sales Domain Leasing Risks

[targetpro]

Got an offer today to lease a very strong category defining domain in an industry that is known for aggressive email marketing. My worry is that the user can pay for a month or two and essentially "burn" the domain by spamming it and/or getting it delisted in Google. It is an exact match generic that will rank #1 for a major keyword with minimal SEO effort.

When leasing, what sort of protection does the seller have? The lessee can destroy a name by spamming it by mail and potentially lose the domain name to registrar TOS violations. A domain can be delisted in Google and nearly impossible to relist (takes alot of time and money best case to relist). Or the lessee can create some infringing content that could lead to a UDRP.

It seems like leasing domains is a bad idea, unless you are dealing with a massive company that has signed an extensive contract that protects the lessor. But this type of company can usually just buy the domain outright anyhow. Leasing would be unusual by any well funded company, so I don't understand why people take the chance to lease? Seems way too risky for me. Thoughts?

 

[manpreet]

Got an offer today to lease a very strong category defining domain in an industry that is known for aggressive email marketing. My worry is that the user can pay for a month or two and essentially "burn" the domain by spamming it and/or getting it delisted in Google. It is an exact match generic that will rank #1 for a major keyword with minimal SEO effort.

When leasing, what sort of protection does the seller have? The lessee can destroy a name by spamming it by mail and potentially lose the domain name to registrar TOS violations. A domain can be delisted in Google and nearly impossible to relist (takes alot of time and money best case to relist). Or the lessee can create some infringing content that could lead to a UDRP.

It seems like leasing domains is a bad idea, unless you are dealing with a massive company that has signed an extensive contract that protects the lessor. But this type of company can usually just buy the domain outright anyhow. Leasing would be unusual by any well funded company, so I don't understand why people take the chance to lease? Seems way too risky for me. Thoughts?

Thanks for sharing.

I have always found Domain Leasing a very interesting subject. I am sure there are much more improvements, even now, to be done in this area. More innovative methods for Domain Leasing should be introduced thats a win-win situation for both the parties.

 

[carob]

Another issue with leasing, as with installment purchases, is what if the party holding the domain goes down or goes bankrupt. Strictly speaking, at least with a .com domain, the owner of the domain is the named registrant, which presumably is not the lessor or lessee.

I asked about this in an Undeveloped thread and as I recall the answer there was that the domains are held by a separate entity from the marketplace company.

 

[Ostrados]

No dont lease a 6 figure domain! for a domain of this quality you will find many other potential buyers!

 

[nivadriver]

Great points so far here. In my opinion, leases are a great approach to extracting long term value out an otherwise single profit experience.

What you describe is a low entry point to a high value asset that would otherwise yield a big payout for the owner. Your risk is higher than I would personally recommend if the asset is truly a 6 figure asset, I say that because only around 3-5% of the domains today will get to that valuation.

There are very real risks to leasing any domain and they are very well presented here. A bad actor can certainly utilize a lease to minimize their entry cost to a big payout of their own. Question is, how can we safely operate with this model at a minimal risk?

My own experience with leasing so far has been where I currently work. Not trying to market here, but the truth remains. The premise of doing a "lease" without the backing of a trusted third party sounds terrifying, personally. And that's one of the key points I only saw one person mention in brevity.

My main goal with offering a lease to a known buyer (key aspect here will develop further) is to extract immediate and partial value from an asset without losing two things: 1. Title of ownership 2. Ultimate control of the asset.

The terms of a lease can be used to your advantage instead of being left to chance. I am using the first domain in my personal account as a sample case for the purposes of this discussion. 24HourDoctors (com) has a simple lease deal of $2,999 initial payment and $399 monthly, for 11 months. Possible yield of almost $7,400 in a year. It may seem like a lot, but for a high yield medical office, that may be their monthly advertising budget. This niche in particular falls under the "concierge medicine" so their yields are considerably higher than normal. My target price for releasing an asset that yields $7400 per year could be mid-high five figures! A true reflection of the value of an asset that continues to perform year-over-year for a business.

Here are a list of choices that I picked from,

Ultimately you can decide the exact length and yield from your individual domain,

And this is where the wall around your asset begins to take shape, you can read the full agreement on the parked page for detailed context.

The most relevant section of this agreement may be point 3. Operations - Read it and see if you could add anything further. It appeared clear to me that the user would instantly lose rights to the lease agreement if any of the violations can be quantified. This is where your responsibility comes in, in my opinion, you should be monitoring their use to some extent. See if any negative reviews pop up, or if they are CAN SPAM compliant, for example.

In essence, it may open up new venues for our assets to outperform current single-sale models. But it comes with certain risks and responsibilities. Leasing is not a single step process, you are being rewarded handsomely to maintain an asset that is likely going to increase in value with use. My opinion remains positive on leasing, we just need to take different approach to the process because it is truly different than single-sale models.

High value domains may yield even higher profits than something as niche as my example. I think we just haven't delivered the products for this to function at minimal risk yet. This could mean new companies or services from existing lease-leaders to develop with community input. Thanks for posting this thread, seriously.

My gears are turning.

I realize my reply does not add a great deal of value for thread participants, but your take on your own asset heightened my appreciation for one of mine, ConciergeClinic dot com. Thanks for your insightful posts Dan..

 

[lock]

I am following thread as own.
site . rentals

 

[7363824]

I wouldn't think it would make sense for someone to pay thousands of dollars to lease a domain just to trash it, but then again theres lots of things people do that I dont get.

If it were me I'd do some due diligence on the party that wants to lease it and make sure that the down payment will cover my acquisition and carrying costs and time so worst case scenario I break even and not loose anything. In fact I suspect if anyone offered insurance it probably wouldn't be for the full sales price just for your actual costs on the domain.

 

[SamirAz86]

Which option work best:

1. Buy it now with make offer and installments

2. Buy it now with lease to own? But there is nor make offer option.

I use DAN service.

 

[DuDD]

• There are significant risks for Domain Leasing
  
  
  In case the renter uses it to run an illegal website, the domain name becomes invalid

 

[DAN.COM]

We have thousands of lease contracts running and only once the situation depicted occurred. And when it occurred, within 24 days we had taken down the domain and no damage was done to the value of the domain.

Contractually, DAN sellers can go in the legal route to claim damages if the buyer engages in illegal activity on a leased domain.

To conclude, the vast majority 99,99% of transactions go well because the buyer has a financial incentive to not engage in illegal activity on a leased domain either.

So we'd advice all sellers to not ignore the added value of leasing domains since the risk is proven very low if you use a trustworthy and reliable platform to manage your transactions.