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A potential buyer finds out a domain cost way less than the current asking price. What do you say?

Labeled as discuss in Domain Buying and Selling Discussion, started by SuperBrander, Nov 4, 2020

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  1. SuperBrander

    SuperBrander Top Contributor VIP

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    I lost a $25K sale today because the potential buyer looked at a domain's archived history and found out the domain was offered on the landing page for way less a few years ago by the previous owner. Unfortunately, it's a lead via a marketplace so I can't communicate directly and make a good argument about why the price it once cost shouldn't matter.

    You win some, you lose some so though it's definitely annoying- it's not the end of the world. But it got me thinking about this matter and I thought it would be interesting to hear some opinions and convincing arguments. So... what would you say to convince a potential buyer that the price a domain cost a few years ago shouldn't matter and that buying it for a much higher price is justified?
     
    Last edited: Nov 4, 2020
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  2. DomainGuy86

    DomainGuy86 Established Member

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    None of the backstory matters, unless it was used in fraud or some sort of illicit activity.

    All about application and best fit. If they jumped out of the offer, it was most likely because they were not serious enough to begin with. Current owner sets price--whether they like it or not is a different matter.

    I would say...."This is the current price. This is based on comparative sales and current market demand. The previous owner may have been in need of funds quickly, which is why he/she listed at such a discount--to move fast with a sale. Not my place to speculate. The price is open to reasonable negotiation, if you are interested. Otherwise, I would recommend a .link or .xyz domain, per a more economical budget. Thanks."
     
    Last edited: Nov 4, 2020
  3. SuperBrander

    SuperBrander Top Contributor VIP

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    @DomainGuy86 Thanks for the input. Well... it looked serious. It was a back and forth via the marketplace. The domain was listed for more than $25K. Think about it from the buyer's perspective and put yourself in his shoes- you make a $25K offer for a domain that's being offered for more so at 25K you think you're getting a good price. Then you go to archive.org and see that 3 years ago the domain was offered for low $XXXX. If I were the buyer, saw that and didn't understand domains, I'd also think that someone was trying to take me for a ride and sell me something that's way overpriced. And I would then very likely reconsider even if initially the domain seemed perfect. Nobody wants to feel like a sucker. The question is- what's the perfect response that can speak to an end user in a way that would be convincing and that could counter that feeling.
     
    Last edited: Nov 4, 2020
  4. equity78

    equity78 Top Member TheDomains Staff TLDInvestors.com PRO VIP ★★★★★★★★★★

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    Everyone does not view domain names the way domain investors do. Even people with very deep pockets. My background is in stock and bond investments. Worked for a big firm, I remember when the Internet came about and I was out of that business and investing in domain names for my company at the time, I mentioned Stockbrokers.com to the head of a firm I knew well. He asked me why would anyone want that? Now this was early 1998, but he told me he wouldn't pay $5,000 for it. I was like you are crazy, you will see. Again that was probably more about timing.

    When people think they are being duped (I know you were not duping them) they will back away from things, even things they want or need.

    I was in a department store once when a woman started throwing punches at a salesperson when someone in line told her, "That was $30 last week" She was now paying $49, she lost her mind, started screaming, when told to calm down, just started throwing lefts and rights.

    When you know who you are dealing with, or as well as you can possibly know them, it's easier to negotiate. I one time sold a name years later through direct email, the buyer let me know he made an offer years before on Sedo, but did not understand or like the communication system.

    A domain name is worth what two parties agree it's worth, the buyer and the seller, other opinions are fine, but basically meaningless. If I wanted to buy a name for $5,000 and my best friend said it's worth paying $10,000 that would mean absolutely nothing to me, now I will admit I am on the extreme side that I am never looking for opinions, some do and some need. I think if you need you probably should not be putting money at risk.

    So you could say, I did not own the domain name years ago, I am not pulling a bait and switch. The previous owner was someone in desperate need of money and put this valuable asset up for sale at a lower price.

    The domain name is now in stronger hands, I would like your business but I am not desperate to sell this domain name, I know it's value.
     
  5. NameJi

    NameJi The Domain Lover VIP

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    You could say -- "Our pricing is complex. They always run in one direction, up".
     
  6. SuperBrander

    SuperBrander Top Contributor VIP

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    Thanks for the great reply, @equity78. I agree. It's definitely easier to deal with someone when you know who they are and can communicate with them directly. In this specific case I'm in the dark because I have no idea who the potential buyer was and I can't communicate directly. I tried to convey a message using the marketplace but they said they sent a message earlier and waiting to hear back. Then I was informed that the negotiation was terminated. What I tried to convey was something along the lines of:

    I'm the new owner and this domain is valuable and the price is justified because of x, y, z. Here are a few comparable sales from 2020.

