You make some good points. It can be boiled down to it's just business but being in the middle of it I asked for some professional courtesy and understanding and did not get it. Yes may not be illegal but it's definitely shady under the circumstances. My whole point is this is the type of thing that gives domainers a bad name. Judging from many of the responses many people in this business have the F-em attitude. Sometime it's best to do the right thing rather than try to make the most money. I for one would have given it over at cost... that whole Karma / good character thing. I think enough said. Best to everyone.
(The following is just a hypothetical statement - it is not meant to endorse either side in this).
So, the other day I noticed a domain that was deleting soon though Pool. I did some research and found out it has backlinks (which means existing traffic that will not slow down as fast as regular type-in traffic) plus it used to be a site (meaning more traffic).
After I got the name, I start getting emails from someone claiming to be the previous owner's brother insisting that I give the domain back to them and giving me low-ball offers. Then I see him calling me unethical and a cyber-squatter and also accusing me of extortion and bullying on a very popular domaining forum.
It amazes me how people think businesspeople, like ourselves, are charities. I got this domain though legal means and now I get these accusations and insults because I prefer not to give a domain back to someone claiming to be someone it is not easy to prove.
Sound familiar? Trust me, working with the public (in one of the most difficult industries) for as long as I have I've learned to see things from the other side, which has made me very good at customer service (consistently recognized by my supervisor in my previous position). Most people do not think to look at things though the other person's eyes (I really wish they made the "Point of View" gun from HGTTG movie). I could have made the segment more harsh, and in reality it would have been.
Yes, there are some domainers that would have worked with you, maybe even sold the domain back to you for cost + an administrative fee, but there are also many that would not have. Some would have sold it back to you for the small fee regardless of the domain's value, but this percentage would have grown smaller and smaller the higher value domain it was (who here would sell a LL.com back to a previous owner who let it drop for $100?).
It is a hard lesson, yes. But it will be a pointless lesson that you will most likely make again if you do not learn from it. Watch your portfolio, even set up "alerts" for your more important domains (or all of them), even look into a domain management software package so you can easily keep an eye on your domains.
Also, your claims that "the domain has no value outside of you and your brother". I find that hard to believe. I tried to get draggar*com (when I tried, 99% of Google results were me posting in forums or MUD characters, and so on). Let's say someone registered it and wanted $25,000 for it. Obviously someone else thought it had value and the same can go for any domain.
As for posting the domain, you don't have to worry about link building. You can say domain,com (a comma instead of a period), domain(dot)com, domain(.)com, domain/com etc. these will not build links nor will it be picked up by Google for searches for domain.com