Domain name lease to own deals are great. They generate monthly income, and if the buyer opts to discontinue paying, I get to keep all of the payments and have the chance to re-sell the domain name. One thing better than a LTO deal is when the buyer decides to purchase the domain name in full – – earlier than expected.
In my LTO purchase agreements, I give the buyer an option to pay off the deal early at a discount. The buyer can save anywhere from 10-20% of the total purchase price if paid-off early. The discount rate varies depending on my profit margin and the length of time for the payment plan.
In order to take advantage of this offer, the buyer must complete the purchase by a set date. If, for example, the deal term is 48 months, the sweetener is valid if the buyer pays in full before the second anniversary of the deal. Beyond that, it would benefit me more if the buyer defaults and I get the domain name returned to me.
If you sell a domain name on a LTO plan at Squadhelp, the seller has the option to offer a discount to the buyer to complete the deal early. As I recall, the seller can choose a dollar amount rather than a % of the total, but it is the same idea.
When negotiating a private LTO deal (vs. on Dan.com or Squadhelp), I sometimes mention the discount and sometimes don’t. Mentioning it doesn’t always fit into the discussion. The buyer – or the lawyer representing the buyer – will see the discount in the LTO purchase agreement. They will either note it in their head as a future target and/or I can remind them of the offer in the future.