Your Guide to Finding the Seller, Negotiating the Price and Closing the Deal
All domain names are not created equal. That’s why some domain names sell for $7 … and others sell for $7 million. The best domain names provide instant business advantages, such as higher organic search-engine rankings and traffic, better paid-ad click-through rates and improved brand recognition. The best are also trickier to purchase, involving tougher negotiations with savvy sellers.
Here are five rules of thumb for buying the best domain name for your business.
1. Don’t Assume That the Best Domain Names Are “Unavailable”
Chances are, if you visit a domain registrar like GoDaddy.com or Moniker.com and type in a catchy, one- or two-word .com domain name, you’ll get a “domain name is not available” message.
That message means that you can’t register that particular domain name because someone else has already done so.
But it doesn’t mean the domain name is truly “unavailable.”
There are millions of pieces of prime Internet real estate – also known as domain names – that are lying vacant, waiting for someone to build a great Web property on them. If the price is “right,” the registrant is often willing to sell.
There are millions more that have fully functional websites on them. If the price is “right,” the registrant is often willing to sell.
Whether your desired domain name is registered to a big corporation or a private individual, whether the registrant has had it for a decade or for a day, whether it was obtained for business use or personal enjoyment, if the price is “right,” the registrant is often willing to sell.
The challenge is determining who the registrant is, what his idea of the “right” price is and whether your monetization model can generate the desired rate of return on that price.
2. Find the Registrants of the Domain Names You Want
So you’ve picked out a few highly desirable domain names for your business that are already registered. How do you find out who registered those domains? And how do you determine whether the registrants are willing to sell?
If you’re Internet savvy, then you’ve probably heard of the WHOIS system that allows anyone to search its database for domain-name registrant information.
In theory, the WHOIS system makes it easy to look up the domain name of your choice and find out exactly who registered it.
In theory.
In practice, many domain-name registrants take advantage of privacy options that let them keep their identities confidential.
When registrants activate these privacy settings, it’s nearly impossible to contact them to determine whether they are interested in selling. If by chance they’ve developed websites on your desired domains, you can try reaching the registrants through the sites’ “Contact Us” mechanisms … but unfortunately, inquiries sent via this route are all too often lost or ignored.
One way to blast through these blockades is to work with an experienced domain broker, such as Moniker Domain Brokerage. Good domain brokers like the ones at Moniker have deep expertise in all aspects of buying and selling domain names. In most cases, they can get past WHOIS privacy obstacles to find out exactly who registered your desired domain names.
3. Interact Anonymously With Domain-Name Sellers
Once you’ve identified a potential domain seller – either on your own or with the help of a domain broker – one of the biggest mistakes you can make is revealing your own identity.
To understand why, just put yourself in the seller’s shoes for a minute. Let’s say the seller has a telecommunications domain name. If an average Joe wants it to start a cell-phone reseller business, that’s one price in the seller’s eyes. But what if the intended buyer is AT&T? Or Deutsche Telecom? Or even the top cell-phone reseller in Dallas? The seller’s idea of a fair price just shot through the roof based on the perceived depth of the buyer’s pockets and the potential business value to an established company.
For this reason, it’s best to let an experienced, trusted third party make inquiries on your behalf.
For many companies, attorneys are often the first choice for handling domain-name purchase inquiries. However, when it comes to high-value domain names, attorneys do not always make the best advocates.
That’s because most attorneys, no matter how talented or hard-nosed, don’t have a deep understanding of the micro and macro variables that influence the value of a domain name. Chances are, they’ve never:
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Butted heads with the unreasonably emotional seller who thinks his $25,000 domain is worth $250,000.
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Regularly matched wits with savvy domain-name investors whose livelihoods depend on buying and selling domain names.
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Helped you make the case to your CMO and CFO for why the purchase of a premium domain name makes business sense.
Domain brokers, on the other hand, deal with these all-too-common situations on a day-to-day basis. This means that a solid domain-brokerage firm can not only fulfill your need for anonymity, but can go the extra distance to make sure that any deal you make makes business sense.
They can advise you when to compromise and when to walk away, because they know how to value domain names, the Internet's version of "location-location-location," to make sure you’re getting prime Internet real estate at fair prices.
4. Learn What Constitutes a Fair Domain-Name Price
In any negotiation, price is often where the discussions break down. This can be especially true in domain transactions, because most potential buyers don’t know how to determine the true worth of domain names.
