With domain theft and hijacking more prevalent than ever, it’s often safer to employ the services of a third party expert when selling or buying online. In the domain world, that means using a broker [1] to negotiate deals and using an escrow service to complete the transaction. Most of the time (though not always) the escrow services, brokers and listing sites are all offered by the same company.
Escrow Services
Domain escrow services are very much like real estate escrow accounts. The money and/or goods are stored in a service run by an objective third party, who then releases the money and/or goods to their respective parties when all of the conditions of a deal have been met.
For example, if you and a prospective buyer decide to use an escrow service, you would transfer control of the domain name to that service. At the same time, the buyer would transfer the money to the service as well. When both parties have completed their portion of the deal, the escrow company will then hand the domain name over to the buyer and the money over to you.
Not all escrow services operate the same way though. Instead of taking control of the domain and then turning it over to the buyer, some might hold the money, then wait until the seller transfers the domain control to the buyer before giving the seller his/her money.
Escrow services aren’t always used for smaller transactions. The ones for $200 – $300 might make escrow services seem ludicrous since they charge money for each transaction they oversee. However, the added safety that an escrow service provides often makes their services worthwhile for even the smallest of transactions.
If you don’t feel an escrow service is necessary for a particular transaction and the other person seems adamant about it, you might try stipulating that they will pay the extra fees. Often times, the seller will insist that the buyer pay the fees anyway.
If you’re considering a less reputable escrow service, do some research before giving them your money. Some con artists have set up ‘fake’ escrow services on false websites in order to take illegal control over domain names. Be careful of buyers and sellers who claim they will only work with one specific escrow service as well, particularly if that escrow service is unheard of or not listed on our escrow services resource section.
Domain Brokers
Domain brokers also act as mediators between buyers and sellers. The difference is that their expertise is used throughout the negotiation process instead of the just during the actual transaction. Domain brokers work on behalf of either the buyer or seller Though care should be taken if you find out that the same broker is acting on behalf of the seller and the buyer. This arrangement could easily turn into a conflict of interests. Dual brokerage is not recommended in the real estate industry, nor is it recommended in the domain industry.
Brokers can be very useful when a seller is slow to lower their selling price. New domain owners tend to be much more responsive to seasoned and reputable experts than they are to an unknown email message with a less than desirable offer. Even if your offer is fair, sellers sometimes have unreasonable expectations that a broker can assist with.
For their services, domain brokers generally earn a percentage of the final sale price. If you find an experienced broker who’s good at the bargaining table, the money you save on a single domain name could easily pay for their service.
If you’re contacted by a domain broker about one of the domain names that you’re selling, remember that negotiating is their specialty. You might easily find yourself saying ”yes” to a price you never would have previously considered. While this is not necessarily a bad thing, particularly if your domain was actually worth less, keep it in mind at all times and do not allow them to bully you into accepting an unfair amount.
Now that you’ve read all about buying and selling domain names, let’s take a closer look at some of the legal issues that domainers must learn to deal with.