GoDaddy is set to introduce a Lease to Own purchase option for buyers of aftermarket domain names listed for sale via Afternic. This option has been one of the unique points of differentiation for sellers on Dan.com, a company acquired by GoDaddy last year.
While I offer LTO on most of my domain names I have listed on Dan, I am cautious about it with others because of the potential damage highlighted by Brad Mugford:
Interesting, but a quick question.
Is the buyer allowed to use the domain during the lease period?
If so, where are the terms regarding the buyer’s usage?
For the low price of a LTO payment, a buyer could possibly damage the value of a domain.@jamesiles @PaulENicks https://t.co/lWxvZBwiJL
— DataCube (@datacubecom) July 14, 2023
In advance of offering LTO, sellers need to evaluate and understand the risks of offering this on their domain names.
As Brad mentioned, someone could make one payment worth 1/60th of a valuable domain name’s retail value and use the domain name in a way that either damages its value or puts it into harms way. Some examples I can quickly think of off the top of my head:
- Send spam or scam emails from the domain name
- Do outbound marketing to try and sell the domain name to companies utilizing the keyword in their brand
- Park the domain name with blatantly infringing links
- Use the domain name to sell or display illicit content
Would someone do this maliciously when they have presumably outlaid a sizable first payment? Would it be much different than doing outbound “brokering” on a domain name the “broker” doesn’t own or sending spam emails while faking the return email address? I don’t really know.
I imagine it could be more complicated (and possibly expensive) to legally force someone to stop what they are doing if they have rights to use the domain name via the LTO and they aren’t violating any laws or the violation is a grey area in the LTO TOS. That’s a question you may want to hire a lawyer to ask who will need to read the Dan.com TOS and possible the GoDaddy TOS.
For me, I have been more cautious about offering LTO deals. On my highest value domain names, I generally do not offer automated LTO deals where someone can initiate a deal without my involvement. I do them privately, but that requires a more extensive and customized agreement. Even on names that aren’t as valuable, I am a bit cautious about offering LTO deals when the usage of the domain name could harm its future value or put it at risk. I may also mitigate the risk by offering a much shorter term LTO, like 6 or 12 months, so the payments are higher.
Wise domain investors should consider the implications of LTO before offering them across the board. They may wish to hire legal counsel to understand the risks of UDRP and to understand who would pay for a legal or UDRP defense in the event a leased domain name becomes the subject of such action. It would also be good to know what happens if a domain name is lost via UDRP. Could a seller be sued if a domain name is lost via UDRP in the middle of a payment plan where the buyer hadn’t even used the domain name yet? Again, these are questions domain investors should consider and should hire counsel to advise on before opting in to LTO.
I have done quite a few LTO deals and have more than 10 active LTO deals right now. I think investors need to consider and evaluate the possible risks before implementing this option.
How about Payment to Own instead LTO?
It means that when you make the whole payment ,then your fully own it,so the faster you make the payments the faster you own it.
If you don’t pay,then I get all the payments.
This shows how serious the buyer is on the domain the buyer wants.
Brad is exactly right. I don’t offer LTO on any of my 900+++ names. One of my names that is priced at a significant number, but would lend itself to content that may damage the brand is TheUnitedStates.com. If a political party or news organization purchases the name, it is no longer my concern, as I’m paid in full. But yes, I can see a party paying one payment and publishing content is many ways that would damage the brand. Now, I’ve sold several million dollar City names on terms, but these were with significant down payments, and also having knowledge about the Buyer, and their development plans. You would not have this same benefit on a LTO deal.
Agree…if you want to” test drive “the domain then you either pay the initial high down payment or buy in full…
This is to protect your domain and to show how serious the buyer is..
100%. They need to pay at least 30 % and then the rest monthly .That really shows how serious they are .
I recently made a buyer pay me half the price of a domain and the balance he can continue to pay monthly .I think investors should start raising the bar and getting 10% to 50% part payment and the rest of the installment can be done monthly .This should help deter any form of abuse which i am not saying wouldn’t stop some bad actors but it would give you enough cash t fight whatever udrp you may encounter, should there be in.You would have funds for a good lawyer and also make sure the the agreement doesn’t permit the buyer to lease or offer name for sale .
GD should make surer it is stated boldly that buyer cannot offer name for sale until ,domain is in their account after full payment is made.
Further clarification. On any of my higher priced domains, even though they have no “LTO” or rent or payments plans offered, I would absolutely entertain a monthly or quarterly payment plan on any of them, WITH contractual stipulations about content and potentially damaging activity. I’ve had one default on a $35,000 name, but took it back and retained $17,500. The 7 figure names have never come close to missing a payment; they are reputable, established businesses with great reputations, and all have paid a mid six-figure down payment. To address what Mika states, I have zero concerns about allowing the payment buyers to be able to sell the domains to another party, and make a profit over and above my selling price to them. What you are trying to stop is someone making a small 1/36th payment then trying to sell the domain at a profit; this isn’t an issue with the proper down payment. Not sure how you stop someone from doing this at Afternic when they make a 1/36th initial payment, and it is why I won’t list my names with LTO payment options.