When someone emails you an offer for a domain name, its important to do whatever it takes to find out who the potential buyer is. Not only is it important to allow you to maximize a potential sale, but its also important to head off any potential legal issues that could come as a result of even good faith negotiations. The OpenDental.com UDRP decision shoes how negotiations can lead to a UDRP loss even when the domain name was initially registered prior to the Complainant’s use of the term.
Reasons why it’s important to identify a potential buyer:
1) Achieve a better price: Most people register domain names because they see the potential business that could be built on the domain name, although many people are buying domain names because they believe they make great investments, rather than because they hope to build a business based on their vision. Like just about every type of asset and other goods, most people will sell if the right offer comes around. This is why people engage in negotiations whether they intend to sell a particular domain name or not.
A buyer wants the best possible price and generally will not share the maximum price it can and will pay for the domain name in order to get a good price. Some corporate buyers have big budgets, but they won’t disclose who they are, since the seller would probably be less inclined to give a good deal. If the domain owner can determine who the potential buyer is and what his budget might be, he could achieve a higher sales price. Likewise, the domain owner could also realize he is wasting time with a fruitless negotiation, if the buyer is in fact a poor college student.
2) Legal leverage: Some people make offers on domain names in order to bait the domain owner into negotiations in an effort to gather evidence of a bad faith negotiation. Although a domain name would appear to be generic in nature, many companies will argue that they use the term for a brand or slogan, and therefore it’s not generic. With UDRP cases sometimes a toss-up, it makes business sense to pay $1,500 to file a UDRP rather than pay $50,000 for a domain name. If you know that this potential buyer may have a claim to your name (or has a litigious/UDRP-happy past), you can avoid negotiations.
3) Time/money wasting: With domain appraisal scams still in existence, a domain owner needs to know whether he is dealing with a serious offer or someone who is running a scam. Time and money can be saved by not replying to a domain appraisal scam email, and they are fairly simple to identify.
Ever since I added privacy to my best domain names, I haven’t received many unsolicited offers to buy them. Since a few of them are stand alone businesses, I figure if someone intends to make a strong enough offer for one, he will know they are fully developed and have advertising contact forms in plain sight. That said, I have a number of clients and friends with sizable domain portfolios, and I have been helping some do due diligence on potential buyers for a few years. This has paid off in many cases, and I think it’s important for you to investigate all potential buyers before you reply to a domain inquiry email.
Tomorrow afternoon, I will post 5 methods I use to determine who a potential buyer is.