Domain names are difficult to value. There are some guiding principles, such as hexalogy, length, marketability, rememberability, but these metrics hardly offer the foundations for a scientific approach to domain name valuation.
Unfortunately, there is no playbook for buying and selling domain names and ‘value’ can only be determined through the motivations of both the buyer and seller. Many factors influence this motivation, such as current use, past use, content, the type of business or person you are dealing with etc.
In order to determine market value, it is worth researching similar domain name (after-market) sales. one such website is www.namebio.com which records historic domain name sales. You just add your keyword, define the placement of the keyword (front, middle or back), choose a category, length, and a number of other filters and search away.
This will provide you with a list of similar sales that you can use to show market value to a seller.
Once this information has been delivered to the seller, it is worth contacting them to gauge their expectations before committing to protracted negotiations. A broker can quickly determine whether there is a possible deal in the opening dialogue with the Registrant.
Keeping the Seller Anonymous
There is one principle that is constant in domain brokerage – the bigger the brand, the bigger the price tag.
Buying a domain name from an individual is a different negotiation from buying a domain name from a domainer or an established business. However, it is important in all cases that a buyer’s identity remains anonymous during negotiations. This evens out the playing field and prevents price hikes.
This anonymity can extend from negotiation through to escrow. Brokers can even protect the buyers identity in the whois update process to ensure confidentiality.
The Escrow Process
Escrow facilities are generally used by brokers, buyers and sellers to secure the domain transaction. It is the easiest way to guarantee a safe and trouble-free transaction Your broker is generally not an escrow agent and will utilize a service such as escrow.com. Escrow fees vary but are generally around 0.89% of the agreed price of the domain name.
- Buyer and Seller agree to terms – Either the Buyer, Seller or Broker begins a transaction. After registering, all parties agree to the terms of the transaction.
- Buyer pays the Escrow merchant – The Buyer submits a payment by approved payment method to our secure Escrow Account, Merchants such as Escrow.com verifies the payment, the Seller is notified that funds have been secured ‘In Escrow’.
- Seller ships merchandise to Buyer – Upon payment verification, the Seller is authorised to send the merchandise and submit tracking information. Escrow.com verifies that the Buyer has received the domain name.
- Buyer accepts domain name – The Buyer has a set number of days to inspect the domain name and conduct the change of Registrant etc.
- The escrow merchant Escrow.com pays the Seller – they release funds to the Seller from the Escrow Account.
Use a Broker
A broker will manage the negotiation, escrow and will keep you anonymous through the process. They can provide objective and good advice to each step of the process. A good broker should also be able to save you a significant percentage of what you would otherwise pay.
Brandsec is a corporate domain name management specialist company that look after many of Australia, New Zealand and Asia’s top publicly listed brands. We provide brand protection, DNS services, domain name brokerage and dispute management and brand security consultation services.