How A Domain Sale Works
You might be wondering how I sell a domain name. Most of the time, the buyer looks me up as the owner of the domain (using a service like betterwhois.com) and then emails me an offer. At least 1/2 the time they ask me to call them or they ask for my phone number, and I always respond for them to just email me an offer instead. I hate negotiating by phone, plus I like having a record of the emails for future use because that way if the deal does not happen, sometimes the same buyer will contact me again months or years later about buying the domain, and I can then see what previous offers they made to me. Also, many times I have to do some reasearch to figure out what price to charge for the domain, and I can’t do that very well while talking on the phone to the buyer.
Once in a while domain offers come to me from listings I have with domain brokers or auction sites like afternic.com and sedo.com. Once we agree on a price, the buyer has 2 options. They can either Paypal me the money and I will then transfer ownership of the domain to them, or they can use an escrow service like escrow.com or moniker.com. Using an escrow service takes almost all the risk out of the transaction. If the buyer does not use escrow and instead pays me up front, they take the risk that I won’t give them the domain as promised and then they will lose their money. Much like how a lawyer handles a real estate deal, escrow.com eliminates this risk by holding the buyer’s money in escrow and not paying it to the seller until the buyer verifies they have ownership of the domain. The fee for domain escrow depends on the purchase price, but is usually around $50-$100.
I love escrow.com and have used them dozens of times, but there is one small problem I sometimes have with them. If I sell a domain and then the buyer makes their whois listing anonymous, it is impossible for escrow.com to vefiry the sale took place because they are not able to see who now owns it. So, if the buyer fails to respond to the escrow.com verification emails, it can take weeks or months for escrow.com to finalize the transaction (so the seller gets the money). A typical domain sale without this problem only takes a few days.
Another way that I sometimes sell a domain is using a lease with an option to buy, or by having the buyer pay me using an installment plan. With a lease, I keep ownership of the domain and the buyer pays me monthly payments, but I give them full control of the domain so they can use it for their website. I usually also give them an option to buy the domain for a specific price so that way they don’t have to worry about wasting time and money setting up their website and then having me not renew their lease. An installment plan works pretty much the same way, where I keep ownership of the domain until they pay the sales price in full, but I let them use the domain right away after they give me a down payment. If they end up never making the final payment, then at least when I take back control of the domain, it will be getting more traffic than when I owned it, because of all the advertising the buyer did for their website.
Sometimes I get partnership offers from people who want to setup a website on one of my domains and pay me a percentage of the profits. The problem is that I only get these offers on my really good domains, and I have not found it to be worthwile. I did these types of partnerships several times back in the early 2000s and none of them ever worked out. It takes so long to ever get any payment out of it that it is much better for me to just sell the domain instead.
As for how I decide what price to sell a domain for, there is no easy answer for that. It is generally not based on the income I get from that domain, because I estimate that 90% of my domains make less than $50/year. Instead I base it on what I think the market value is for the domain, and that is just something I estimate based on my many years of domain buying/selling experience. I also look at comparable domain sales published on sites such as dnjournal.com. Sometimes a major factor is also how eager I am to get the cash. Many times I have sold great domains for low prices because I was desperate for cash, or to pay off high interest credit card loans, or to fund some new business venture. But, if I am just going to stick the cash in the bank at today’s low interest rates (less than 2%), then I have less motivation to sell.