

Ask HN: How to purchase a domain from owner? - kliao

I am interested in purchasing a domain name that is currently up for sale. The owner is asking for an offer price. What is a good way to determine the price to offer, and on what terms are domains typically sold?
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jeffmould
The first rule in negotiation is to get him to give you a price. From here you
have the upper hand in knowing what his thought process is. By you providing
him an offer price you are doing one of two things. You are either letting him
know your "minimum", or what you think it is worth personally, or you are
letting him know your "maximum". Either way you are hosed here. If you let him
know your "minimum" he knows he has room to negotiate up. If you let him know
your "maximum", you are opening yourself up to paying way more than what you
could have potentially purchased it for. By getting him to concede a price you
gain this upper hand. If you believe that the price is to high, you should
work to prove him wrong. If you believe it is a steal, then jump on the deal.

Now the question is how to determine if his price is "realistic". There are
several factors at play here. First he may see you approaching him about the
domain as a chance to make "big" money. His understanding of the market may be
minimal and he may have read new stories of people paying top dollar for
domains. He may perceive your approaching him as a chance to make his cash.
Knowing what his price range is a step for assessing this. Proving exact
traffic will be difficult, but you can guesstimate the amount it may
potentially receive.

1) Is the domain name currently ranked in Google in the top 10 or 20? If it is
in the top 10 it has instant appeal for you and the price just went up. Top 20
still getting a good price, but not as much as in the top 10. 2) Is he
monetizing the site currently in any way? If so, you should ask him to provide
you with documentation or some kind proof on how much he is making from it.
This may be difficult and he may be reluctant to show you. Comes down to power
of persuasion here. 3) Is the domain something "catchy" or a high-demand
domain name (i.e. 3 letter .com)? 4) If you find yourself making no headway or
want an extra negotiating tactic you can always have the domain "appraised" by
an independent 3rd party (yes there are companies that do this, I just can't
think of their names right now). Just Google domain appraisers or I am sure
someone will jump in here and fill in the blanks. You can sell this as a
benefit to him as he will now have an outside opinion on the value of his
domain. The problem with this method is that you and him may be thinking the
domain is worth $100, but the appraiser comes in and says it is worth $1000.
Now he is going to want a $1000 when you could have had it for $100. This is
where knowing his price thought is beneficial. 5) Put your offer out there.
Walk away if necessary if you don't feel him budging. Give him a few days and
come back to him. Let his emotions (good and bad) wear down over those days.
If this is the first time someone has approached him regarding the domain he
may be tempted for a big offer at first, but after a couple days of sitting on
his brain you may get a more realistic response.

