I was negotiating a domain sale with an end user buyer a couple of weeks ago, and when it came time to discuss payment, he mentioned a potential hardship in paying the full amount at one time. I didn’t want to lose this sale, so I mentioned that there are financing alternatives since banks don’t generally lend to purchase domain names.
In order to close the deal, I arranged an introduction to Domain Capital, and fortunately, the buyer and Domain Capital were able to come to terms, and the deal closed yesterday. When I think of Domain Capital, I generally think of domain investors and others with domain industry connections who use the company as a means of financing an acquisition or getting liquidity for domain names they own. I am glad I thought of them when I was dealing with this end user buyer.
Of course, there are other financing alternatives to consider (a couple of which I considered), although two of these are not really “financing” per se. You might consider these options when closing a deal with an end user, even if it’s not mentioned. I would imagine some people wouldn’t discuss a payment hardship, so unless you suggest the financing options, they might balk at paying your asking price.
Here are a few domain financing options:
- Domain Capital – I mentioned it above.
- Self financing – Offer the buyer the option to pay with a payment plan and keep the name until payment is made in full. It’s the least expensive option but it can get hairy if something goes wrong. Be sure to have a solid contract with the buyer and don’t risk this on a valuable name.
- Escrow.com payment plan – It’s not cheap, but it may make a buyer more comfortable to have the name held in escrow while payments are made. You can also step away from the transaction and let them collect your payment on your behalf. Escrow.com offers this on deals valued at $75,000 or higher.
- Attorney escrow – Work with an attorney like John Berryhill (who I know offers this on some transactions). You can work out the legal agreement and his firm will hold the domain name in escrow while payments are being made.