Self Financing Domain Deals | DomainInvesting.com

Self Financing Domain Deals

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Sometimes to complete a domain sale, you need to offer a payment plan to the buyer, allowing him to pay over time. It might not seem advantageous to do a no-interest deal like this, but sometimes it’s necessary to close a deal.

I’ve bought a couple names using payment plans simply because it was offered. My thinking was why the hell not take a payment plan when it would cost me nothing to stretch payments out, and I could pay a lump sum if/when I sold the domain name. If you’re offered a no-interest payment plan when buying a domain name you want at the right price, it’s a no-brainer.

When you’re selling a domain name on a payment plan, here are some things that you might want to consider (these things may be different if you’re the buyer):

Keep the domain name in your portfolio or put it in escrow (like Moniker escrow) until all payments are made. If the buyer has your name and you have no money, you have less leverage when you want to be paid the outstanding balance. Legal costs to get it back could be more than the remaining payments.

Do not change the DNS unless absolutely necessary. If the buyer uses it in a way that infringes upon someone else’s trademark or does something else that would reflect poorly upon you, it wouldn’t be very good and may cost you the domain name. If you do need to change the DNS, monitor the content and make sure you let the buyer know there are restrictions.

Make sure the buyer knows if all payments aren’t made, the seller keeps the domain name and payments that have been made up until that point. You don’t want to keep the domain name in limbo if payments aren’t all made but the buyer thinks he still has rights to it. It’s your call about whether to cancel the deal if the buyer is a day, two days, a week…etc late with payments. This is a personal choice and I guess it would be dependent upon your relationship with the buyer.

Have all details spelled out in a sales agreement or clearly put in an email.  Don’t make assumptions on something like this, especially if the amount to be transacted is significant.

Be assured that the buyer isn’t going to try and sell the domain name before it’s paid off. It would suck to have a 3 letter domain name be subject to a UDRP because the buyer (before paying for it in full) tried to sell it to a company that believed it had rights to the domain name.

The payments should be divided fairly evenly. You don’t want to have small upfront payments because there is less incentive for the buyer to keep the deal if he has to make very large payments at the end. If he’s only paid a small % of the price during most of the term, it may be more likely that he would back out knowing that he hasn’t lost much.

Never, ever back out of a deal if you receive a better offer during the course of payments. I don’t care if you sell a name for $10,000 and you get a $100,000 offer.  If you are willing and able to finance a deal like this, I am sure your reputation is worth much more than the money you would forgo by keeping the deal. You could pass the offer along to the buyer and work something out, but that’s between the two of you.

In today’s market, self-financing deals with a payment plan is a decent way to close a 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 (6)

    HRO

    I believe Escrow dot com has installment plans and having just a quick look at their site they call it “Domain Name Holding Services”

    They hold the domain while the payments are being made and then transfer the domain to the buyer. This eliminates the risk but it seems to be offered for $500 per year.

    October 7th, 2010 at 3:52 pm

    Mitch

    “Make sure the buyer knows if all payments aren’t made, the buyer keeps the domain name and payments that have been made up until that point.”

    You better change that to the SELLER keeps domain & payments :)

    October 7th, 2010 at 4:03 pm

      Elliot

      @ Mitch

      LOL… good point :)

      October 7th, 2010 at 4:04 pm

    BG

    What about if someone dies? I recently sold a domain for a good price and agreed to a 2 month payment with the buyer and an initial $1k deposit.

    All was well, but then I found out the guy had sadly passed away. This was a domain that he was going to use for his business. I have been in contact with his wife, who also runs the business but I havent been pushing it at the moment as of course its a difficult time for her.

    We did have a contract drawn up. Next time though I think its definitely a good idea to stipulate that if all payments havent been made then they forfeit their payments and the domain. In this case I didnt mention that, although the agreement we had/have was that I retain the domain and DNS and will only transfer it over once final payment has been received.

    Its sort of a road block at the moment though as they have paid $1k, so I cant really go off and sell the domain.

    So in short, I thought payment plans would be ok. But now I think I would prefer to just try and get the money up front if possible.

    October 7th, 2010 at 5:36 pm

    Eric Borgos

    I have sold several domains on payment plans, and never had any problems. A few times I have used escrow at the buyer’s request, most of the time I don’t because the fees are high. The main reason I sell with payments is that I get a higher price that way (people will pay more for something on credit) and if they default, at least usually whatever site they built will have some traffic, making the domain more valuable to me when I take it back.

    October 8th, 2010 at 10:19 am

    @chrisco

    Can you post a Word doc agreement you’ve used? Thanks.

    October 13th, 2010 at 8:59 am

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