Site not sold, non-paying bidder, Flippa demanding success fees

[Clinton]

For those of you who don't know it, http://www.prosperly.com/, is a site with a lot of good information very relevant to the interests of the type of people who visit these forums - it covers a wide range of topics from siteflipping to starting, building, buying and selling internet businesses. (Not all of it is free, but a lot is)

The owner, Adam, is a member here, BTW.

Anyway, he dropped me an email about a blog post he did about his recent Flippa experience. I thought I'd mention it here. He hit a non-paying bidder and Flippa won't take any explanations - they want their money and they want it now!

How big is this non-paying bidder problem at Flippa? And does Flippa ban non-paying bidders or only the poor sellers who've already shelled out listing fees? Is there any way around not paying Flippa if your site hasn't sold or is there no option but to cough up Flippa's 5% "success fee"?

[petertdavis]

I think it's bad business for Flippa to demand fees for sites that didn't sell.

[mgallone]

Personally, I think that Flippa should utilize some kind of escrow system. That way, they can be responsible for the funds transfer, which would handily reduce the number of scam artists who gather there at the moment. Another advantage would be that they could take their success fee directly from the escrow payments, meaning that people suffering from non-paying bidders wouldn't be subjected to success fees when they have't recieved anything.

[tke71709]

We argued about most of the things he mentioned until we were blue in the face when they launched Flippa.

Basically Dave et al said that they could read minds and would know if a site actually sold or not...

OK I'm paraphrasing a bit here

[Clinton]

I remember those threads at SP

Problem is Dave wasn't the most clued up in the business. Then they got someone to help him who had no experience at all! Here's how the meeting went:
Luke: But don't they have a point in that we have no way of knowing for sure when a site has sold / the buyer has paid?
Dave: Actually, we do <wink, wink>
Luke: Oh really? What's it?
Dave: It's a secret so don't go spilling it to Flippa users
Luke: My lips are sealed
Dave: I discovered something called WHOIS which tells you when a site changes hands. All we need to do is check the WHOIS.
Luke: Wow, really?! That's pretty cool.

OK I'm paraphrasing a bit here too

[petertdavis]

I should say that, in Flippa's defense, I had one transaction where I was buying a site via Flippa and I put the money into Escrow.com (it was about $1,800 or $2,000, somewhere in that range), and paid Flippa the "Buyer's Fee" and waited and waited for the seller. After a couple of weeks of no response from the seller, I contacted both Escrow and Flippa. Flippa gave me a full refund. Escrow gave me back the money minus their fee. Flippa didn't give me any hassle at all, just refunded. YMMV, but my experience with Flippa and the buyer's version of the success fee worked as well as I could have expected.

[Clinton]

Peter, I'm sure they have no intention of screwing any buyer/seller. But where there's no evidence of a broken transaction, they either have to go on trust or take the heavy route. There really is no third way, is there? And therein lies the major flaw and a receipe for disgruntled customers/loss of revenue.

[petertdavis]

Well, that's a good point too. I'm sure that if they wouldn't trust me, they wouldn't trust anyone. Then again, with a quick search on domaintools.com you should be able to get a good idea if there was any changing of hands going on there, or not. Sure, not a flawless way of getting to the truth, but I guess I would urge them to err on the side of trusting their customers until they have a good reason to not trust them instead of the reverse.

[LukeMoulton]

Luke: But don't they have a point in that we have no way of knowing for sure when a site has sold / the buyer has paid?
Dave: Actually, we do <wink, wink>
Luke: Oh really? What's it?
Dave: It's a secret so don't go spilling it to Flippa users
Luke: My lips are sealed
Dave: I discovered something called WHOIS which tells you when a site changes hands. All we need to do is check the WHOIS.
Luke: Wow, really?! That's pretty cool.

OT: I was fortunate enough to attend a Problogger (Darren Rowse) seminar in Melbourne earlier this week. He presented a great session on how to build community and how to set the tone of your community - you know, lead by example and set the level of constructive conversation and all that. (Notes here for anyone interested).

Just sayin.

[tke71709]

LOL

Not sure if that is a dig at Clinton or Sitepoint... Probably Clinton, but it's equally relevant to both.