Important Consideration when Reading Domain Blogs

Elliot Silver
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13

I think one of the best developments in the domain investment space in the last five years is the emergence of domain blogs. Some may say there are too many, but I think the variety is great. We can read different perspectives, advice, and news from a number of sources. Just a few years ago, there were only a few blogs, and shortly before that, there weren’t any.

One thing you’ve noticed is the differing opinions and advice shared by the bloggers you read. Some (like myself) invest in domain names for a full time living while others invest as a hobby to supplement their income. In addition, bloggers earn money in different ways, and our backgrounds are diverse. This gives each of us a unique perspective when we write.

There are any ways to make money from domain investing. Some ways are risky (financially and/or legally), some are time intensive, and some require little time investment. Every investor needs to determine the best way for him or her based on his or her personal interests and economics.

Just about all of us who blog earn money in different ways through domain investments. As a reader you need to evaluate whether someone’s methods would work for you, and you need to be able to adapt when necessary to adjust based on your personal interests.

This is a great business for many reasons, but one of the biggest is the amount of opportunity that
still exists for people of all backgrounds. When you are reading the blogs, you need to remember there are many ways to become rich via domain names, and each of us has our own objectives and strategies, and even if they appear to contradict each other, it doesn’t mean someone is right and someone is wrong.

Braden Pollock: “If You Get Arrested for DUI Tonight…”

Elliot Silver
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Braden Pollock, founder of Legal Brand Domains, LLC, owns the best portfolio of DUI related legal domain names, including DUIAttorneys.com. He offered some great New Years Eve advice on Facebook this evening:

“If you get arrested for DUI tonight, my company will probably mail you crap next week. You don’t want my crap. Be safe. Don’t drink and drive.”

Braden is right. Have a great time tonight however you celebrate New Years Eve, but be safe. You don’t want to get something in the mail from Braden’s company 🙂

5 Reasons Why Domain Name Leasing is Beneficial

Elliot Silver
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82

I’ve become a big fan of leasing domain names. As a domain owner, when you’re able to work out a mutually beneficial lease deal, there are many benefits and few drawbacks. I am pretty sure we’ll see more lease deals in the next few years than before.

I want to offer my thoughts on why leasing is a great idea from a domain investor’s perspective and also want to share why I think it’s advantageous for an end user to lease a domain name.

I believe there are many advantages and benefits to leasing a domain name, and I want to share my reasons below. You are more than welcome to share your thoughts as well.

Here are 5 reasons why I think leasing domain names is a great idea for domain owners:

  • Consistent revenue stream that is greater than the existant PPC earnings or advertising revenue without the work (if you developed on your own).
  • With domain valuations down from 2006-2008 highs, you can keep your domain names without selling at arguably lower valuations.
  • Someone else builds value on your domain name, both in terms of traffic and goodwill, which you will realize should the lease term end without renewal.
  • Can realize a much higher sale price if you do a lease to own or purchase strike price in your agreement.
  • Possible tax advantages to collecting revenue over time and/or treating leased domain names differently than inventory (obviously speak with an accountant – I have a CPA handle mine).

Here are 5 reasons why I think leasing domain names is a great idea for end users:

  • Spend less money up front on a domain name, allowing funding to be spent on building the product or service and marketing it.
  • Can work with the domain name owner to agree on a fair purchase price or lease to own deal for the domain name in the future, allowing an idea to be built out before committing the capital.
  • If the business doesn’t work out, the domain name can be given back to the domain name owner without having to find another buyer for it.
  • Business can be built and grown without having to spend a great sum of money at one time.
  • There may be tax advantages depending on how you classify domain names (obviously speak with an accountant – I have a CPA handle mine).

10 Questions to Ask a Domain Broker

Elliot Silver
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6

Hiring a domain broker is an effective way to sell a domain name. Reputable domain brokers will know most of the buyers within the domain industry, and more importantly, they know how to reach out to end user buyers to sell a domain name. They also should excel at negotiations in order to get top dollar for your domain name(s).

It’s my experience that a domain broker who is going to put the time into selling your domain name will want to know that they are exclusively working on your domain name so that their efforts and financial commitment aren’t wasted. They will also expect a specific commission rate for the sale of your domain name. All of this should be discussed in advance and worked out with a brokerage agreement.

I want to share 10 questions you should ask a domain broker before agreeing to sign an exclusivity agreement as well as why I think these questions are important. If you have additional questions that you think would be beneficial to ask, please share them in the comment section.

