Negotiating – Making and Receiving Offers

In the buying and selling of domain names, your negotiating skills are an essential part of making money. Use this section of the guide as a loose structure for forming your own negotiating skills.

Making an Offer

There are various ways to approach a domain name purchase. You’ll make your choice according to what status the domain name is currently in (if you haven’t yet read the overview on Buying Domain Names for Investment, it’s a good idea to look at it now).

There are three main types of inquires:

• The Casual Inquiry
• The Lowball Initial Offer
• The Attractive Offer

The Casual Inquiry

If you want to find out if a seller has an interest in selling their domain name, then a short email along the lines of the following may be all that’s needed:

The approach email will obviously need to be different if the domain name is in use for an active site, but the above covers most of the cases in which the domain name is not currently being used.

Notice that there is no mention of your interest in buying the domain name. As soon as you express you desire to buy a domain, you’ll instantly inflate the perceived value of that domain. By stating your interest in buying the domain, you’ve created demand for that domain and therefore the price the owner will quote to you will be higher.

It’s a good strategy to open a free email account which you will use to initiate a first approach to a domain name owner – especially if your main email address indicates you’re from a large, well-funded company. Many sellers will automatically raise their price (sometimes very steeply) if they think a buyer has deep pockets.

By approaching them from a free email account and signing your email with your FIRST NAME (so that savvy sellers can’t research you on the Web), you’re removing any red flags that might cause the seller to start raising their expectations and their prices.

Think of it like this: Who would you expect to pay more for a domain name? John.Q.Generic @gmail.com or Bill Gates of Microsoft?

This method of opening with a casual, semi-anonymous email also gives you the opportunity to make a more formal approach under your “professional guise” at a later date, without necessarily needing to divulge that you’ve been in contact with the seller before.

But there are some problems that may arise from sending this type of casual question.

Firstly, the domain name owner may not take the request for information seriously (simply because it’s worded so casually) and will therefore not respond to your inquiry. Second, the domain name owner may respond with an inflated price just to see if the inquiry was real.

However, if you followed the advice above, you can wait a few weeks and approach the owner again, but this time under a different identity (possibly even under your own company’s identity) and see if that triggers a more positive response.

Of course, the owner may also respond without actually quoting a price. In that case, you can proceed with the dialog using one of the other tactics on this page (while taking into account that you’re already in discussion with the seller.)

The Lowball Initial Offer

This tactic will generally only have a chance of success if the domain name is not currently in use. Instead of sending out a bland, basic email, send out a very specific email and slip in a suggested price which is much lower than you are actually prepared to pay, though not so low as to insult the domain owner’s intelligence. Remember, you’re not going to buy the next business.com for $100!

Here’s one way you could word the email:

If the seller doesn’t have any particular use for the name, but the cash sounds tempting, you may well get back an email saying that the domain name is available at $500 (in the case of this example). Remember though, it’s unlikely that a seller is going to accept less than you’ve already indicated you can spend. In fact, because you’re making a lowball offer, it’s unlikely the seller will accept your initial offer at all. But, by making your initial offer at a level well below your real domain name purchasing budget, you’ve left yourself with room to maneuver should the seller respond with interest in proceeding with the sale, but with a higher price. After that, it’s all down to negotiation!

The Attractive Offer

If you have the means to expend a large sum of money for a domain name acquisition and you really want to secure one particular name, you may close a deal very quickly by making a high opening offer that will get the domain name owner’s attention and backing it with your corporate credentials.

The downside of this approach is that you have destroyed any chance of getting the domain name at a discounted price as you’ve shown the domain owner that you have plenty of money to spend on the purchase.

On the other hand, the vast majority of domain name owners, when faced with a very good offer, are unlikely to turn it down. Using this approach, you may ultimately end up paying less and spending less time than if you’d worked your way through the negotiation starting at a low price.

Here’s one possible email format, though of course this would have to be substantially modified to suit your particular circumstances:

By combining an attractive offer with the pressure of a tight deadline to close a deal, you’ve effectively condensed the negotiation process to a few hours or days.
This approach won’t net you the next “business.com” for $10,000 even in today’s domain name resale market, but it should be sufficient to close a deal on 99.9% of currently unused domain names.

Whatever initial approach you take, this is just the beginning of the domain name acquisition process. You still have to negotiate an acceptable deal and work out the payment and domain transfer specifics.

Receiving an Offer

You’ve had your name listed, placed a reasonable asking price on the name, and waited patiently for a buyer (or marketed to them). Finally, you get an email from a prospective buyer. You might have a number of different feelings regarding it, depending on how high of an offer you’ve received.

Lowball Offers

Your first reaction might be to delete the email without even replying, but that could be a huge mistake. Just because the prospect started at a low price doesn’t mean you can’t negotiate towards a fair price. As you learned in the section on making offers, a smart buyer will open with a low initial price to give themselves room to bargain.

If you think the price is unreasonably low, just write a simple email back explaining the price you are asking and that you aren’t interested in offers below a certain amount.

Buyers Ready to Pay Top Dollar

This isn’t very likely to happen, but if someone does contact you and seems very anxious to buy at a very high price, some degree of caution is advised. While it’s possible a high initial offer will turn out to be legitimate, don’t let a high dollar figure cloud your judgment. Remember that if something seems too good to be true, it often is.

Make sure that you don’t give the prospect any unnecessary information. If the buyer asks for anything unusual or tries to get any kind of information from you that he/she doesn’t need, there is a chance they might be attempting to scam you out of your domain. Proceed with caution. If you’re still unsure, seek the advice of a domain broker or ask for advice on some of the domain name forums listed in the resources section of this guide.