Buying a domain name on the aftermarket? Listen to Alan Dunn talk about whether you should make an offer or ask for a price when reaching out to a domain name owner.

Alan Dunn: 00:52 In today’s episode, I want to talk about whether or not you should make an offer or ask for a price on a domain name. This topic is one of the most common conversations we have with domain name buyers. One, which in my opinion is critically important since it’s going to define your initial approach and more importantly, the initial response from the owner. If you wish to acquire a domain name that’s not listed for sale, then more often than not, just asking for a price is not going to work.

Alan Dunn: 01:20 There are quite a few understandable reasons for this. For example, the owner has no idea how to value a domain name since he wasn’t really even thinking of selling. The cost of looking into an internal sales price is not worth the time, especially for bigger companies. Sometimes even the listed owner is not the decision maker, they simply have no motivation to sell, or in some cases, the owner has had people threaten legal action before. So let’s look at these five reasons to consider making an offer instead of asking for a price.

Alan Dunn: 01:57 Number one, if the owner has no idea how to value a domain since he wasn’t thinking of selling, then if you really want the domain name, then it’s probably best to start the conversation with a number. A relatively reasonable number and not a low-ball offer. This can let the owner know that you are a qualified buyer, but a tangible number also makes people think. You’ve heard the expression of bird in hand. So basically, when it comes to this, you have to look at it like a bird in the hand is much better than no bird at all. That’s essentially what asking for price is. You’re not bringing anything to the table.

Alan Dunn: 02:33 Number two, the cost of looking into an internal sales price is not worth the time, especially for bigger companies. So this is really, really common, especially when domain names have the registered owner as the IT person, or a legal counsel, or even a domain name management company. Again, another common expression is, “Time is money,” and this applies to almost everything in life. How this applies when asking a domain name owner for a price is you are now asking that person to do all the initial research without even knowing how much you’re willing to spend. The odds are they have something better to do with their day.

Alan Dunn: 03:12 Number three, the listed owner is not the decision maker. I think this point is very, very underrated by many buyers. A lot of people automatically assume the person listed as the domain name registrant is also the sole decision maker. A lot of the times, this is just not the case. Many have a partner, a spouse, sometimes even a board to ask about selling any assets. Then, there’s tax issues and all kinds of other stuff. By not extending an offer, it’s very easy for these people to decide not to engage, especially on good domain names where they routinely get spam emails asking if the domain is for sale.

Alan Dunn: 03:50 Number four, owner has no motivation to sell. Okay, that’s fair. Money is a great motivator. However, just asking for a price is not helping motivate them. It’s more often than not, simply an annoying question to many people who have really, really busy schedules. As the catch phrase in Jerry Maguire goes, “Show me the money.” The right number is going to be likely the biggest motivator of them all.

Alan Dunn: 04:16 Number five, this doesn’t happen a whole lot, but the owners had people threaten legal action before. This topic deserves a much broader discussion. However, for this conversation, let’s assume the person has a great generic domain name. Odds are that someone might also have a trademark on that name. Probably quite a few people. Somewhere down the line, someone might’ve threatened him with some nonsense legal action. Making an offer helps show you’re not fishing, and while the owner may not respond by email, it might at least open up the door for a phone call.

Alan Dunn: 04:51 Let’s talk about a real world example. There was one name we were engaged to acquire and the owner was somewhat of a ghost. We literally had to track down his brother through a peer’s obituary to even know if he was dead or alive. Well, it just happened that the owner had just retired and had no interest in dealing with smaller things. To make the situation a little more complex, the company who engaged us only said, “We can afford the name. Just get a price.”

Alan Dunn: 05:17 They were a big company, so we took the engagement on, but I’ve heard this line before, and many people who work at big companies don’t have authority for big budgets. The owner wasn’t responding well to the price question. When we finally did speak to him, he was a really nice guy. They said something to the effect of, “Hey, I’ll sell you the domain, but I’m more interested in fishing right now, so let me know a number, and I’ll just say yes or no.”

Alan Dunn: 05:42 See, to me, that was a win waiting to happen. We have a really nice owner, a buyer who sounded like they would pay a reasonable price on a relatively invaluable domain name to anybody else, but this deal almost blew up when we went back to the buyer and said, “We a number.” There was literally a three-week standoff between our contact of the potential buyer’s office and the people who have the authority to write the check.

Alan Dunn: 06:07 By all measures, we succeeded. The failure, which almost cost the deal, was the buyer’s inability to value how much the domain name was worth to them. It put a tangible number on it. They were more interested in the owner making the first step. Finally, we got approval on a number we’ve recommended, $25,000 for a two-word.com, which happened to be the exact name of the company.

Alan Dunn: 06:32 Think about this now, the buyer wanted the very best domain for their company, understood domain prices can be high. He was willing to waste weeks just to approve a number, any number. Not a small company either. One who has raised over a hundred million dollars in funding. Crazy, right? Guess what happened when we offered the owner $25,000? He accepted. We closed a couple of days later, and I’m sure he went back fishing while the buyer is still probably wasting countless hours asking for prices and other things.

Alan Dunn: 07:05 The takeaway for us is the broker involved here learned always ask for a number, and more importantly, confirm if the person asking to make an acquisition really has the authority to write that check. Thank you for listening and don’t forget to subscribe or visit namecorp.com for more information about buying or selling a domain name. Have a great day.

Listen to Alan Dunn, a 20-year domain name industry veteran, share domain name stories and talk with other experts and founders around the world. Go inside big and complex transactions, common domain name questions and more. Domain Stories available on Apple Podcasts, Google Podcasts, Spotify, Stitcher, Tunein and Pocket Casts.

Follow Alan Dunn on Twitter @alangdunn and @domainstories, and visit Namecorp.com for more information on buying or selling a domain name.