  • Is my asking price reasonable? If your trustworthy broker thinks you are asking too much from an end user perspective, you might be wasting time. You are almost never going to get max value when you are seeking a buyer vs when you receive a direct inquiry. If your asking price is reasonable, you have a better chance of selling your domain name. You will also likely have a broker who puts a greater effort into selling your name since he thinks there’s a good chance it will sell.
  • Have you sold similar domain names, and if so, what names at what prices? Working with someone that has experience in your vertical can help you sell a domain name more quickly. They know how specific buyers think, and they can give them reasons why your domain name is worth what it’s worth.
  • What other domain names are you currently selling that are similar to mine? If they have names for sale that are in the same field, they may be more likely to contact end user buyers to sell the other names. On the other hand, if they have better names at better prices, your name becomes less  desirable  to buyers and will look even more overpriced.
  • Will you be contacting end user buyers on my behalf? It’s great if your broker can sell your domain name at your asking price to other domain investors via newsletter, but if it sells via newsletter, it was probably priced lower than end user value. That said, quick cash sales serve a purpose and I am always happy to sell profitably, quickly. If you want to maximize the price you receive for your domain name, you will probably want your domain broker to pitch it to end user buyers.
  • Are your contact methods legal and/or spammy? You probably don’t want a broker to send out hundreds or thousands of spammy emails, especially if they use software to do it. First off, that might not be legal. Secondly, it might irritate a whole bunch of potential buyers and that could “poison” your name. It may be more efficient for the broker, but it’s probably not going to help you sell a domain name.
  • How long a period of exclusivity do you require? Most brokers who plan to put an effort into selling your domain name will require an exclusivity agreement. They don’t want to put time in trying to get someone to buy a domain name and have you sell it to them independent of them. Find out how long this period lasts.
  • What is your commission rate? Do you give a discount if I find a buyer while under exclusive? Most brokers charge between 10-20%, with 15% being the most common rate. If a broker is going to put more effort into finding a buyer (ie attending a conference on your behalf, you should expect to pay more). In addition, if you sign a 6 month exclusive agreement (I would not), and someone inquires about the name in the meantime, you shouldn’t have to pay the full commission rate. You should ask this up front to avoid making assumptions, because technically, you would be on the hook should a deal be struck while under the term.
  • Do you handle escrow or use an escrow service? I always recommend using Escrow.com even if the deal was brokered and the broker is willing to act as the intermediary. There is no reason for the broker to handle the money you are owed, and with Escrow.com, you can select a brokered transaction so the broker will be paid by Escrow.com.
  • Will you be doing anything special to sell my domain name? Some brokers go above and beyond when selling a domain name. They attend industry specific tradeshows and events to find end user buyers. Some put together pitch books sharing information about why a domain name has value. Others will meet with buyers in person since that’s how business tends to be done at large companies. Be sure to discuss who will pay for these marketing expenses.
  • Do you actually have a buyer for this domain name?  One tactic I’ve seen and experienced is when a broker emails me about a domain name out of the blue to tell me they may have someone who wants to buy the name. In the excitement over the possibility of making a big sale, the domain owner signs an exclusivity agreement and the broker then proceeds to try and find a buyer. The initial email makes it seem like they have someone ready to buy, but in reality, it’s usually just a tactic to try and get someone to sign an exclusivity agreement so they can then start the process of finding a buyer.

Check The Other Extensions

Elliot Silver
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7

Last week, I shared 5 factors I consider when buying a domain name, and I want to expound on two of the factors because I think they’re great indicators of value for the .com domain name you are thinking about buying.

When acquiring a domain name in the aftermarket (private purchase or auction), I always look to see how many other TLDs are registered. As I mentioned before, the more extensions that are registered, the more valuable the .com is because there are other prospects that would want to upgrade and/or it shows that the keyword is valuable to someone else.

If you have time, I recommend that you analyze who actually owns those TLDs, too. I used the word “analyze” here because it’s not always easy to see who actually owns the domain names just by the Whois information. What I mean is that if you are buying a RealEstate.com domain name and the .net is owned by Joe Smith, you should see who exactly Joe Smith is because that information is important. If Joe owns the largest real estate company in the city, he might have the money and interest in buying the .com should you want to sell it vs. Joe Smith who is buying cheap .net names at Go Daddy as investments.

I also think it’s important to note how long the other extensions have been registered. If a .net, .org, and other extensions have been registered for 12 years, it means someone has been paying $10+ a year for quite a long time. They may even be paying legacy pricing. There’s probably a reason they’ve sunk $100+ in renewal fees for these domain names.

The key takeaway aside from the insight is that there’s much more to do when buying domain names aside from entering your credit card information. If you treat domain names like lottery tickets, that’s cool, but it’s probably going to net the same result as going to the convenience store and buying lottery tickets. However, if you invest the time into researching good domain names and buy some good ones, that’s an investment you’ll probably find to be financially rewarding.

When To Use The Phone to Sell a Domain Name

Elliot Silver
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I don’t like chit chatting on the phone. That’s especially true for business related conversations. Because of this, I hardly ever use the telephone to contact prospective buyers of my domain names. There is a good time to use the phone though, and I’ll share when I think it’s appropriate.

After sending emails to prospective buyers and you receive a reply from someone who seems interested but isn’t quick to reply or has short replies, you might want to give them a phone call to discuss. A phone call can help move a deal forward in several ways:

  • Establish trust
  • Speed up the pace of negotiations
  • Allow you to get a better read on the buyer
  • Move the negotiation to your schedule
  • Take away some leverage from the buyer

The primary reason I use the phone is to move a conversation along more rapidly and to get a better read on the buyer. Based on the buyer’s needs for the name and/or interest level, I can price it accordingly and also offer better terms.

I can also  gauge how familiar the prospect is with domain names and domain acquisitions. If I think the sale process and transfer will likely take more time and effort than usual, I can price the domain name accordingly.

One important thing to keep in mind is that a phone call can also kill a deal. If the buyer asks questions you don’t know the answers to or appear reluctant to answer, he or she might have no interest in doing business with you. In addition, if you struggle with communications (ie you don’t speak the same language as the buyer fluently), it might make things more difficult and might also cause trust issues.

I think using the phone can be an effective negotiation strategy. I would not use it to cold call, and I would use the time to build trust, establish a dialogue, and try to push a deal forward.

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