This is an overlooked area where serious buyers, at times, may lack vision. They often concentrate on the price instead of the deal itself. Don’t feel bad, we’ve all been there and I’m no exception. What do I mean by that though? If the domain for example is estimated to make you 100$/day on PPC, how much the DEAL is worth to you? You may see cases where the domain isn’t for sale but the company is, and the price of the whole company is less then the value you are willing to pay for the domain.
The other aspect of this is when you concentrate on deal vs price you concentrate on TERMS, which means, you can structure ANY price for any domain (or any purchase for that matter) to be worthwhile if your terms are designed creative enough for you to make a return in the process or to at least to manage risk well enough to make the experience worthwhile. 10 million dollar domain for an estimated 10$/day ppc domain? can it be done? sure, just make sure you manage risk well enough (for example pay less then earnings with option to drop the deal if conditions change) and you can pay over the next few generations for the purchase, and still make money on the deal. One such deal we had years ago was a six figure domain purchase. I inquired for the purchase and the domain owner said his price. My response, as I felt price was high and as I wanted to avoid paying cash, was to tell the domain owner that even though I felt the domain was overpriced I won’t be like others and argue on price, if I can get my terms. The owner was curious what I meant by that so I described an offering where I had everything to gain and very little to lose (managed risk). The owner went for the deal I proposed which meant, we were “getting paid” to buy the domain (making more then our monthly payment) and at the end of the payment structure we ended up owning a multi-million dollar property.
So next time when a seller tells you a domain isn’t for sale or price is too high, just ask yourself, how can I structure a deal, address seller’s need (this topic is for another post), and make the experience worthwhile? You’ll be surprised what creative ideas you may come up with!
hi greeting My Dear Sir Sahar ,
ThANKye for ‘the article
which is of the supreme quality
which even the super or super-charged Frank Schilling
may not b[be] able2attain ,
but ,
even
i’m extremely extremly busy
i’m forced2ask : :::::
could u[you] please indicate more clearer by the phrase
““
just make sure you manage risk well enough
(for example pay less then earnings
option to drop the deal if conditions change)
””’
?????????
““ pay less then earnings ””’
do u[you] want2say
““ pay less thAn earnings ””’
??
ThANKye , 2w
—-ANSWER—-
I don’t think Frank and I are competing, we just write
To your question, in my example it relates to setting up a payment structure where your payments are less then monetization earnings.
Cheers
Sahar
This is very interesting. I know the real estate analogy is common, but I think it’s accurate. If I buy a million dollar house and rent it out for more than the monthly mortgage payment, I am essentially getting paid to acquire a valuable piece of property.
You write:
“The owner was curious what I meant by that so I described an offering where I had everything to gain and very little to lose (managed risk). The owner went for the deal I proposed which meant, we were “getting paid”? to buy the domain (making more then our monthly payment) and at the end of the payment structure we ended up owning a multi-million dollar property.”
I did not understand ANYTHING.
What was this deal you proposed that was so great?
—-ANSWER—-
The owner was not monetizing the domain. The deal basically was our payments were less then what we were making.
I agree Sahar. Creative financing has made many people very wealthy and is a great skill to know. What would help the domain industry in particular which you have covered already is more liquidity and more and better financing options. Any tips on how you set up a successful creative financing deal and what clauses you used?
—-ANSWER—-
Nothing major really. Creative financing is about addressing the needs of the seller while managing your risk carefully. I’m not a big fan of long contracts and try to keep them to a page or two. Most important is that within a payment structure the domain is held with an agent or in your hands and not the owner. You do not want to pay for something and have no control of transfer when payments are done.
Sahar,
Do you have a recommendation for an agent that would hold a domain (like in escrow I suppose) that would protect both parties for a deal like this?
Thanks,
—-ANSWER—-
Yes. Either Ari Goldberger or John Berryhill, both are top domain attorneys in the industry and both I work with regularly.
Sahar