Is an IPv4 auction an appropriate forum to buy or sell IP addresses?

There’s a handful of websites out there purporting to provide an auction-style marketplace for scarce number resources. The answer, in a nutshell, is that the risks and drawbacks usually make buying IPv4 addresses in an auction unviable except in limited circumstances and for small-sized blocks.

What You Should Consider Before Buying or Selling in an IPv4 Auction

  • Transparency and Reputation

As someone looking to purchase IPv4 addresses, you’ll want to know all you can about a netblock before making an offer on it. A few questions you may have can include things like:

“What is its routing history and geolocation history? Was it used for email in the past, and are there any lingering blacklist issues? Was it ever used by a hosting company or ISP?”

Most, but not all, IP Address auction-style sites allow buyers to know the IPv4 range in advance of bidding. If a Buyer is sophisticated enough, they can determine some of the above answers themselves, but certainly not all of them. That requires either direct interaction between Buyer and Seller, or at least interaction through a knowledgeable IPv4 broker who can shed light on the more opaque issues.

As a Seller, you’ll also want to know all you can about potential Buyers. Some questions include:

“Do they understand the justification and approval process of their RIR ? Will they know how to navigate their RIR’s transfer process? What is their payment process? How will the Buyer be using the IPv4 space?”

An IPv4 Seller in an auction-style format has no say on who bids on their block. By using a reputable IP broker, Sellers have a partner who can help filter out the riffraff and increase the chances that a deal will conclude satisfactorily for all parties.

  • IPv4 Auction Participation Level

Sellers may think an auction is a great way to generate interest in their netblock, but when considering the realities of the IPv4 market, auctions provide visibility to only a small subset of buyers. Most entities don’t have the procedures in place to allow them to bid on a netblock in an IPv4 auction. They are required to institute a budget, choose a Seller to work with at a specified price, create a purchase order, and execute payment according to established guidelines. The speed and flexibility that an auction requires doesn’t allow them to participate, eliminating most of the best-funded bidders.

  • Contract – or lack, thereof

Don’t expect a contract between Buyer and Seller on an IPv4 auction sale. There may be terms and conditions involved from the auction platform, but that is mostly for the legal protection of the auctioneer.

A reputable broker will help buyers and sellers craft a contract that explicitly lays out the details of the transaction, including the representations of both parties, indemnifications and liability, and the legal recourse both sides have in case problems do arise. This contract is an invaluable tool in proving ownership of the netblock when using it or, perhaps, subsequently selling it.

  • Don’t be Fooled by the Prices

The IPv4 prices at IP auctions don’t always reflect current market pricing. In fact, most prices posted include a hefty fee levied by the auctioneer, so it may indicate what a buyer has to pay, but not what a seller can expect to receive.  Check the fees out in advance, if you can. This may not be easy to find on the auction site, and there’s a reason for this. As with any auction, beware of shills or fake bids used to artificially drive up the price of the IPv4 address block.

Every Buyer and Seller in the IPv4 market has specific and, ofttimes, unique requirements. A good broker can help put together a deal that works for both parties, without forcing either side into a cookie-cutter process that’s lacking in transparency, market penetration and contract enforceability.