6 Factors for Negotiating a Successful Domain Name Purchase from the Man Who Sold Whopperettes.com for $50,000
As is said in the legal industry, when it comes to buying domains a person who represents himself has a fool for a client.
PHOTO CREDIT: Getty Images
The domain you use for your website says a lot about your business. The more relevant and short it is, the better positioning you will receive, under most circumstances. Every business wants to acquire a good domain, but it's often much more complex than simply registering a new one that's never been used.
While there is a wide selection of new gTLDs (generic top-level domains) available like .LAWYER and .SPORT, the dot-com extension continues to be the most desirable. Domain investing and flipping can be a huge business, and oftentimes startups and businesses have to pay a pretty penny for the domain they desire. For instance, Clothes.com sold to Zappos in 2008 for $4.9 million.
While a lot of large domain sales come down to what the buyer is willing to pay, there are still some other factors that come into play. I recently discussed that with entrepreneur Adam Boalt, who just launched govWorks -- a domain name that was originally used starting in 1998 before the business using the URL failed during the dot-com bubble but not until after raising $60 million.
Boalt says he spent $50,000 on the govworks.com domain name and, in a recent conversation, he touched on 6 factors that should be considered when coming up with a value for a particular domain and negotiating a purchase price.
1. Never represent yourself.
Domain sellers often feel more comfortable dealing with a broker for 2 specific reasons. First, sellers view brokers as a dispassionate third-party who is trying to negotiate a good deal in a professional manner. Second, brokers can usually get a clear reading of the seller's intent and base price.
There's an old saying in my profession that I think of on this point -- a person who represents himself in court has a fool for a client.
2. Always use an escrow service.
Similar to purchasing a home, domain buyers should put their purchase funds into an escrow account, where a third-party holds them until the transaction is finalized. The funds can only be released when all of the terms of the agreement are met, as overseen by the escrow company.
Boalt's personal favorite is Escrow.com, which he used when he purchased TravelVisa.com for $125,000.
3. Research your top-level domain.
Make sure to research the top-level domains (TLDs) for restrictions. Boalt learned this the hard way when he bought a co.uk domain for $15,000, only to find out he had to form a company in the UK in order to keep it. He was completely unaware of this when he made the purchase.
Creating a company in another country raises a host of other complications that you may not be willing to navigate.
4. Buy all of the available extensions.
If you firmly believe that you're going to be successful, go out and buy all of the available extensions. "You have to think of it as investing in your business and yourself," Boalt said. "Aside from .com, I generally buy .net, .org, and most recently .co and .io."
5. Don't let your domain expire.
This point might seem obvious, but Boalt said he's been surprised a few times by acquaintances who simply neglect to re-register their domain name before it expires. Most reputable registrars allow you to register your domain name for up to 10 years. Network Solutions allows you to register your domain name up to 100 years.
6. Keeping quiet is to your advantage.
You should keep your domain ideas under wraps. Don't talk publicly about the domain name you're going to buy until you finalize the transaction, as it might end up saving you a considerable amount of money.
About 10 years ago, Boalt was in a Miami restaurant and he overheard 2 advertising executives talking about their Super Bowl commercial pitch for Burger King -- the Whopperettes.
"I bought the domain name whopperettes.com for $10 on GoDaddy," says Boalt. "Three weeks later I was offered $50,000 for the domain, which I happily sold."