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1) I dont play everquest so I cant comment on whether or not the price is accurate, but yes, I have heard of everquest and ultima online items changing hands for serious cash. Some house near Lord Britishes castle in UO costs more than what mine does, even though its fictional.
2) Of course its wrong, but some people havent the time/patience/skill to do it themselves, while still having enough cash to afford this. I heard that there was talk of legal action to prevent selling of items for cash, but im not sure whether it was Everquest or not that it refered to.
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