Interesting Article About Seller Financing | DomainInvesting.com
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Interesting Article About Seller Financing

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During the last few years, I’ve heard about a number of people offering seller financing on their domain name deals. If a buyer can’t pay for a domain name purchase entirely up front, and he doesn’t wish to seek a more traditional financing option like Domain Capital (or doesn’t qualify), seller financing may be an option.

There are a number of advantages to self financing a deal, and there is also a fair amount of risk involved for both parties. Inc. Magazine has an article about seller financing, and I think it’s a good read if you’ve ever considered this option when selling a domain name.

I self-financed one deal, and it hasn’t turned out as great as I hoped. The plus side was that after the first payment was received, the deal was profitable for my company. The downside is that the buyer hasn’t paid off the purchase yet, despite passing the final payment date last month. The buyer is an end user who has a small business, and I felt guilty about demanding payment. He has promised payment in Q1.

Self financing can be a decent option to close a domain sale, but you should know the risks and weigh them against the advantages.

Thanks to Lonnie for sharing.


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 (8)

    Fred

    I’ve read of others using financing as well, but not 100% sure of the idea. I’ve had a couple of buyers ask about it, but I always declined. Elliot, if you were to do over again today…would you offer financing to a buyer if they requested?

    January 31st, 2013 at 10:57 am

      Elliot Silver

      Yes on this particular domain deal because it was profitable after the first payment. On higher value deals, I would be more reluctant.

      January 31st, 2013 at 10:58 am

    Brian Gilbert

    We’ve done it a few times. Our first time was without an escrow agent in the middle. We kept possession of the domain and worded the contract so that if a payment was missed, we’d work with the buyer and if an agreement couldn’t be reached, we kept the funds and the domain.

    For our other deals, we used Moniker as the escrow service. One deal had late payments, but the buyer always kept in touch and ended up paying the domain off early. Another deal only had one late payment.

    All deals where Moniker was the escrow agent were worded that if payments were missed and couldn’t be made, we kept whatever funds had already been paid and the domain would come out of escrow hold and back to us.

    Two of the three deals were annual payments and one of the deals was monthly payments, another deal was a large down payment with final payment 3 months later.

    Would we do it again….yes. Of course we prefer to have payment up front but realistically with some of our domains and their pricing, startups may not be able to afford a one lump sum type of payment.

    I can’t reveal the domains and their sale price but collective sale prices were right at $1M.

    January 31st, 2013 at 11:28 am

    BFitz

    Don’t feel guilty. An agreement is an agreement. Would the buyer feel guilty if after locking up the domain at your price, he got an offer for 10x that price?

    At some point even the banks turn into Paulie from Goodfellas, “…you, pay me.”

    I once bought a domain on three month terms I otherwise would not have.

    January 31st, 2013 at 8:02 pm

      Elliot Silver

      One of my favorite movie quotes. That’s not my personality though, hence my reluctance to do a deal on these terms again (and unwillingness to loan anyone money!)

      January 31st, 2013 at 8:04 pm

    first one

    i had used zenscrow.com and was very happy. it helped me increase return on investment.

    was only a 3300 dollar deal over 3 months but buyer wanted the name and in good hands. i could have taken his 1k cash offer but zenscrow and howard helped me increase the return on investment. not the greatest domain name but a few end user prospects.

    moniker i would use and like the fee structure. but in this case i won an auction elsewhere and could not transfer due to 60 day lock period. zenscrow was fast and thanks to them i had my first deal!

    i hope to do one deal like this in 2013 and trying do a 9k deal as i speak. but my gut is telling me it wont close and some challenges on this one. thats ok, no rush to sell one of my core holdings neither. there loss and they will miss the type in traffic and .com generic domain name.

    February 1st, 2013 at 6:26 am

    first one

    elliot would be interesting see how you had structured the agreement as and wording if you care to share.

    i dont mind paying for a service and fees attached on this type of an agreement. more professional looking or buyer,seller split fees. someone else takes ownership of name until agreement is done and paid off.

    February 1st, 2013 at 6:29 am

    Francois

    FYI

    At eCOP.com, 5% of all transactions last years were seller finnacing deals.
    And it looks this percentage is raising this year.

    February 2nd, 2013 at 3:44 pm

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