Domain Sales

Domain brokers are an important part of the domain industry, and there are many fantastic brokers whose dealmaking skills bring revenue to domain owners. When using a broker or brokerage service though, I recommend using a third party escrow service such as Escrow.com,  Afternic’s escrow service, or Sedo’s escrow  to be an intermediary, and I’ll share a few reasons why this might be a wise idea.

Keep brokers honest

I’ve heard stories about brokers allegedly taking money off the top when closing deals on behalf of domain sellers. For instance, if I told a broker I want $50,000 for ElliotsBlog.com and a broker tells me he has a $40,000 offer, if he’s in the middle of the deal, he might actually have sold it for $50k and pocketed the remainder. If you work with a third party, the sales price will be transparent.

Ensure swift payment

After I transfer a name to a buyer or to a broker, I expect to be paid ASAP. There would be no reason for the broker to keep the buyer’s funds any longer than it takes to set up a wire transfer online (or get to the bank to do it in person) once the domain name is transferred to the buyer. With a third party escrow service, once the domain name is in the buyer’s possession, your funds are released.

Licensed, insured, and bonded

Generally speaking, US-based escrow services are licensed by state regulators, insured, and bonded. You don’t have to worry about them running off with your money and your domain name. When dealing with an unprofessional broker, you may give up the domain name and not receive the funds and you don’t have much leverage, especially if they aren’t based in the same jurisdiction as you (and litigation is probably very expensive).

I don’t see why a domain broker would have an issue using a third party escrow service to facilitate a domain sale. If they are concerned about their commission payment, you can ask them to have the buyer pay that directly and take it out of your payment.

Using an escrow service makes for a cleaner transaction and can ensure fairness for all parties.

There have been a number of times where I’ve sold an end user buyer more than one domain name at different times. After completing one deal, I have a look around at various venues to see if there are other names in the same/similar vertical that could be acquired and flipped at a profit.

It’s a risk to buy names with the hopes of flipping to a specific person, but if you have a good gut feel and the name can be used by other parties, it can be worth the risk. I want to share a tip about how you can sell a name to someone based on a sale you saw (ie from Ron’s weekly sales report).

Have a look at the DNJournal sales report every week. Take some of the high value names that sold and perform a Whois search on the name. See who bought the name and try to find out as much information about the company as you can to determine why they bought the name and why they paid what they paid.

Once you figure this out, look at the buyer’s website and/or LinkedIn page to see what other products or services the company offers. Check out who owns the corresponding domain names (NOT trademark names, but descriptive types of names). If you can buy those names for a good deal, you can then present them to the buyer of the reported name from Ron’s report.

Here’s a made up example. Let’s say that XYZ Widgets & Devices spent six figures to buy eWidgets.com. After doing some research, you see that eDevices.com is for sale for low 4 figures (it is NOT). You can purchase that domain name and then offer it to the buyer of eWidgets.com at a good (but profitable) price. You already know the company values domain names and you know they just spend six figures on a different name.

Don’t forget these important factors:

• Do not buy/offer trademark names
• Make sure you contact the right person at the company (contact the seller for details)
• Names should be  salable  to other parties if buyer isn’t interested
• Don’t try to sell a name before you bought it

During the last couple of years, I’ve sold quite a few domain names to “end user” buyers. From my perspective, an end user buyer is a person or company in the field or industry related to the domain name you are selling, and the buyer of the domain name will use the name as a part of their business.

Generally speaking, an end user buyer is more likely to pay a higher price than someone in the domain industry who wants to re-sell or monetize the domain name. An end user buyer will know exactly how much it costs to acquire a customer and know what it will take to compete in the field with a website on the domain name. They also know the value of the “goodwill” in the domain name for their company’s positioning in the field. They can therefore justify spending more for the name because they know how much it will impact their bottom line.

The problem when trying to sell to end users is that many do not realize how valuable an exact match domain name can be. Some of them have a limited online presence and others simply own a domain name that matches their business name. Many companies don’t do online advertising campaigns, and some would have no idea how to value an online lead. Yes, it’s easy to say that they could buy your name for less than it would cost for a lifetime of Adwords expenses, but converting that into sales is difficult.

With that being said, many end user contacts will give you an insultingly low offer, while others will not make an offer but will be rude to you in their replies. No matter how negative the reply is, don’t get into a “pissing contest” with the other person. They can do much more damage than it’s worth, and to have a few minutes of feeling like a champ with a witty reply, you could set yourself up for problems (like them emailing other prospects to tell them that you’re an a-hole!).

Since April, I received a $50 offer on a name that I privately sold for over $20,000, was told that I am “crazy” for asking six figures for a name I privately  sold for close to my asking price, and I was cursed at on the phone for asking for $50,000 for another name that I sold a short time later. I also received countless sarcastic “good luck” type of emails that I simply replied “thanks” in response to when others may have offered the witty, “thanks, but I don’t need good luck,” which of course, can lead to a testy exchange.

In many cases, I could have gone back to these people and gloated when I closed these sales, but that does me no good either. With the crappy economy, people will likely be jealous of your success and you could become a target of their ire.

No matter what type of negative reply you receive from an  uninterested  end user buyer, do not engage in an email exchange with them that turns nasty. Once you confirm they aren’t interested in your name, move on (unless they  genuinely  have questions about domain names).

You have a lot more to lose than they have, especially if they choose to be particularly prickly towards you.