How to Negotiate Buying a Domain Name, Part III

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[This is the final segment of a three part series addressing how startups can negotiate buying a domain name. Checkout parts 1 and 2.]

SELLER
Don’t string me along!

BUYER
Sixty-five hundred. No more.

SELLER
That means nothing to me.

BUYER
Contact me when you’re willing to make money.

SELLER
We’ve been at this for weeks! I’m done… seventy-five hundred and
YOU pay the escrow fees.

BUYER
Fine. After the domain transfer, we’re done professionally.

Despite what people think, negotiations are not like in the movies. No one abruptly hangs up phones and there’s no quirky supporting character that asks how you knew they would call back. If you’re interested in real negotiation tactics to buy domains, read on.

This series has covered the salient research you need to conduct before contacting domain owners and subsequently how to initiate outreach. This portion will cover the interaction phase. Always keep in mind that you’re communicating with an actual human. People are more likely to be swayed to help you meet your goals if you’re earnest and friendly.

  1. Conduct
    • Stay Calm and Collected – Your emotional control is non-negotiable. Have tact and don’t let the heat of the moment dictate how you respond. If things go awry, don’t resort to threatening your seller with a lawsuit at any point during the negotiation or even at the conclusion of the deal. While a verbal or written contract is binding, it’s extremely difficult to enforce and carry out in a timely manner. Litigious action should be a last resort. If the seller comes off as agitated or angry at any moment in time, you may want to step-back and wait a day or two before responding.
    • Reply Succinctly – Send them amicable but also concise responses, unless otherwise warranted. Creating a rapport is great, but only if the seller is actually interested in talking.
  2. Tactics and Responses
    • Move Past Initial Rejection – If they don’t respond to your initial email with a price, you’ll have to supply the first offer.  If they don’t accept it , they’ll often ask you to submit another one. Try your best to get the domain owner to counter your offer or at least have them provide a ballpark price range, e.g. 4, 5 or 6 figures. It’s best to not negotiate with yourself.
    • Lower Their Value Position – If they respond with a number that’s clearly outside your budget, try to knock them down to reality with the research you’ve done like the domain appraisal value and comparable sales that were lower. Sellers will have less of a foot-hold if they feel that you know the market and the domain name. Focus on lowering the domain’s value so they’re forced to try and sell it to you. Remember that you don’t want to lie or sound condescending, but let them know you’re interested in getting the best deal for your company and there are other alternatives for you. It’s even better if those alternatives have added advantages over this domain: higher SEO rankings, less trademark issues, higher appraisal for lower price. Let them know that you’ve done your research and have other options.
    • Beware the Straw Man – Unless they’re clearly a broker, domain sellers will often present additional decision makers into the process to blame a scarecrow or induce doubt. “My boss/partner/spouse won’t let me sell it below x amount.” Don’t call them out on this, but be aware that this is a tactic, and you’re negotiating with this person and not someone else. If you believe this person doesn’t actually have selling power, politely request to talk to the decision maker.
  3. Domains at Auction – My previous article covered contacting the seller on the auction platform to get them to post a BIN that’s agreeable with your budget. Here we’ll go over possible outcomes:
    • They Haggle and Then Agree – After you come to an agreement with them, make sure you precisely coordinate the exact minute they’ll post the BIN so you can accept it. You don’t want someone else purchasing the domain you negotiated for.
    • Bidding War – If they request that you publish your offer as a bid in the auction, see if their “reserve” has been met. Diligently monitor the final moments of the auction and act accordingly.
      1. The Reserve is Met – If someone placed a bid that meets the reserve, they’ll win the auction if no one bids a greater amount. Try making a higher offer to the domain owner for a BIN to avoid conflict with the other bidder. If the domain owner still rejects it, wait until the last possible minute to post a higher bid to avoid igniting a bidding war.
      2. Bidding – If there are other bidders in the auction, be prepared for an hour or more of trading bids. Most auction platforms extend the time of the auction each time someone places an additional bid at the end. If you have the time and patience, don’t use a proxy bid, where additional bids are automatically placed on your behalf until your ceiling is reached. Proxy bids let the other bidder know that you’ve set a pre-determined budget and they just have to outbid that fixed amount. If you draw out the auction and continue to bid when it gets close to the final minutes, it’s possible they’ll be deterred from sticking around and bidding in small increments.
      3. Reserve Not Met – Monitor the end of the auction closely and make sure no one is close to the reserve. Contact the domain owner again after the domain fails at auction and make a private offer. Sellers are usually more willing to accept an amount that’s equal to their reserve. Also take note if  no one showed interest or bid on the domain while it was at auction. This could be a reflection on the domain’s value or possibly just poor planning on the domain seller’s part. Either way, you should mention the lack of auction participation to the seller to lower their position.
  4. Deal Terms – Sometimes you’re near a deal, but you need to get more creative to close it. Make sure you investigate all the following possibilities before abandoning the name:
    • Financing Options
      1. Upfront – This is always the most attractive option for the seller. They just want a quick and easy transaction. Let them know you’re willing to pay immediately and carry out the transaction if they can move forward.
      2. Lease-to-Own – Use this option if you can’t pay for the domain in-full. Make sure the domain is held by a third party unless you’re buying from a major company. Have them include an option to buy the domain at any time without penalty and iron out the exact payment schedule.
      3. Renting the Domain – Don’t do this. Seriously.
      4. Trade – If you have other domains or services that the seller is interested in, you may want to throw these in as an extra benefit of doing business.
    • Sweeten the Deal
      1. Cover Fees – You can offer to cover the escrow and/or broker fees.
      2. Points – Depending on the value of your business and the domain, you may want to entertain the idea of offering a small amount of nonvoting stock in your company.
  5. Transaction – Domain owners will often exhibit seller’s remorse when you’ve bought their domain, especially if it was below market value. Sometimes they claim the transaction is “void” for any reason under the sun or simply disappear without contact. Avoid needing a court ordered settlement to procure your domain by carrying out the transaction as quickly and easily as possible. If a seller immediately agrees to your first offer, try not to respond over joyously or talk about your budget. Remark that it’s a bit more than you would like to pay and immediately initiate the transaction and transfer through escrow.
  6. Long-Term – If after everything the deal still doesn’t work out, remember to keep the conversation and rapport amicable. Test the waters and clarify what the bottom line is for both sides before ending the conversation. Knowing that you’re willing to go to $10,000 and they’re willing to lower to $20,000 might come in handy later when they need to liquidate their portfolio for financial reasons or they find it’s not as easy to sell.

Throughout this process keep in mind that you’re dealing with real people and there are always other alternatives. Only react based on your observations and strategy, and not emotions. If you need more advice tailored to your specific situation, leave a comment below, or try posting your question on NamePros for more tactics on domain sales.

If you have any recommendations, or stories about your negotiations, please share them!

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