advice Buying high-value domains

[Anton Helios]

I'd like to open discussion and receive your expert opinion on a sensitive topic - high-value domains negotiation and acquisition.

I consider myself an experienced negotiator, with a significant list of business deals, acquisitions and negotiations, 20+ years of experience. However, in domain negotiations I faced somewhat unusual patterns of negotiations that I cannot fully understand and I'd like to invite you to explore it here.

1.Arrogance

I'm noticing that all sellers are showing quite arrogant approach to price discussion. With anchored price of 500-1M I receive a link with top deals with eth.com , ava.com and nft , which based on quite specific domain request cannot in any way serve as an anchor or price validation.

When I'm inviting to open discussion pointing it out, asking for validated medium market prices, without any low-balling or assertiveness, they react quickly and aggressively, saying that they don't have time for this. Obviously they do have time, as negotiating deals is their business and full-time job. However, they refuse to do that. I never encountered such an aggressive tactics from anyone in any industry, especially in such a highly-non-liquid, one buyer, type of asset . I refuse to believe they receive hundreds of offers.

2.Public anchor

Domain was sold previously, probably to the current seller. There's a clear validated market price on godaddy. Of course I understand, that it doesn't mean that the domain will be sold at a 100$ profit. But what I receive is 20x-30x. When I point it out, they say that they bought it at a much higher price, but refuse to provide any proof with the same f-off tactics. We all understand, that no seller of such level would ever buy the domain privately, leaving such a public anchor. However, it doesn't concern them.

Market validated, medium market price and appraisals are at the foundation of any acquisition, of any negotiation on any level. If a nearby house in the same neighborhood of a same size sold for 200k, you cannot ask for 6M. Same applies to acquisitions of almost any asset. It even applies to the unique assets with no BATNA, no alternatives. With domains its hardly true. Company can live without .com domain. 600k can be reinvested much more effectively in 99% of cases.

Questions:

How can you explain such phenomena ?
How to approach such deals and people ?
What is the leverage and tactics ?

Please share your thoughts.

 

[D Haynes]

I'd say this...

1.

The vast majority of domain holders/investors/sellers don't do it as a full time job or only means of income. For most it's a side hustle. Obviously this is less likely to be the case the better the name/portfolio. As a result I'd guess most domain holders/sellers aren't all that versed in the nuances of negotiating. I agree that if they're going to use comparable sales they should be... we'll... comparable and using what may be far superior pervious sales in a negotiation shows either a lack of knowledge, a level of disrespect for the potential buyer and their negotiating abilities or both.

There is also a possibility the name is being brokered by a marketplace and they have been instructed as to what the floor price should be but I'd be very surprised if any of them would reply in this manor.

2.

Ultimately it doesn't matter what someone payed for a domain and they are under no obligation to disclose a purchase price to a potential buyer. I've sold many names at 100x + of the purchase price and some of those were to investors who'll double that again. A domain is worth what someone is willing to pay for it. The up and down of it is if the seller has it priced too high it won't sell and at some point they'll have to lower the price if they ever want to move it on. As a buyer all you can do is offer your best price and if the seller is remaining stubborn you have to move on. You never know they may come back to you down the line and then you're in the driving seat.

A company of a certain size can indeed live without a .com but a lot of the time once they reach a level they inevitably go after the .com for the credibility it offers. Sometimes this is exactly what the seller is waiting for "you wanna build on a .io fine. I'll see you in 5 years when you want the .com and your pockets are deeper".

I guess as a way of possible approaching/dealing with these sellers is to basically point out the floors in their pricing as you kind of already have. Find your own comparable sales (there are a few sites for you to do this). Check how long they've held the name. If its been 10 years plus you could make an argument that they must not get much interest and maybe this is the best opportunity they have to offload the name. Some buyers have offered equity for a name. There are marketplaces that offer installments or LTO arrangements.

At the end of the day if the seller is playing hard ball there isn't an awful lot you can do.

Good luck!

 

[Jv1999]

I think GD prices are insane.

 

[karmaco]

Nobody has to justify pricing to you on a digital asset they own and they can price it however they want. Its really that simple.

 

[william]

I think when you ask them to justify their price or you try to justify your own offer using any kind of reasoning, whether based on data or not, it puts the sellers on the defensive. They immediately either argue or retreat into their shell. What every seller wants to see is an offer and numbers. Some will have a reasonable discussion with you, especially experienced brokers, and will let you know why the domain is worth its price tag and walk you through your questions. But for the most part, domainers will view you as a tire-kicker and won't waste too much time on you. Now, you can void EVERYTHING i just said, IF you come in with a high offer. If the domain is priced at $500,000 and you come in with a six figure offer, there are only a handful of people which won't have a conversation with you.

 

[biggie]

1.Arrogance

Hi

some people come in the game, with arrogance because of what they did/have done, before they found domaining.
some are know it all mo-fo's and you can't tell them shit... cuz they know it all.

then, there are some who learn to be arrogant.
most of that is due to their experiences gained/learned, while engaging in the game over time.

some are not arrogant at all, but they know the true value and potential of their holdings and are willing to hold them until death or right buyer comes along.

still, the higher the quality of the domain, then expect the seller to only respond to serious offers.
simply because such names are practically impossible to replace in a portfolio.

imo...

2.Public anchor

Hi

anchor doesn't mean much, because it all depends on the name, when it was sold, who was the seller, and what did the buyer do with it, during the holding time.
trending names, fads, landrushes and hyped extensions, may have high past sales, but now don't have much, if any, reseller value.

How can you explain such phenomena ?
How to approach such deals and people ?
What is the leverage and tactics ?

Hi
tried to explain in nutshell form
when approaching, don't lowball
sellers typically have all the leverage and the experienced know all or most of the bs tactics that potential buyers will do, including threatening domain owners with C&D's, etc.

imo...

 

[MKA]

Questions:

1. How can you explain such phenomena ?
2. How to approach such deals and people ?
3. What is the leverage and tactics ?

Please share your thoughts.

1. They've decided on a price for the domain beforehand, and they're not in a rush to get rid of the domain.

2. Make sure you're able to spend at least two-thirds of what they're asking for. The first counter-offer should be roughly half their initial offer.

3. Point out that you're considering an alternatives.

There isn't really much you can do if you and the seller aren't seeing eye-to-eye on the value.