

Last Updated on: 03-Jun-09

Administrative Contact:

RED, LLC, RED, LLC  jm@x5t.com

1 Mauchly

Irvine, California 92618

United States

+1.9496994246

++++++

Comments from the company, AUCTION.COM (REDC) to explain their position are welcome. Links to any disclaimers located on their sites, or PDF’s of auction brochures are welcome.

If anyone found further questionable or favorable information regarding REDC (Real Estate Disposition Corporation), please comment here.

I left out about 2000 words of other details and information extending this story, which I may followup on if there is interest.

As usual, Andrew Allemann’s article on threats to the domain industry is important and thought-provoking.  I’m sure a lot of readers who depend solely on typeins to value their domains had to get up out of their chairs and dash to the “Holey Seat”.

I’ve never been sold on utilizing parking/landing pages as the sole value in a domain. I’ve had offers for domains I own giving me 10 year multiples, WITHOUT taking into consideration that the domain is a category killer, or a definitive brand. You can’t just give a domain a value based on “quick cash coming in because lots of people are using “name direction” in their browser field.

When you own generic descriptive domains, even longtails, those domains have value beyond “typein” traffic where in the past, many domainers have become very rich. However, I know a lot of those domainers played games with TMs and typos, which just diminishes the importance of a legitimate domain name and muddies our industry image.

Now companies are coming after domain owners who have owned domain phrases years before the company even existed, or rolled out a new product.  Reverse hijacking will be a big topic in 2010. Domainers, now more than ever, have to be vigilant.

I agree about supporting the ICA. We need a voice to represent us legally. However, we also need more than the ICA, because the reality is, (here comes the 50th time I’ve said this), that the true value in a domain is represented by the sale to an enduser, or the full buildout of that domain as a working website by the domainer (thereby becoming an “enduser”. Not a minisite, but a company-based, producing prodservs site such as Wifi.com, or Chocolate/s.com, Burbank.com, Business.com and thousands of others.  Minisites are valuable, and have their place, and are probably “gateway drugs…. errr… gateway paths” to making a domain evolve from a wimpy landing page, to a minisite, to a powerful category killer website, even with longtails.

So domainers’ focus (if they aren’t already endusers) should be on creating a property they can sell to an enduser at some point. Like an acquisition, domainers should see their domains as this type of asset.

Relying on Google, Yahoo/MS is a waste of time. I’d spend more time building up affiliate relationships with relevant prodservs to my domain, and if you sell just one high-yield product, with even a 5% refcomm on that sale could beat CPC payouts parking the domain.

I’d start with minisites, AEIOU.com, NoParking.com, Webuild.com, WhyPark.com, Devhub, and others that the industry deems respectable. Put up affiliate links, storefronts, other refcomm opp links, and just let Google and Yahoo feel the “pinch” of losing the revenue that domainers provide them.

Domainers, in force, can play their game deadly too. I wouldn’t give any ad provider the keys to my success. Strategic thinking in the face of the barriers you write about is imperative. Can we do it?

I think we can, by forming a non-profit PR organization for domain investing.  It really is the future for all of us. Promote every sale of a domain to an enduser company with NR’s weekly, or twice weekly. Get INTO THE FACE of the business sector. Show them we’re united, and we’re a force to be dealt with.

We aren’t pawns, serfs, slaves, wimps, losers, and cowards. We are domainers. Time to unite and bring the fight back to those who would attempt to rip us off.

I wonder what power 10 million domains owned and parked by thousands of domainers can have over Google/Yahoo profits if we all just, for one day, changed our NS to nothing. We send out a NR, stating a “Worldwide Domainer Protest” Day, and then everyone just do a global NS change to nothing, or to some low level search site.

I’m just crazy dreaming, but I hate injustice, and what your article describes is just that… Most domainers I’ve met are great people, working hard, investing in the system, and true entrepreneurs. We’re BUSINESS PEOPLE, and we bring a lot of money to a lot of related businesses.

Ask yourself this question:

WHAT WOULD GOOGLE DO WITHOUT DOMAINERS? What if they got zero, nada, zip revenue from our end? I guarantee Google would feel that and see the damage, because the numbers don’t lie. If we could just organize a one day “no google day”, the tune would change quickly in the Google board room.

Get tough, people! Most domainers have shown their grit by just BECOMING domain investors. Don’t lose heart, don’t panic. Focus on selling and building out your portfolio.

Share your brains with the domain industry for a solution.

You have the answers, you just have to fight for them.

I know there are domain investing newbies who buy three hundred domains, which are 22 character longtails, and they’re thinking that some company will gush love upon them and offer big bucks for quick sales. They jump into this business thinking that a quirky idea spelled out in a slew of many domains with a common “theme” will somehow ignite a buying frenzy for their “brilliant” longtailed domains.

Coming from a marketing background involved in live entertainment and Madison Ave Agency promotions, and having spent a lot of time contacting businesses regarding buying domain names — there are some big and small companies who DO get it, but a much larger percentage of big and small companies who just do NOT get it.

I agree that every domainer needs to back up their domain sales pitches with facts, but the real problem is REACHING the right ears to pitch it to. In other words, if you just send an email to email addresses listed on the “CONTACT” link at some company website, you’ll probably get no response.

This is the hard part of selling to the enduser, and that’s reaching the right person who has the ability to push your offer through the correct channels to get a viable review of your domain and its assets as applied to the respective company.  The key for every domainer is to locate the correct person within a corporation to make the sale.

For smaller sales, just contacting the owner of a company and pumping them up with the fact that they can own the domains representing what the prodservs their competitors are also selling, and that the price for that “online control” of that niche with the domain is commiserate with the company’s ad budget, is enough for making a quick three-four figure sale.

Flipping domains aggressively takes this type of effort, unless you have so many domains, such as BD, that people just come to you.

TIP: Many domainers can have their interested wives or girlfriends or family and friends selling their domains, with a clear set of instructions on what to say.  Offer your team a solid 15% commission on sales, and set them loose. Think of all the people you know who have no job, or are just sitting around the house, but want to make some money. Or those family members looking for a second job or additional source of income.

In this arena though, finding the right people to do this depends on how “excited” your team members are learning the whole process of domain values and sales. If they don’t get it, or don’t believe in it, they won’t perform. Cut ‘em loose and move on, keep looking for that excited “go-getter” that will take the time to earn $150 for two hours work for a $1000 domain sale.

Getting a team together that will make cold calls to endusers, be enthusiastic about domaining, and understand the underlying reasons of why a domain name is valuable won’t be easy, but even having one or two salespeople with this commitment can mean thousands of dollars for you each month.

How many of us have sold a domain based on a referral from someone we know? Expand on that, research and plan, and set up a system with the right team and it can really make a difference in your monthly sales.