As for terms, just make sure that all control and ownership of the domain is
transferred to you. You could work with an escrow company or third-party for
this.

~~~
lionhearted
> The first rule in negotiation is to get him to give you a price.

This can backfire if they offer a very high price that they can't come down on
without losing face. An alternative strategy is to offer your "maximum
plausible position" (forget who coined that phrase, smart guy though) - in
this case, the lowest dollar amount that you won't look like you're joking.

To use a high profile real life example, look at Scott Boras, the baseball
agent. He'll ask for 7 years and $110 million for a client that eventually
gets 5 years and $60 million... but who was arguably worth less than that.

You're right about over-bidding, you need some knowledge about the worth of
things to make an offer that isn't ridiculous without risking overpaying. But
if he's bidding a on a decent parked 3 letter domain name, for instance, it'd
be silly to bid less than low hundreds. For a longer or less memorable phrase,
maybe you could open with offering $50. But it's not always a mistake to offer
first, it can set the tone and scope of the discussion.

------
kylecordes
The big difficulty when purchasing domains is this:

Consider a person who owns unused domain X. X comes up for renewal. Owner is
torn about whether it's worth another $10 (or whatever) to own the domain
another year. If they say the domain out there for sale for $100, there is no
chance this person would buy the domain.

Then a random inquiry comes in from a potential buyer. The owner is suddenly
struck with a powerful case of the endowment effect (
<http://en.wikipedia.org/wiki/Endowment_effect> ), and imagines the buyer is
probably a well-funded startup, or maybe a Fortune 500, or perhaps even
Google! Or Microsoft! Or maybe a joint venture between Google, Microsoft, and
Facebook, which desperately needs this domain! Suddenly the owner treasures
this domain. The thought of parting with it is unbearable. The notion of
putting a mere price on such a precious domain, unthinkable!

Yet the actual prospective buyer might only find the domain worth a few
hundred dollars; so usually no deal is possible.

------
stephenou
Let's say there are 3 types of domain: parked domain, in-use domains,
monetized domains. Here's what I would do:

Parked domain: I would offer no more than $50. Most parked, un-used domains
are going to be parked forever. The chances being sold are very low, so you
can use this advantage to really push down the price. Also, if the domain name
is just the name of one of your project idea, you can always pick something
else that its domain is available.

In-used domain. At this part, it really depends. As jeffmould said, try
looking up its search engine ranking and determine its value based on SEO.

Monetized domain. Usually the owner of this kind of domains wants to sell at a
relative high price. Do a little bit of research and estimate how much the
site is making every month. Let's say it's generating $1000 ad revenue per
month, anywhere between $5000-$10000 will be acceptable.

To conclude, the golden rule is always offer your lowest expected price.
Because the owner is 100% going to raise the price from what you say until
you're both satisfied.

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dangrossman
If you do come to an agreement eventually, I recommend using escrow.com for
the transfer. It protects you both from the other party backing out. They have
a service specifically tailored to domain sales.

You pay escrow.com for the domain, not the owner directly.

Escrow.com notifies the domain owner that they have his money, and he can now
transfer the domain to you knowing you're not going to run without paying.

Escrow.com will only release your money after they verify the WHOIS data
reflects the transfer to your ownership.

If he didn't really transfer the domain, he doesn't get your money, and
escrow.com will return your money. If you do have ownership of the domain,
escrow.com already has your money and won't give it back without going through
a binding, mediated dispute process.

------
DanBlake
I always contact people with the same line, from a email address I make up on
the spot (so they cant google me and end up asking for pie in the sky prices)

"Hi, I have a idea for a website I want to make with some friends and your
domain looks to fit the part- How much would you want for it?"

Really defuses the high price thing and usually ends up with them asking for
something under 500 bucks

ymmv

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wacheena
I used to work in the domain business for Google.

Professional parkers value a domain based on its current traffic and ad ctr.

"Premium" domains - whole word .com domains generally have the highest value
because 1) users sometimes type them into the address bar, 2) they have a
better chance of ending up in organic search results and 3) there is usually
clear ad targeting for users who visit the site (leading to a higher ad ctr).

If the domain is exclusively parked, one way to get a very rough estimate of
the traffic is to use a keyword search tool. Look at the search volume for
keywords in the domain and use that as a measure of how valuable it is.

------
mikeknoop
It is my understanding that ICANN will turn over domain names where
intellectual property or trademarks are concerned. What prevents you from
simply registering the appropriate trademarks and (supposedly) getting the
domain for "free"?

~~~
jschuur
There are so many things wrong with your answer and attitude, I don't even
know where to begin.

Way to be a dick.

~~~
mikeknoop
I think you misread my tone... I was not answering the OP, I was asking a
general question to the rest of HN.

All I asked for was validation or non-validation on the method I mentioned. Is
it true or not?

~~~
jschuur
In that case, I will concede you might not be a dick ;)

I'm sure they'd look at trademark filing dates, just like prior art is a
factor in patent applications. If this approach were possible, I bet someone
would have already tried it, and that hole plugged.

~~~
nostromo
Actually, that seems to be just what Groupon did.
<http://news.ycombinator.com/item?id=1547943>

------
jonbishop
You should check out a domain auction site like Sedo.com to see if you can
find similar domains and what they are selling for.

~~~
user24
remember: "being offered for" != "selling for"

