Exclusive: A Domain Name Success Story

I have been invited to share this story with you, but the author asked me not to reveal the name of the domain he sold or the exact price. I respected his wishes in the story below. Therefore names have been changed -- but the information remains very valuable. It has lots of useful tips for people seeking to sell names directly! I have commented his story below. - E.H.

NOTE: This story was sent to me by Jeremy Elson. I suggest you contact him if you need more information.

I recently sold the domain name '<domain>.com'. I registered it about 2 or 3 years ago for a computer dating service I was running - after thinking of every possible permutation of "love" (love.com, match.com matchmaker.com, etc.) I finally went to the WordPerfect 5.1 Thesauraus, typed "love", got "<domain>" - which I loved - and immediately registered it when I saw no one else had taken it.

This is a great hint. Look for permutations of a name if you can't get the first name you think of.

Of course, this was before URLs would appear at the bottom of every commercial on TV and I'm now kicking myself for not registering more domains when I had the chance. I could retire!

A French company that apparently wants to run some sort of other French dating service wrote us e-mail one day out of the blue, in August of 97, asking if we were interested in selling our domain name. We eventually settled on a price (low 5 figures).

Low 5 figures is pretty good for a domain name sale.

We used a financial insturment called an "International Letter of Credit" to execute the transaction. It's kind of like an escrow account, but can be done for international transactions and apparently doesn't even cost that much. Basically, the French company deposited the money into their bank in France, and asked their bank to send an International Letter of Credit to some random bank of their choice in the U.S. The money was then transferred from the French company's bank to this random (3rd party) bank. We then got official legal-looking documents from the 3rd party bank informing us that they had xxx dollars waiting in an account and guaranteed they would transfer it to us if we could prove we had met the "conditions" of the Letter of Credit. (The French company and our company had, of course, mutually agreed on the exact wording of the "conditions" -- the acceptable forms proof that we had transferred the domain to them.)

I asked Jeremy what was in that letter. He replied:-

Here is the email from my partner who arranged the deal to the company that bought our domain name. I've changed the names to preserve our privacy. The company that received the doman name was called "S5 Productions". Our company is called the Frost Group. Our bank is First National Bank. The domain to be sold is <domain>.com.

Which bank was used?

The company that bought our domain name chose to use the Bank of New York as a neutral 3rd party. I don't know why; they didn't tell us and we never bothered asking. Bank of NY just acted as a 3rd party bank in this transaction. The domain buyer's company's bank forwarded the money and the International Letter of Credit to the Bank of NY; then the Bank of NY forwarded the Letter of Credit to us, telling us they had the money waiting for us if we satisfy the conditions described above. After transferring the domain name to them we forwarded the Internic registry database entry for our domain to Bank of NY, which then wired the money ($xx,000 less about $300 in fees) to our bank.

But back to the story...

We then wrote to Internic to get the domain transferred, and once the transfer was executed we printed a copy of the registry info for the domain and sent it to the 3rd party bank. The bank inspected the documents, accepted them as proof that we had met the agreed-upon conditions, and then did a wire transfer of the money to our bank, less about $250 in legal expenses. I'm not sure how much the French company was charged on the "sending end" to execute the transaction.

Jeremy had a lot more to say about the actual process to transfer the domain name. This is perhaps THE MOST VALUABLE INFORMATION OF ALL.

The most important thing that I found out is that the InterNIC's guidelines for transferring a domain name are flexible. They explicitly say on their web page that the the current holder of the domain name should fill out a template for deletion of their domain and forward that template to the new owner; and that the owner should then append their New Domain Name Registration template on to the old owner's Deletion template, and that the *recipient* should then forward the combined template to InterNIC with a subject line of TRANSFER DOMAIN.

We didn't like this because it would mean we would have to give our Guardian password to their company, which we would prefer to keep private. (Of course, I'm assuming that anyone who wants to sell a domain name has first protected their domain registration using a Guardian password; otherwise an evil attacker can trivially steal the domain name away!)

If you haven't protected your domain name registration, it is a good idea to do so immediately!

So, I called InterNIC and asked their customer service people if it was okay if the *current* owner of the domain, instead of the *new* owner, could send the combined "delete" and "new" transfer templates. Much to my surprise, they said that it was absolutely fine to do it that way. So, the domain name sale went like this:

1) We and the recipient of the domain name agreed on a price, and agreed on the conditions that I described above.

2) The recipient filled out an InterNIC domain template for Registration of a New Domain, complete with their DNS servers' IP addresses, company name, etc. They then sent this template to us (not InterNIC!).

3) The recipient deposited the money into their local bank and arranged for an International Letter of Credit. Their bank then wired the money and the letter of credit to an arbitrary 3rd party bank in the US -- they chose the Bank of New York.

4) Upon receiving the Letter of Credit, the Bank of NY sent official notice to both us and *our* bank, telling us that they had the money waiting and it was guaranteed to us as long as we could meet the conditions specified (that we had agreed to in step 1).

5) We filled out a Domain Name Deletion template with our private guardian password, appended the recipient's New Domain template that they'd sent to us in step 2, and sent the combined email to hostmaster@internic.net with a subject of TRANSFER DOMAIN domain.com.

Note that this is the step in which we deviated from InterNIC's official guidelines; they say on their web site that the combined registration should be sent by the *recipient*, not the current owner, but InterNIC customer service told us that the current owner was also allowed to send the domain transfer. We chose to send it so that we would not reveal our Guardian password to the company receiving our domain name.

6) After InterNIC effected the domain name transfer we printed a copy of "whois domain.com" and sent it to the Bank of NY. After several days they accepted the documents and wired the money to our bank.

7) Celebrate!

Note also that the transfer won't go through unless the DNS servers that the recipient specifies on the template are up and running, and correctly identify themselves as the SOA for the domain.

BTW, the entire process (from first contact to final payment) took a little more than 4 months.

Jeremy had one final comment...

I noticed that there are certain companies that offer domain name sale escrow services; my first reaction is: why trust an unknown 3rd party when you can trust a bank instead? We sold our domain name with complete legal protection (the Letter of Credit both guaranteed that the French company would get their money back if we didn't come through, and guaranteed that we would be paid if we did transfer the domain) -- and didn't have to rely on some shady domain name broker. I would trust this amount of money to a bank *long* before I'd trust it to some unknown run-in-a-basement domain name broker who popped on to the scene 6 months ago.

That is a very valid point, and indeed brokers seem to spring up like mushrooms these days. I do not feel that all brokers can be grouped into the shady category. Look at their sites in detail, ask questions, ask for testimonials from satisfied customers, etc... Now that you are armed with all the fantastic information Jeremy provided above, you can decide for yourself whether to go through a broker or go it alone. You can also go halfway if you already have a buyer but you want to simplify the process still further: GreatDomains for instance offers escrow and transfer services for a flat $500 fee.

It remains only for me to thank Jeremy very warmly for his amazingly useful story. - E.H.