How Do You Confirm Financial Fitness? | DomainInvesting.com
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How Do You Confirm Financial Fitness?

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For many of us, getting a high 6 or 7 figure deal on a domain name is exciting and helpful to our business. Unfortunately, just because a prospective buyer agrees to pay a high price for a domain name does not mean he or she will be able to follow through with that deal and fund escrow.

Let’s say you are negotiating with a prospective buyer. After negotiating for a period of time, the prospective buyer offers $800,000 for a domain name, and you’re willing to sell your domain name for that price. How do you qualify the buyer to:

1) Ensure that payment will be made promptly.
2) Not permit the prospect to try and find a buyer at a higher price.

During the course of a negotiation, I try to qualify the prospective buyer. It doesn’t make sense to spend a significant amount of time negotiating a deal when the buyer doesn’t have the means (or corporate approval) to pay a high price. I try to look at a variety of publicly available tools to try and confirm financial fitness, but this is not always easy or accurate. If inaccurate, it makes the whole effort pointless.

It can be difficult to qualify many buyers. Some of the largest buyers and their agents use various tactics to stay anonymous. They may appear to be a ghost with zero domain names owned and no Internet presence, but in reality, they are a massive company with a virtually unlimited spending limit. Anonymity makes it almost impossibly to privately pre-qualify them for a large purchase.

I try to look at things like their business background, fundraising success, domain names owned, address…etc to see if I can ensure they will be able to afford a domain name. Obviously, this is not ideal. One time I asked a prospective buyer how he would be able to afford the purchase, and he was very offended at the question. I don’t want to be intrusive, but I also don’t want to agree to a nice deal and end up having it fall through.

So… how do you confirm financial fitness before agreeing to a large deal?


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (10)

    Patrick

    One thing you can do is loop in a lender for purchase finance like my company, Lendvo, or DC for that matter. When a piece of the domain price is financed the buyer of your name only has to come up with a portion of the funds while the lender provides the rest. This can eliminate some of the vetting problems and also negates having to use seller financing in some instances.

    July 18th, 2016 at 1:07 pm

    John

    If the domain is really worth a lot, like at least several of yours are, then:

    Rule #1:

    Don’t let them be anonymous.

    “Sorry, you’ll have to reveal who you are or represent, especially since I may consider an equity stake or royalty deal.

    Ancient secret:

    Don’t know how useful it is, but many years ago I heard that Dun & Bradstreet could give you financial info on a party that may not be obtainable otherwise.

    July 18th, 2016 at 7:33 pm

    Snoopy

    So… how do you confirm financial fitness before agreeing to a large deal?

    /////////////////

    Not sure there is any real need for this, you’ll soon find out if they are financially fit or not. Half the time they aren’t, or they change their mind.

    July 18th, 2016 at 9:36 pm

      Elliot Silver

      The issue is that I don’t want to quote a price on a name and have that person shop it around, either exposing the name to UDRP or legal risk or harming its resale value by being a poor representative of the name.

      It’s leas likely that someone who could afford a 6 or 7 figure domain name would do this.

      In reply to Snoopy | July 18th, 2016 at 10:08 pm

      Nick

      I always change the domain page to an escrow.com buy it now button with the price. That way they can’t shop it around, since other buyers will be able to see your price.

      In reply to Elliot Silver | July 19th, 2016 at 9:25 am

    Supratik Basu

    “They may appear to be a ghost with zero domain names owned and no Internet presence, but in reality, they are a massive company with a virtually unlimited spending limit. Anonymity makes it almost impossibly to privately pre-qualify them for a large purchase.”

    Yes, Goldman Sachs & Co. did this trick for GSBANKUSA.com.

    Their company Lawyer Steven T. Shelton hired Christopher Serbagi who tried to deceive me with a U$ 4000 offer for GSBANK.com which I was owned and bought by a Chinese person later bought by Goldman Sachs & Co. and resolve to a online only bank site.

    Later they offered me U$ 10000 through GoDaddy Domain Buy Service and asked for my offer but filed UDRP after knowing my offer without any counter offer though they didn’t had any TM at the time of registration.

    Pls don’t teach me of common mark law or other ethical jargon. If you are then pls read the following link

    http://www.huffingtonpost.in/entry/goldman-sachs-fined-5b-fo_b_9673214

    July 19th, 2016 at 4:11 am

    Supratik Basu

    “They may appear to be a ghost with zero domain names owned and no Internet presence, but in reality, they are a massive company with a virtually unlimited spending limit. Anonymity makes it almost impossibly to privately pre-qualify them for a large purchase.”

    Yes, Goldman Sachs & Co. did this trick for GSBANKUSA.com.

    Their company Lawyer Steven T. Shelton hired Christopher Serbagi who tried to deceive me with a U$ 4000 offer for GSBANK.com which was owned by a Chinese person later bought by Goldman Sachs & Co. and resolve to a online only bank site.

    Later they offered me U$ 10000 through GoDaddy Domain Buy Service and asked for my offer but filed UDRP after knowing my offer without any counter offer though they didn’t had any TM at the time of registration.

    Pls don’t teach me of common mark law or other ethical jargon. If you are then pls read the following link

    http://www.huffingtonpost.in/entry/goldman-sachs-fined-5b-fo_b_9673214

    PS: site admin pls delete my previous comment this is correct

    July 19th, 2016 at 4:15 am

      Snoopy

      The name would be lost at UDRP in a heartbeat. Over $10,000 I’m guessing they thought they might aswell just file. For a name like this it is a big mistake to ask over what it would cost to get the name at UDRP.

      In reply to Supratik Basu | July 20th, 2016 at 12:21 am

    essential domains

    in past when representing “undisclosed principals” as an acquisition intermediary in comm real estate deals, in order to build trust to get seller’s cooperation to be willing to discuss the price/terms/conditions under which the property may be available for sale, i would offer to provide a ‘proof of funds’ letter from a reputable commercial bank confirming availability of the funds upon acceptance of an offer; or sometimes i offered a letter on a reputable well known local or national law firm’s letterhead from an attorney who represented the client assuring that the client was ‘real’ and financially capable.

    worked several times when seller was reluctant to even consider talking about the mere possibility that they would consider selling a property due to concerns about neighbors, lenders finding out about situation

    requesting and obtaining such assurances may separate out the less ethical prospects or less financially capable prospects

    July 19th, 2016 at 8:46 am

    Josh

    They are qualified when escrow receives funds or the wire clears.

    Up to that point I never hold my breath, learned that many moons ago, simple as that. Talk is cheap, show me the money.

    Determining who the buyer/interested party is in my view is only good for pricing.

    I have had too many people sign their name and back out and done millions in business via an email to the good, like I said, when it clears, you are qualified.

    July 20th, 2016 at 12:09 am

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