    I think it's very hard to get back on track if/when a potential buyer finds "proof" (in their mind) that they're paying way more than what the domain "should" have cost. In most cases, IMO, only if the domain is an absolute must for them (for instance if it's an upgrade to an existing domain), they might be able to get over the mental hurdle of feeling like they're being duped. The funny thing is that I actually bought this domain for less than the historical records the potential buyer saw because the owner later dropped the price significantly. It was a great buy, but I'm not sure there's a great way to explain to an end user the intricacies of domaining and why I can buy it for such a low price while they're expected to pay so much more. It's hard for me to think of an item, physical or digital, where the cost to the end user can be so much higher than the cost to the seller within such a short period of time. Most businesses perceive domainers as cybersquatters and an obstacle in their way to begin with and the difference in price is so high, that it's an uphill battle. Still, I think I could put up a fight if I could have more info about the buyer, be able to monitor how many times they're opening emails from me etc.
     
    Last edited: Nov 5, 2020
  7. pb

    pb Established Member ★★★★★★★★★★

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    They're mad at themselves for the lost opportunity to buy it cheaper, and that's how they cope. They could also bring this attitude over from the fmcg market. If you know a product cost $5 on the last sale, and it's not essential to you, you likely won't buy it for $10 but rather wait for the next sale.
     
    Last edited: Nov 5, 2020
  8. SuperBrander

    SuperBrander Top Contributor VIP

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    @pb Thanks. Yeah, nobody likes to overpay. TBH I don't blame them for backing out because I might have backed out too. That's why I'm trying to figure out if there's a way to make a potential buyer feel good again after they discover something that makes them feel like they'd be getting screwed if they make the purchase. I think it really deflates the enthusiasm about a purchase when you know that you're paying so much more than you could have. When it's $10 vs $5 it's easier to get over it (especially if you wait and see that the price doesn't drop so you can eventually come around). When it's low $XXXX VS $25,000 though it's a bitter and much harder pill to swallow.
     
    Last edited: Nov 5, 2020
  9. pb

    pb Established Member ★★★★★★★★★★

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    Well, it's important that the old listing was by the previous owner, so you have no obligation to relate to it in any way. It's not like you were listing it for 1k and then suddenly increased it 25x (I'm not saying you shouldn't, just that it's another situation). No, it was in another time, another context, another reality...

    > I don't blame them for backing out because I might have backed out too

    Honestly I did that, too. I've almost bought a domain for 300 PLN but then I noticed it was listed for 60 PLN just a few days earlier (by the same owner). I tried to bring the price down but they wouldn't budge, so I passed on the deal, even though I liked the domain. It proceeded to sell for 8000 PLN a year or two later, possibly still by the same owner. :xf.rolleyes:
     
  10. AEProgram

    AEProgram Top Contributor VIP Blue Account

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    When you finally have someone interested in a name you must put up a fight. Pay attention to what they say but stay strong to your price and make your case. Believe in your name, believe in what you sell. If they contacted you, you are already ahead of the game. Don't let anything they say scare you, they are more scared of you not selling the name than you are scared of them not buying it. You just need to make the buyer understand and believe that the price they are paying today is borderline theft. They also must believe that you really do not care if you sell it today or hold onto it for another 10 years. Obviously this only works if the name justifies it.

    My reply:

    "All of the domain names that sold for millions of dollars, at some point were registered for under $100". The person that buys this name now for $25,000 might end up selling it in 5 years from now for $65,000. This phenomenon is not unique to domain names. Assets such as art, real estate, stocks, precious metals and, cryptocurrencies are constantly being purchased at a price that is way higher than what someone paid prior, in some cases, an hour earlier. I believe the value of this domain will significantly increase overtime and to hold it for another 10 years will cost me less than $100. Therefore, if someone wants to buy this name from me now, it would have to be at a fair price and I honestly believe that my current asking price is extremely reasonable."

    If you are open for lease to own I would add.

