Domain Spotlight:

Can’t Afford a Domain? You Might Be Surprised How Creative Some Sellers Can Be

Everyone dreams of owning a category killer domain.  For every person that dreams of owning one is another person that dreams of selling one.  You might be surprised that you may be able to buy that domain using some creative financing.  While I’m not saying you can afford it, I’m saying they’ll let you buy it.

Without going into specifics, most domain investors don’t realize that many of the big domain sales involve creative financing. By creative, I mean longer term, staggered payments. You see the sale for $150,000 but don’t realize that the terms were in payments.  Perhaps something along the lines of $10,000 down and 12 quarterly payments of $12,000.  Other sales have included low monthly payments and then a large payment at the end.  Most have one simple clause.  You miss a payment and the domain goes back to the original owner with no payback of what you’ve put in.  I’ve heard of payment plans as much as 5 years, others with a percentage of sales or profits, and a few charging no interest.  And it’s not just the 6 digit prices either.  Even the 5 to 10K names occasionally will have a long term payment plan. In cases where the owner doesn’t have a big investment in the domain you’ll often find that he/she may be willing to work with you.  In every case the collateral is the same, the domain. They really have nothing to lose so they will trade the higher selling price for the longer term payments.

As a buyer it gives you time.  If you have a business plan and believe you can cash flow the can avoid traditional financing.  It also gives you time to set up your company/website and THEN you can go get traditional financing.  It some cases it may be your only option.  A traditional bank most likely isn’t going to lend you money for a domain because they wouldn’t know what to do with it if you defaulted.  This is another reason why sellers often will work with you.  They can’t get the high price without giving financing because many buyers can’t come up with the lump sum.

So the next time you hear of a big domain sale don’t always assume the person wrote a check and took the domain. While most domains sales are cash and carry there are many that aren’t.  So how do you know who is willing to accept creative financing.  Simple. You ask. The only thing they can do is say no…..and laugh at you and say where in the world did you hear something like that.

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5 Replies to “Can’t Afford a Domain? You Might Be Surprised How Creative Some Sellers Can Be”

  1. Although owner-financing can be a a good idea at the time, you have to also remember the risks that come along with it…

    Let’s say that you purchase a $50k domain over 2 years. In that time, what happens if the owner goes bankrupt? Well, it’s not your domain anymore and you are simply a creditor. What happens if you miss a payment because they change their bank details and are slow in informing you so that you can’t make a payment? These are just 2 scenarios, and the only way you can do anything about them is to take it to court, and if you are financing a domain then I wouldn’t think you would have the tens of thousands of dollars to do that….

    I had a similar event happen recently where the owner/financier of a domain changed the paypal information twice without notice. Come 3 days to one due date I couldn’t make a Paypal payment but was given another paypal address and promptly paid. 3 months later the Paypal address suddenly stopped working again, but this time I noticed this 10 days before payment was due and shot off an email only to receive an email back the day the payment was due stating that Paypal was no longer accepted. I do not live in the USA and so I just couldn’t go into a bank and pay cash, so I used a wire transfer service to pay the full amount which fortunately hit their account and was clear within hours…

    So, owner financing may be great, but you have no control of their business, solvency or their health, and for the stress a similar financing deal caused me I am now very very careful about someone holding your most important I.P. asset.

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