Usually when I want a domain name, I place a value on it to my portfolio, and I make the owner an offer that is within my value range. While I may end up paying more than I could have paid, it virtually guarantees that I will receive a response. These days, it is difficult to pay too much for a great category killer generic domain name. There are so few available for sale, the prices continue to rise.
Domain owners receive dozens of emails for their valuable domain names daily, weekly or yearly. For the most part, unless it isn’t a top tier name, chances are very good that your offer isn’t the first, nor the last offer that will be made on a particular name. If you send a lowball offer, the owner will likely delete it like all the others – or send you an email telling you to get lost (or some unprintable variation of “get lost”). If you make a reasonable offer, you are much more likely to get a favorable (or at least some sort of) response.
I know there are many people out there who would tell me they bought a great name for a tenth of the value simply by making a low offer for it. Well, I think that is mostly due to lucky timing, and it certainly doesn’t happen often – especially with software that allows people to send out massive amounts of inquiry emails. If you have no idea how much a domain name is worth to you, then it probably isn’t advisable to even be making offers until market research is done.
From my own experience, if you want to acquire a name that you believe is worth $20,000 – $30,000, you will have much more luck by offering close to $20,000 rather than $2,000. Most motivated domain owners would probably thank me for the offer, and ask me to increase it, assuming that if I start there, I am willing to go higher. My approach is to either increase the offer just a bit (if I have room) or tell the owner that’s my final offer – and I stick to it. If the domain owner is inclined to sell for that price but wanted to see if I was willing to offer more, he will probably accept my offer, lest he regret declining a fair offer. Owners want to receive the most for their names, but most won’t turn down a reasonable offer if he knows its the best he will get.
I know there are plenty of stories to counter this strategy, but as more people enter the industry, the more important it is to make your first offer an impressive offer. You should get a better response rate and end up owning better domain names. You may pay more, but you will close more deals.
Making a Reasonable Offer for a Domain Name
Responding to a Domain Name Offer
Like nearly any piece of property or other asset, almost all domain names are technically for sale for the right price. There aren’t many domain owners who would pass up on a high seven figure cash offer for a domain name, with the exception of developed businesses or very few exceptional domain names. If you sincerely have the ability to pass up on a $5,000,000 for a domain name, I congratulate you, and you can probably stop reading this post and go back to your bottle of 1926 Macallan.
For those of you who have more of a Budweiser taste, please continue.
The problem I see is the way some UDRP proceedings have gone recently, where domain owners can potentially be penalized if they receive an offer and attempt to negotiate a better deal. It seems that some UDRP panels consider an owner’s contemplation of selling a domain name a sign of bad faith. This is dangerous for domain owners, and I know it causes many people to think twice whenever an offer or solicitation is received. Just about everything in this world has some sort of price, and simply because a person would consider selling a possession doesn’t mean that they owned the possession for the sole purpose of selling it.
That said, I think domain owners might be well suited to respond to certain domain email inquiries and offers with an agreement to waive the right to file a UDRP or lawsuit if anything about the domain name is discussed. The person making the inquiry or offer would have to waive his rights to any future legal action before ANY discussion about the name can take place. Any person who is interested in buying the name should be willing to sign, and if someone isn’t willing to sign, it probably means they have ulterior motives, or perhaps they are just kicking the tires.
I am not an attorney, so this isn’t a legal opinion, but the point of this post is to discuss the question of whether this type of agreement would protect domain owners and if it would be a legally binding agreement. Since most domain owners would be willing to sell names in their portfolio for a price (even though that price could be sky high), it might be something worth considering before future negotiations.
Mike Berkens' Daily Domain Blog
The domain investment business is fairly small, so there are many individuals that “everyone knows.” However, there aren’t as many individuals that everyone knows and likes. Mike Berkens is one of those few people. Mike’s company, Most Wanted Domains owns tens ft thousands of great domain names, and as far as I know, Mike is as bullish on domain names as anyone else in the industry. (You can read my “5 With Mike Berkens” interview for more detailed information.)
Mike started a great blog recently, and although I’ve linked to it a few times, I want to separately encourage everyone to add TheDomains.com to your RSS readers. Mike is one of those types of people that can move and shake the industry, and I have great respect for him. He has maintained a low profile until recently, and I am glad to see him blogging.
Mike is an influential guy in this industry, and his blog is a daily “must read.”
Great Castello Brothers Interview
I have a great deal of respect for David and Michael Castello and what they’ve done for the domain industry. Not only do they own an incredible group of developed geodomains including LagunaBeach.com, WestPalmBeach.com, and Nashville.com (among others), but they also have some other great generic non-geo related domain names names as well.
Aside from their tremendous portfolio of domain names, the Castello Brothers are genuinely nice guys who are always willing to give advice. I am especially thankful for the advice they have both given me for my Lowell.com development project. Recently, they were interviewed on SimplyGeo.com in a two part interview. Part One of the interview was posted yesterday, and Part Two was just posted today. This interview is a must read!
Creating Partnerships in the Domain Industry
There have been plenty of times that I’ve seen certain people in the business build a successful website, and I admired their vision, work ethic and execution. On more than one occasion, I’ve even said to myself, “I’d like to work with that person if I ever have an opportunity.”
With all the consolidation that has been occurring in the domain industry, it would be smart to continue to see various individuals and small companies putting their collective heads together to create something truly unique. I am sure that Bido is going to be very successful without even knowing exactly what it is, simply because Sahar, Darren, Ron and Jeff are involved, and these guys know the domain industry.
More often than not, domain investors and developers work individually or with a single partner. While this can be productive, it doesn’t always allow for new ideas to germinate. Working with a partner can teach all parties new things and new ways to solve problems. As the saying goes, two heads are better than one.
Obviously for this to work, the partners have to be able to work with each other, which can pose many challenges in and of itself. My advice is to be upfront with a potential partner if it doesn’t look like things will work out. A partnership can be a great thing, and it can help propel your business and the domain industry forward.