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Domain Buying and Selling

  

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 is no single “right way” to approach a domain name purchase, so you’ll have to choose the method you feel most comfortable with. Take into consideration your situation and the status of the domain name you’re looking into buying. The following should give you plenty of ideas you can draw upon and adapt when making your own deals, but make sure to rewrite the samples provided to suit your own style.

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:

Hello,

I see that you own the domain name Domain.com, but that you are not using it for a web site. I was wondering what plans you had for the name.

Regards,

FirstName

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:

Hello,

I see that you own the domain name Domain.com, but that you are not currently using it for a website. I/ am currently looking at acquiring a domain name for my business and your name, Domain.com, is on the short-list.

I have $500 budgeted for acquiring a new domain name and can close a deal quickly. Would you please let me know if you would be interested in selling Domain.com, and if so, at what price?

Regards,

FirstName LastName

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:

Mr. X [See if you can find out the domain name owner’s details from the whois record] ,

I represent the company Large Company, Inc. and have been tasked with acquiring a domain name for our new business portal to be launched [date a few months from now].

Your Domain.com domain name is at the top of our shortlist of names, and we would be prepared to pay up to US$10,000 to secure this domain name.

Time is of the essence as we need to secure the domain name by [date much closer to now], so that our Corporate Communications department can prepare the relevant logos and letterheads.

I am available to discuss this transaction at the number listed below. I look forward to your reply.

Sincerely,

FirstName LastName
Company Name
[Phone Number]

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.



9 Responses to Negotiating – Making and Receiving Offers

  1. Michael Romm
    03/17/2013 at 10:30

    I am interested in buying a domain that is owned by someone else. I also own five domains I want to sell. I have never bought or sold a domain other than for my personal use before. Can someone contact me and let me know how it is done? Thank you.


    • Hi Michael, To sell your names, please visit http://www.igoldrush.com/sell. If you’re interested in a name that someone has listed in the showcase, click the ‘Make Offer’ button to contact the seller. The iGoldrush Showcase is a free resource and all sales are handled directly between the buyer & seller. Thanks!


  2. If an existing company (12+ years) offers you a princely sum in the high 4 figures for your generic 7-letter unused dotcom, how much percentage higher do you counter with? I always had big ideas for the domain, but have never gotten around to it. I was really into domain buying back when I bought it around the year 2000 (shocked it was available). But I’m thinking it’s time to part ways. I don’t want to get into a ball busting affair, so what do you recommend?


    • By the way, I get bites on this domain every year… some serious (with very little cash) and some that inquire without any offer. This is the first the company came right out and said, “We’ll give you XYZ.”

      And back in 2004, I had some schmuck claim he’d never allow me to use it because he had the trademark on it. But his TM is narrow and this is a generic name. The company offering is serious and they have TM for a different industry.


    • It’s hard to say with unused domains because unlike an established business, you can’t charge 3x the profits, etc. The price on unused domains tend to be more about demand and who is willing to pay the highest price and how valuable it is to them. Does this name have existing type-in traffic? How long has it been registered? Does it contain high traffic keywords? These all affect potential pricing. Another strategy some use is to ask for double what they want as the final sale price and hope negotiations end up meeting in the middle somewhere near the sales price they desire. You may want to start with an appraisal service and go from there. We recommend several here: http://www.igoldrush.com/domain-resources/domain-appraisers


  3. many people are aggressive by offering very low price, this is normal they want to pay as little as possible. But attention, when you negotiate with the landlord for a domain name, remain professional and do not use words that may offend like “my offer goes down to $ 50 per day” 🙂
    Thnaks


  4. I recently sold a couple of domain names (same name, .com & .net TLD’s) which I had been squatting for $1,000 each, the domains were appraised at $5,000 each, the buyer said he runs a charitable non-profit organization and his $1,000 offer was all he could afford, so I agreed to the sale and he promptly paid. Then a week later, the buyer sold both domains to another party for $20,000!! Is that ethical or even legal? As it turns out, the buyer does this sort of thing alot and makes several hundred thousand a year lying to people that he runs a non-profit organization. So now I never trust a buyer’s initial low-ball offer, he robbed me of my domains that were worth much more than he paid me. Was I scammed?


  5. Very useful information on making and receiving offers related to domain names.
    I’ve learned many new things on domains’ negotiating.
    Thank you, iGoldrush!


  6. Oscar the Grouch
    11/02/2016 at 15:10

    Regarding lowball offers. This is a technique that has a high chance of failure.

    I was just contacted out of the blue by a real company that auctions domain names, stating that they have a buyer interested in a domain that really don’t use.

    I’d sell it, but am not actively looking to do so. I told them to have their client make an offer.

    If they make me a lowball offer, the conversation ends. There won’t be a second chance. This is known as a win-lose negotiation, and is usually successful when the person has no other choice, or is really stupid.

    I’m not in that position. You should assume the same thing, or you’re likely to spend a lot of time fishing and getting no fish.


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