For example, that cool, catchy domain name that you think has an “outrageous” $100,000 price tag might actually be a bargain if it can significantly improve your competitive positioning.
Several factors make one domain name more valuable than another, including:
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The volume of type-in traffic: Type-in traffic, also referred to as direct-navigation traffic, occurs when users go straight to the Web-browser address bar and type in domain names like “computer.com” or “LAnightclubs.com” instead of querying a search engine. Depending on the domain name, type-in traffic can bring in a few hundred to a few hundred thousand visitors per month – “free” traffic that you get just by virtue of having a great domain name.
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The inclusion of search-engine keywords: Search-engine algorithms give higher organic rankings to domain names that contain popular keywords. In addition, users scrutinize URLs to determine which PPC ads or organic listings to click. So a domain name like “CheapPlumber.com” is more likely to rank high and convert well than “BobSmithAndSons.com.”
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The domain name’s age: Older names are more valuable than newer ones, simply because search engines tend to rank them higher.
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Branding potential: This factor, though harder to quantify than the others, is no less important. A domain name that closely conveys what your business is all about and that allows you to build a strong brand identity around it can go a long way toward building your business. Or, it could go a long way toward building a competitor’s business – making it worth your while to take it off the market.
One way to get savvy about domain-name prices is to peruse publications and Web sites geared toward domain-industry professionals, such as DN Journal or The Domains.
Another way is to rely on the expertise of a seasoned domain-brokerage firm, since domain brokers live, eat and breathe domain-name sales. They can approach sellers with recent prices for comparable domains, analyses of website-traffic data and perhaps most importantly, dispassionate professionalism that keeps buyer and seller emotions from derailing the negotiations.
And in a worst-case scenario, when a stubborn seller refuses to budge on price, the domain broker also knows where to find you an alternative, equally effective domain name at a price that makes business sense.
5. Avoid Domain-Financing and Domain-Escrow Mishaps
Let’s assume you and the seller finally agree on a price. Whew! The hard part’s over, right?
Well … sort of.
You still have to agree on payment terms.
For domains that only cost a few hundred dollars, it’s easy to whip out your credit card. But for ultra-premium domains with higher price tags, financing can be tricky.
Experienced domain brokers can sometimes negotiate five-year leases or other creative terms that domain sellers normally wouldn’t extend to unknown third parties. Brokers can also steer you to reputable finance companies that specialize in domain-name transactions when the seller insists on full, up-front payment.
Last but not least, domain brokers can help you clear the final obstacle in buying a domain name: a smooth and risk-free transfer of registration.
When a domain name changes hands, there are strict procedures that both the seller’s domain registrar and your domain registrar must follow. If either party fails to properly complete and file the right authorization forms, the seller can claim you stole his domain name and take it back – even if he’s already received and spent your money.
To protect yourself from this worst-case scenario, you should pay the seller via a trustworthy domain-escrow process that doesn’t release your funds until the seller transfers the domain name.
It’s important to note that many popular escrow services do not fully protect domain buyers in this regard, because they do not actually audit the paperwork from both parties’ registrars or double-check that the transfer is actually complete.
Be sure to work with a domain broker who monitors the domain-transfer paperwork for accuracy and completeness before authorizing your escrow payment. The best brokers also insist on a written contract, signed by both you and the seller, before finalizing the transaction. Courts tend to view these formal documents as more legally binding than the simple Internet agreements most online escrow services use.
Buy Internet Domain Names With Confidence
Acquiring a great domain name that can immediately boost your business results doesn’t have to be daunting. The best domain names are often available for sale when experienced negotiators approach the registrants in the right manner.
A trusted third-party, such as an experienced domain broker, can greatly simplify the process by helping you identify the domain registrant, maintain your anonymity, negotiate a fair price and ensure that the domain-transfer process goes off without a hitch.
And if a domain on your initial wish list is not for sale, a good domain broker can steer you toward other equally effective domain names, giving you multiple options to consider within your desired price range.
About Moniker Domain Brokerage
Moniker Domain Brokerage, a 10-year pioneer and leader in the domain-brokerage industry, has successfully closed domain-name deals ranging from $10,000 to $9 million. Moniker distinguished itself early on as the first broker ever to sell a $1 million domain, going on to represent buyers and sellers in successful domain-name transactions totaling more than $150 million. The company also offers domain appraisal, escrow, premium-auction and corporate-registrar services.
