Negotiation Tip: Another Reason Not to Lowball | DomainInvesting.com
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Negotiation Tip: Another Reason Not to Lowball

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The most obvious reason you shouldn’t send a lowball offer for a domain name is because it’s unlikely you’ll even receive the courtesy of a response. I guess courtesy may be the wrong word, since some domain owners might not think it’s courteous to offer $500 for a domain name that’s worth $25,000.

There’s another important reason you don’t really want to submit a lowball offer. If you do receive a response, but you don’t receive a counter offer, you will likely be inclined to improve your offer. Now that you know someone is at least monitoring the email address, you might think to come back at $4,000. That’s still a bargain if the name is worth $25,000.

The domain owner will certainly take note of your 8x price increase, and anyone with a brain and a business sense will automatically turn that down figuring there’s gotta be additional money in the bank to raise the offer.

When I reject an opening offer but don’t give my price, my eyes light up when the potential buyer significantly increases his offer. Even if the second offer is a number I’d accept, I’d never immediately accept it knowing that the next offer will be even higher. My feeling in doing so is that I can always go back and take the offer if the potential buyer says that’s his highest offer.

That being said, when you’re on the other side of the table, you need to realize a huge % increase in your offer will almost certainly work against you, so lowballing on a domain name you want to buy is a bad strategy.


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 (20)

    Leonard Britt

    While no seller wants to give away their product, I wonder if sometimes the reputation in this industry of price gouging is well-deserved. Yes, a domain with type-in traffic which can be monetized has a value. If an exact-match domain can more easily be ranked in search engines that bestows some value. A short domain even if it is not a .COM (how dare I say that?) can make for a nice brand. But our industry probably needs to do a better job of teaching what constitutes value to those not only outside but those who are newer to the industry.

    October 1st, 2011 at 11:59 am

    Rick Latona

    That works great as long as you and the buyer both perceive the same value on the name. Too bad they are so subjective.

    October 1st, 2011 at 12:26 pm

    Rob Sequin

    Great article.

    Keep in mind that if you reject their higher offer, they are no longer obligated to it.

    However, if you reply by saying “Can you raise your offer to $X?” then you are not rejecting their offer and at least morally they are obligated to keep the offer on the table.

    When making a counter offer, be sure to put an expiration date on it. You don’t want your offer hanging out there indefinitely for many reasons.

    October 1st, 2011 at 12:38 pm

    Mike

    Good tips Elliot, thanks.

    October 1st, 2011 at 1:03 pm

    Raj

    I have noticed that domain sellers generally put forward an offer themselves, unless we are the ones who are going after a domain. These days, the price people ask for nice domains seem to be quite reasonable anyways. What do you think will the impact on the industry be when the custom domain extensions are going to be allowed?

    October 1st, 2011 at 4:52 pm

    Larry

    I’ll tell you what’s sad. I receive these “certified offers” from Network Solutions from time to time. They are always low ball.

    I received one the other day which was $100 on a three letter domain name. And one for $200 on a 4 letter (a good 4 letter..)

    Here is what NSI charges:

    “Certified Offer ServiceĀ® (for offers $25,000 or less) fees are $19 per offer plus 5% of the final agreed upon price paid by the buyer.”

    Talk about taking advantage of someone (NSI I mean taking $19 from a clueless customer.)

    Here’s the flip side of price offering. Recently godaddy approached me with an initial offer of $500 for a domain that I was going to delete. Smelling blood in the water I managed to get $2300 for that name. Had the buyer understood domains he would have contacted directly or at least started at $200. I would have accepted $500 for this name with an initial offer of $200. But starting at $500 i knew they would pay maybe $750 or $1000 at least.

    October 1st, 2011 at 4:55 pm

    theo

    Leonard you comment makes sense.
    On the otherhand you have advert companies who manage to pull 500k out of a client but refuse to pay 500 usd for domain that fits.

    No they rather spend on 8 usd on a long domain name and spend tons of adverts.

    This pisses me off everytime and i make sure that domain remains at spot 1 at google just to piss them off since usually they do a piss poor job.
    The domain being the one they did not get and offered me a lowball offer.

    Domainers might have a questionable rep ..These advert/seo dudes are just throwing away cash and are worse imo.
    But it is a fine balance. I worked with some in the past and the results are just better

    And once you build up a relation it is easier to sell since they know they have to put in less effort,

    Shame those who get it are rare. If you manage to build uo a relation with one of those companies treasure it.. since the are worth gold.

    October 1st, 2011 at 4:59 pm

    Peter Davis

    The problem with what you’re writing here Elliot, is that there is no general consensus on what is a $25,000 domain. Even most of the people in the domain industry itself won’t agree on what domains are worth five figures, it is really foolish to expect a non-domainer who is approaching you to buy a domain to understand the value. By simply not responding, you may be burning your bridges just as badly as the person intentionally sending lowball offers.

    I’d venture to say that at least 90% of the domains that domainers own and think that are worth $25,000+ aren’t worth nearly that much and many of them never will sell at all, let alone for five figures or more. There is simply not any way to arrive at a retail price for a domain other than hashing it out in negotiations. And, those negotiations may well start with a lowball offer.

