I had my first experience negotiating with a domain name broker this week. Domain name brokers are like real estate brokers, only for internet properties. Say you want to start your own website called casparworld.net. If you were the first person to think of and register casparworld.net, you’re in luck, you can register it for about $10. But I already thought of it and registered it. I already own casparworld.net. So now, if you want this property, you have to buy it from me. And I can sell it (or not sell it) for whatever price I set.
A client wanted to buy a domain name, let’s call it CrawfordAluminum.com (I have no idea whether that’s a real thing, but you get the idea.) There was currently no site at CrawfordAluminum.com, but the property was for sale. A broker had contacted my client a while ago asking if he had any interest in buying. The price was $2,999, but he’d be willing to sell for a discounted price of just $1,999.
My client, let’s call him Mr. Crawford, who wants to build a new site for his business, Crawford Aluminum, Inc. (again, not the real name), wants to have that domain. He could deal with the broker himself (you don’t have to be a broker to do this — there’s no licensing required to enter the market), or he could have hired his own broker to make the deal. Instead, since I’m the one he’s picked to build the site, he wants me to do it. So I’m his shotgun broker.
It just so happens that earlier this year, after hearing him on the Knowledge Project podcast, I’d picked up Chris Voss’s book, Never Split the Difference. It’s an amazing book by a guy who spent years negotiating hostage situations for the FBI. Now he leads a group of negotiation trainers he calls The Black Swan Group. I’ve been a lurking fan ever since, and have tried to incorporate his ideas into life generally. Day-to-day, I don’t really do what you’d consider high stakes negotiation. But, I figure, I’ll do this the Black Swan way and see what happens.
I did a little background research. I got some estimates from a few of the web’s automated domain evaluation tools. Across the board, they show that the estimated market value of CrawfordAluminum.com is between $100 and $300.
I contact the broker, saying “Thank you, that’s a very generous discount. But how are we supposed to do that? How are we supposed to pay $1,999 when the market valuation is at most $300.
He writes back that GoDaddy evaluates the domain at $1571, which his seller thinks is too low.
Back and forth it went. The seller wouldn’t budge. At least, that was what the broker kept saying. And I tend to believe it, because at one point he came pretty close to saying, “Never mind, we don’t want to keep playing this game.” (But maybe that’s a tactic brokers use.)
The domain name is my client’s business name, so we’re stuck. Even though it’s not worth that much according to the generic market analysis, we ended up getting the domain for only $150 off the discounted asking price. Because, in the end that’s what the property was worth to my client.
It could have been worse. The seller could have insisted on the full asking price of $2,999. The seller could have demanded more. I’m not sure at what point my client would have said, “Never mind, we’ll just register Crawford-Aluminum.com (note the extra dash) for $10 and forget about it.” That’s the risk on the seller’s end of trying to price gouge; you can’t register all the possible variations and you can get stuck having invested in a property that is now worthless because we’d have already built a website on a similar property and there are no other Crawford Aluminums out there wanting to buy.
I suppose we ended up right about where we should have been. I’d say, the first time out my “Black Swan” approach served pretty well. At least I felt like I had a framework and a strategy for negotiation, which I’d have been clueless about last year. The seller got most of what he wanted. My client got the domain name he had his heart set on, even if it was more than he hoped it would cost him. I don’t think we left any money on the table. Maybe if we’d had the time to walk away and re-approach them in another 6 months and ask if they thought they were really going to sell it for that much when it’s been on the market for a year with no takers: suggest they cut their losses and sell it to us for $750. But my client needs the website now. So there you go.
Maybe I’m wrong. Maybe an experienced domain broker would have done better. Possibly. Maybe even probably. I spend most of my time programming; what do I know?
But for my first time out on the wild west domain market, at least I lived to tell the tale!