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I'm in a similar situation; where the name an associate wants is already taken and the holder isn't doing anything with it.
1. Up your offer with an explanation. If this guy is a business man he just wants to make a profit. Set your max you will pay and negotiate.
2. Pick a new name or some variation. Or better yet try something like my-new-site.com with the dashes. I've done this myself for my tax business.
All in all, this is just business not personal. Treat it as such and you should come out just fine. Good luck on your business.
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