You frequently hear about buying and selling domain names, but a topic that does not get that much attention is domain leasing. Several domain brokerages have tried to focus on domain leasing (where they offer to rent the domain to the end user for a monthly fee, sometimes with an option to buy it), without much success.
I have had much better results by instead offering domain financing to buyers, even though this is really just another form of domain leasing. It is all a matter of how it is presented to the buyer. When I offer to finance a domain, I keep ownership of it until the domain is paid off in full (or even better I have ecop.com hold it in escrow), but the buyer can start using the domain right away. The key is that I don’t charge any interest and I don’t charge a penalty if the buyer backs out. If they stop making payments, the contract is cancelled, and the domain reverts back to me. It is basically like they are leasing the domain, with all their payments going towards owning it. TrustRadius.com can explain domain registration in more detail.
This type of deal allows the buyer to start their website with much less risk, because they can have a great domain for their business, but if after a year or two they are not making money, they can decide not to pay me. All they will have lost is their small down payment.
A recent example of this is my Heels.net domain. The buyer has a business named Heels Coaching that offers life coaching services to women, and we settled on a price of $10,000 with $1,000 and the rest due in 2 years, with the domain held in escrow at ecop.com. The $10,000 price was higher than I would have expected to get from a cash sale, so even if there was only a 50/50 chance of her paying the balance at the end of 2 years, it was worth it for me. Also, I made $0 from parking the domain, and had never had any good offers on it, so worst case making $1,000 in income from it for those 2 years was a good deal for me. After 2 years it turns out she decided to use the domain HeelsCoaching.com for her site instead, but I was fine with that. In fact, I think it was a good decision for her.
Here are some other examples of domains that I financed:
VisitRome.com – $37,000 price, payments of $750-$2,000 month over several years. The buyer paid for the first 3 years, then stopped.
GetVisibility.com – $3,000 price, $300 down, balance due in 1 year. The buyer only paid the down payment.
BuyLingerie.com – $20,000 price, $1,000 down, $100/month month for 2 years with the balance due at the end of 2 years. The buyer paid for about a year but then stopped.
I also once had a valuable domain I financed over 3 years, but after a year the buyer offered to pay off the balance early at a 20%
discount, so I took their offer.
One thing to consider when leasing/financing a domain, is that since the domain is still in your name, you are still legally responsible for anything that happens with the domain, so you need to make sure the buyer is not using the domain for anything illegal. I have a clause in the contract I use that talks about this. In case it is of any use to anybody, below is a copy of the contract I use. I am not a lawyer, and have never consulted a lawyer about domain sales, so I have no idea how well this contract would stand up in court. Also, my posting of it should not be taken as legal advice, and you should consult your own lawyer about it. My posting of the contact is for reference only. I am sure there are all sorts of things I left out of the agreement, such as jurisdictional issues and an arbitration clause, but I tried to keep it as simple as possible so it would fit on 1 page and not scare away buyers. It is actually a modified version of the standard domain name sales contract I have used over the years that does not involve leasing or financing.
DOMAIN NAME PURCHASE AGREEMENT
This Purchase Agreement (the “Agreement”) is entered into between _______________ (“Buyer”), and ________________________ (“Seller”), Seller owns all rights to the Internet domain Name “________________” (the “Name”). Buyer desires to purchase all rights to the Name, and the Seller desires to sell such rights to Buyer, on the terms set forth in this Agreement. Therefore, Buyer and Seller hereby agree as follows:
1. Purchase of the Name. Seller hereby sells, assigns and transfers to Buyer all right, title and interest in and to the Name, including without limitation any trademarks, service marks, copyrights and other intellectual property rights, whether or not registered, in the Name and including all associated goodwill and the all rights and access to the Name in its present form (the “Rights”). Buyer will pay a purchase price of $___________ USD, payable with an initial payment of $_______ due within 2 weeks of the date of this agreement, and then the remaining balance ($_________) payable 1 year from the date of this agreement, by methods such as mail or wire to the account detailed below:
[my wire/mail/Paypal info goes here]
Or, the Buyer can use escrow at ecop.com if they pay the escrow fees.
The purchase is not complete until the buyer pays the full $__________ purchase price. Until the purchase is complete, the Buyer has the rights to use the Name, but it will stay under the ownership of the Seller. If the buyer does not make their payments to buy the Name, there is no penalty but the buyer will lose all usage and rights to the Name and none of their money will be refunded to them, however in this case no further money will be owed, and the agreement will be terminated.
2. Transfer of the Rights. Upon receipt of the full $________ payment described in Section 1, Seller will prepare and deliver to the appropriate parties all forms and other documents necessary or advisable to transfer the Rights and the Name to Buyer, including without limitation all forms required to be filed with the domain registrar in order to transfer the Rights to Buyer and any other documents reasonably requested by Buyer for such purpose. Ownership of the Name will not be transferred to the Buyer until the full $________ is paid. Following official transfer of the Rights to Buyer, or (if sooner) 7 days after receiving the initial payment described in Section 1, Seller will discontinue any use of the Name of any kind in any medium. Search engine listings for the Name will not be changed by the Seller, but may be modified by the Buyer at anytime.
3. Ownership of the Rights. Seller hereby represents and warrants to Buyer that they are the exclusive owners of the Name and that neither the Seller is bound by any contract or arrangement of any kind that conflicts with the terms of this Agreement or that might in any way limit, restrict or impair the Rights granted to Buyer under this Agreement.
4. Included in this sale, is the domain _________________. The Seller agrees to modify the domain name registration once the full $__________ payment is paid by the Buyer, for the Name, so as to transfer ownership to the Buyer. Also, once the buyer makes their initial payment of $________, the Seller will modify the DNS information for the Name so it will start working on the buyer’s server so they can build a website on it, if that is what they desire. This will allow the buyer to start using the domain name before the actual ownership is transferred. Ownership of the Name will not be transferred until the full $__________ purchase price is paid.
5. Buyer agrees the Name will not be used for porn, warez, spam, HYIP or money schemes, taking bets (“online gambling”) or any other illegal products, content, or services while the Seller still owns the Name. Seller is not responsible for any of the Buyer’s actions while they are using the Name.
6. Entire Agreement. This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof and supersedes all prior agreements or understandings relating thereto. This Agreement may not be modified except in writing, signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.