    "Because I am not worried about the long term value of this domain, I am offering a lease to own option. You could pay just $694 a month for 36 months and start using the domain today. If for whatever reason you decide you no longer want the name (even after 1 month) I will take the name back (no questions asked) and all you paid was $694. The domain will be held by a third party escrow company (fill in the name) so you are protected 100%"
     
    Last edited: Nov 5, 2020
  11. SuperBrander

    SuperBrander Top Contributor VIP

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    @AEProgram Thanks. The domain was actually supposed to be sold with a payment plan, so that was already in place but I like the way you phrased the lease to own offer. That's a good way to present it. As for the value and positioning the purchase as an investment, personally I don't like telling end users that the value of a domain they're buying is likely to increase or even that they'll be able to sell it for the same price. In many cases it won't happen plus the price I'm offering it for isn't related to that. It's about the commercial potential of the domain, comparable sales etc. I don't want a business to make a decision based on some promise of liquidity and then try to sell the domain in the future and potentially realize that they can't even sell it for a fraction of what they paid. So if discussing the investment angle, I'd emphasize the potential profit that can be made using this specific domain if it's in the right hands and the business benefits rather than trying to sell the buyer on the future value of the domain itself.
     
    Last edited: Nov 5, 2020
  12. AEProgram

    AEProgram Top Contributor VIP Blue Account

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    I get what you're saying but the point is not that its an investment for them, its your investment, you can make money by holding on to it and for you to hold onto it the cost is little. At the same time you are explaining that if they wait, the price can go up.

    I agree with your point and a very valid point that the buyers of these names are looking to develop and pitching as investment for them is not right.
     
  13. SuperBrander

    SuperBrander Top Contributor VIP

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    @AEProgram Thanks. I see what you're saying, but I don't want to associate the price I'm asking for a domain with it being an investment that's supposed to make profit on the merits of the name, whether it's the buyer's profit or mine. The buyer needs to want the domain for the benefit of his business. My investments as a domainer isn't something that interests end users who usually don't even know domain investors exist and in many cases it's pretty clear that certain domains likely won't warrant a higher retail price in X years as their asking price is already high. I'm not referring of course to top tier dictionary words and other high end domains. These are more liquid and their prices really are rising and will likely rise significantally in the future so their value as "coveted real estate" can be emphasized. But let's face it- most domains aren't top tier dictionary words and aren't 3L etc. so in general I prefer not to sell end users on domain investing and theoretical profits from that.
     
    Last edited: Nov 5, 2020
  14. karmaco

    karmaco Top Contributor VIP

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    It is irrelevant what it cost 3 years ago. Nothing costs what it did 3 years ago. You were ok with the price you listed it at and should not second guess pricing or justify anything. I guess the only question is do you think the price is befitting of the name? If the answer is yes that’s all that matters.

    As a comparison, people flip houses all the time. Should I be raging that a house that was bought for $85K last year is being flipped for 350 K today? I would not think twice about it.

    Most people are well aware that domain asking price is not equal to domain acquisition price. You have something I want. The only question is what I am willing to pay for it today.
     
    Last edited: Nov 5, 2020
  15. lock

    lock DomainUsed.com VIP

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    We are a professional domain reselling business with overheads and numerous domains therefore we do not sell domains near cost prices but at their current market values.
     
    Last edited: Nov 5, 2020
  16. E-Thunder

    E-Thunder Top Contributor VIP ★★★★★★★★★★

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    The old price is really irrelevant. If a buyer is truly interested and the name fits their needs they will purchase. I would now increase the price to your original amount and let it sit. They very well may come back. The majority of domains I sell are hand registered for $8-9 and I resell for low $x,xxx.
     
  17. Pairadice

    Pairadice Upgraded Member Gold Account

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    That's frustrating when they tempt you with 5-figures and then pull it all away. But, if they are throwing around that kind of cash on a domain marketplace and you said they don't really know anything about domains, and basically you are admitting that you don't think the domain is worth that much, then you must have found the biggest fish on the internet. Unsurprising, then, that they didn't actually follow through on the purchase even though they made an offer. It's either some incredibly rich idiot that is just throwing money away, or someone playing around. If they needed the domain they would have hit the BIN before anyone else could get it.. but they were trying to save money somehow, right?
     
  18. The Durfer

    The Durfer Top Contributor VIP Gold Account

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    more demand for something the more the price goes up, tell em that.
     
  19. Bob Hawkes

    Bob Hawkes Top Member NameTalent VIP Gold Account Trusted Blogger

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    Great topic and thread @SuperBrander with lots of excellent answers.

    I would add the following...
    • The key consideration is the value this domain would bring to the potential buyer, and not what price it was offered in past by a different seller.
    • Perhaps the old price was a mistake or suggested by someone who was not expert in the value of domain names, or offered when they were in financial duress.
    • Each domain name is unique, and valuation is not an exact science. You feel the current asking price can be justified.
    • Prices change, including of domain names. It is the same in other things - do you expect to be able to buy Tesla or Apple stock for what it was 5 years ago? Invested items normally increase in price.
    Bob
     
    Last edited: Nov 5, 2020
  20. biggie

    biggie GreenFriendly.com VIP ★★★★★★★★★★

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    Hi

    so, how did you lose a $25k sale?
    as i read it, there was only an offer:

    so, did they make a $25k offer, and if so, why didn't you accept it?
    or
    did you accept the offer and they never responded?

    also, if the potential went and did some research on the domain before they purchased then
    it sounds like they were domainer or just a savvy individual.

    imo...
     