    October 1st, 2011 at 5:03 pm

    Elliot Silver

    @ Peter

    I know what you’re saying, but I am using $25k as an example of the buyer’s valuation. If the buyer think it’s worth $25,000 that means it’s worth at LEAST $25,000.

    October 1st, 2011 at 5:05 pm

    Peter Davis

    Well, how often does your average buyer have any clue about the value of a domain? If anything, the buyer will have an idea what the domain is worth to them, and that won’t necessarily be in tune with the value the domainer places on it, and the process of the negotiation dance is the best way to bring those two together. If the domainer thinks the domain is worth $25,000, they should just tell people that’s what they want for it. List it on Sedo for $25k, or list it on a webpage built on the domain itself, or heck even an auto-responder setup for anyone inquiring about it.

    October 1st, 2011 at 5:13 pm

    Elliot Silver

    “Well, how often does your average buyer have any clue about the value of a domain? ”

    @ Peter

    This is a tip for domain investors who do have a clue about domain values. Instead of trying to buy a $25k name for $1k or a $50k name for $3k, make a stronger opening offer so your counter offer doesn’t come in so much higher that you look like you’re holding out.

    October 1st, 2011 at 5:23 pm

    Brad Mugford

    I agree with the points Elliot made.

    I am a proactive buyer of domain names and always make what I consider a reasonable opening offer. It is a waste of time to go in with an opening lowball.

    However, I also agree with what Peter said. There is no consensus on what a $25K domain is. Domains, in general, don’t have liquid values like other assets (stocks, gold, etc). Domain values are highly subjective.

    Brad

    October 1st, 2011 at 6:10 pm

      Jagan A

      If the offer comes from people without any knowledge then that is understandable. But What if the offer comes from the paid service such as Godaddy domain buy service. Wont they educate the buyers? I am sure The buy service also comes with an appraisal.

      In reply to Brad Mugford | February 11th, 2016 at 3:59 am

    Jimmy Godanza

    Peter is right. Someone approaching a domain person is going to look at a domain and figure out how long it would take to pay it off by sales in whatever they do. In my experience, a domainer offering a domain that he thinks is worth 25,000 will never pencil out to a profit for an end user. A domain selling for 25,000 is probably a generic domain for a service that makes about 50-100 bucks on a sale. That would take the end user years to pay off, and will never sell for 25,000. The end user will just buy a double word .biz for 8 bucks and make that one work.
    The 25,000 domain is almost worthless to me. The 100,000 domain is typically SO good that it could pencil out to a bigger company and those are few and far between, but an easier sell that a 25,000 domain to a company making a couple hundred thousand dollars a year. Let’s be honest about it though… There’s two worlds here. Theres the domain world that we live in, and the real world that everyone else lives in. If you have a domain you feel is worth 25,000, that’s what it’s worth in domain world. In the real world, it’s worth about 5-10K. Tops. So you shouldn’t get offended by an end user sending you an email offering 500 bucks when in their mind your 25,000 domain is worth 5,000.

    October 1st, 2011 at 6:20 pm

    oh really?

    hmm
    i have a great lowball from you for a two word generic .com and a developed website that is not even for sale

    you offered $500
    LOL
    what a joke

    of course you were sent to the spam bin

    October 1st, 2011 at 6:33 pm

      Elliot Silver

      “i have a great lowball from you for a two word generic .com and a developed website that is not even for sale”

      – Anonymous coward

      LOL… If that’s true, tell me the name and I will justify my offer or apologize. I only see one $500 offer from the past few months in my Gmail account, and I bought two similar names to that one for under $1,000. Maybe it was from before or maybe I missed this particular offer, but why not share it and others can see whether my supposed offer was a lowball offer.

      October 1st, 2011 at 8:46 pm

    Priv

    I reply with a “Thank you for your offer” and let the moron send another 4-5 trying to get me to answer.

    October 1st, 2011 at 7:55 pm

    patrick

    @ Peter Davis, you cannot list a domain for sal at SEDO for more than $10,000 without an appraisal and they have given me some pretty bad appraisals even one that had a3,000 dollar appraisal from Great domains in 2002 and this industry has grown considerably since then Sedo’s appraisal $150.00 because the last domain in the travel industry sold for that.

    October 1st, 2011 at 8:27 pm

    Peter Davis

    Funny story Patrick. What was the domain?

    October 1st, 2011 at 8:30 pm

    e

    I get offers all the time, if it is $500 or less it is coming from china or a domainer, if it is $1500 or more usually it is coming from real buyer or someone on his behalf and you should take your time to negotiate the offer, in most cases you can make a deal even in 5 or 6 figers.
    Traffic is a thing of the past, if the domain sound good to be your business name buy it and do not be cheap having a good name is the difference between success and failure. If a domain name is worth $500 I guarantee that you can create a better one for $15. Unless it very valuable name try .com for your site.

    October 1st, 2011 at 10:31 pm

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