  21. DomainRecap

    DomainRecap Top Contributor VIP

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    When people suddenly feel the need to get out of any deal, they latch onto anything that may allow them to save face and not look like a deadbeat. Other times it's a negotiating ploy, hoping you'll drop your price significantly in response.

    The old "it's because of..." excuse factory happens all day and every day. It's never the real reason, it's just seems like a valid excuse to use.

    Just let it go - if they really want the domain they'll buy it, and if not, they won't.
     
    Last edited: Nov 5, 2020
  22. SuperBrander

    SuperBrander Top Contributor VIP

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    Thanks everybody for your assessment and ideas. @karmaco It's the sort of domain that some people will offer for less and some people will aim high with. I think to the right company it could be worth 25K. It's not going to fly off the shelf though so it'll probably take some time to get such an offer for it again. @biggie The domain was priced for more than 25K. An inbound offer came in for 25K. I told the marketplace that they should counter (because it's always good to counter) but that I'm willing to accept 25K so they should keep that in mind and if they can't extract more- 25K is fine. Then the marketplace got back to me and said that they might be able to get 28K. I said- fine. If not, 25K is OK too. Then the potential buyer informed them that he found out that the domain was listed for low $XXXX a few years ago. The marketplace sent me the screenshot they got from the potential buyer showing the historical archive. Then the buyer notified them that he doesn't want to proceed.
     
    Last edited: Nov 5, 2020
  23. DomainGuy86

    DomainGuy86 Established Member

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    If a business wants a brand...they have to pay for it. They can do a discounted cashflow analysis to see how much a unique brand would likely pull in with retention and click-thru rates. A lot of times the first impression is all you get with the marketplace flooded with businesses and start-up's.

    The right end-user can write it off as an expense and keep more of their income at the end of the year. If you are talking Joe Sixpack dipping into his life savings--I get it--there needs to be some market worth analysis. To me, it is a highly subjective thing--domain valuation outside of premium .com's.

    The OP faced a common issue in any market--leads that fall through. If the big league domain players and registrars suddenly devalued their inventory and cratered to thrift demand, no one would be posting big sales.

    You'll always get the tire-kickers who see the price of everything but the value of nothing. Got to pay to win. I don't email Tesla asking why the stock is trading at several multiples when the intrinsic value is beneath current levels...it is the price of investing.

    In fact...you see how much money was lost during the last market rout. We are talking so much money 25K looks like a night out. If they bought a nice domain...they would of had a liquid asset that holds it value. Earning 1% at your local bank or gambling with the market is unpalatable to a lot of folks. Domaining can get you returns people would kill for with low barrier to entry. That is saying something. Also, can't forget inflation.

    To round this off...you are seeing China and India coming online in huge numbers. This means prices are going to skyrocket. Their entrepreneurs also want legitimacy and respect online with regard to their businesses. The domain age is here.
     
    Last edited: Nov 5, 2020
  24. s.g

    s.g Okay, you've cracked it. There is more to us...

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    Another lesson for our team. A great question and (probably) a handful of equally great answers.

    Originally I was going to reply with "What would Trump do?" when I saw the question/title on the main page but once I noticed all the smart NP members present and actively answering, I realized this thread smells like true knowledge, i.e. let's keep Trump out of it for obvious reasons.

    Thanks to all of you who helped us since we joined on 10 Oct. This place has been incredible!
     
  25. Pairadice

    Pairadice Upgraded Member Gold Account

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    This is the biggest problem with the brokerage system if you set the floor price too high that they have to contact you to get approval before accepting and that can lose sales. However, to the domainer it appears that it's a fresh offer, so of course you would counter offer. What I've realized however is that if the broker contacts you then it's already pre-negotiated, possibly, so you might not run them off if you just simply accept. Maybe wait a day or two before accepting..

    Further, if they've already been talking to the broker and the broker tells them they have to contact you to get approval, and then they wait a day hoping you will accept, and then you reject their offer and ask for more, it might offend people who aren't used to the whole negotiation thing and were just hoping their one offer would be accepted.. if that's what's going on
     
    Last edited: Nov 6, 2020

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