What to offer/pay for a domain name?

Question

I'm interested in purchasing a domain name that is already owned.  I want to attach it to future marketing campaigns (mainly direct mail).  I have a domain already - www.hhbsa.com - but this domain name is more industry specific (webuyhouses type) and is easier to remember.  I found the owner within a few minutes and he said he'd be willing to sell it.  We spoke very briefly and he called me the next day to see if I had given any thought about making an offer.  I could not get a number out of him, so I'm going to have to offer first.  I have never done this before and I have no idea what to offer him.  Of course, this depends on a number of factors - but mainly, what it's worth to me and what it's worth to him.  The analysis is below.

When I type the domain name in, it re-directs to this gentleman's realty website (i.e. he is not actually "using" the domain name).  He is not in the investment side of the business - it appears he is trying to attract retail buyers and sellers.  He is an older guy, at or near retirement age and he appears to be a one man operation or mom and pop office at largest.  I looked in the MLS - in the last year the office has sold 1 listed property, has 1 active listing, and represented buyers on 2 purchases.  All of these transactions were in his name.  He doesn't seem to do a whole lot of business; and since he is at retirement age, I don't imagine he has any future plans with the domain.

Given that info, I don't think the domain name is worth that much to his business.  But he may not think that.  When I talked to him the second day, I could tell he knows it is worth something - I'm just not sure what.

So what is it worth to me?  I really want to get it for $1000-$1500, but at $2500 I would still be happy.  I see the value of having this domain long-term, so I will go up to $5000, but I will not be very please paying that much at this time.

I'm not sure where to start with an offer on this guy.  I don't want to insult him or have him think negotiations are pointless if I offer too little - like $200 - but I don't want to pay more than I need to either.  We're all here because we like to make good deals right?  :-)

Thoughts?  Thanks Everyone!

Todd Hutcheson · Answer

Lazar, make sure you put the phone number somewhere prominently on the top. People want to talk to people.

You also made a big mistake I counsel against. You bought the home without getting the house version. If the other guy does a lot of marketing this may benefit you, but I would not do any marketing using the domain you chose. You would lose about 20% of your traffic.

Jon Klaus · Answer

Good call.  I don't think sahomebuyer.com is worth more than a few hundred unless it was developed.

Lazar Hausman · Answer

@Jeff B.  @Jon Klaus The hhbsa.com is my current site.  What I was trying to buy was SAhomebuyer.com.  Ended up registering HomebuyerSA.com for like $10. It is a very basic landing page with the sole goal of getting conversions.  Traffic is being driven there with my direct mail marketing.  I don't have any results yet because the page and my marketing just started this week.

Jon Klaus · Answer

And welcome to BiggerPockets, Lazar!

Jon Klaus · Answer

Ha, y'all are pretty far apart between $200 and $200k!

Did you register the one you like better? If so, can you share what the first domain is? If you are definitely not buying it?

Jeff B. · Answer

I think the webmaster was thinking his job was in jeopardy asking for 200k.

There is No information on the hhbsa.com traffic from any website analytics that are publicly accessible.  Others have given solid advice to shop for another domain name.To be valued at 200k it needs to have web traffic similar or more than biggerpockets.com 1.5 million to 2.5 million visits a month.

John Thedford · Answer

Though there are lots of extensions, many still say that .com is THE extension to own. A friend recently sold a domain he owned. It was just the name. No website. No traffic. He got around 30K for it. I thought that was high but the buyer was willing to pay it. Since this owner called you back, he must have some interest. I would email him back asking if he made a mistake in his email stating 200K. If not, thank him for his time and tell you that if he decides to lower the price to let you know.

Lazar Hausman · Answer

Hey everybody thank you for replying.  I actually found a very similar one that I like better, but still figured I would see if I could get this one also.  I offered him $200 and he emailed me back saying his webmaster said he should ask $200,000.  LOL.

Rob Swan · Answer

I agree with $300-500 as that's what I've sold and purchased low traffic domains for.

I also agree that you should consider other top level domains (.biz, .org, .us) as the sky is the limit these days.

Tony Christian · Answer

Sounds what you're looking for is, you want to make an offer that will get him to uncover his magic number.  Then possibly meet somewhere in the middle.

It's safe to assume he has some sense of it's value.  But, he called you back.  This tells me he's motivated to sell.  You just need to find a price.

Start out low $300 - $500 .  How he reacts and the tone of his voice will give you a feel of how close you are.  If he pauses and then turns it down, you may not be to far off.  On the other hand if he starts laughing you're nowhere near his dollar signs.  Either way you have an opening to push for a counter offer.

Even if you like his counter offer, don't jump at it.  Give him another counter offer.  Reluctantly give in if he doesn't budge.  Make him work a little.  Otherwise if he feels he could've gotten more out of you, he'll feel suckered, and could back out of the deal.  You want him to feel he got the better end of the negotiation (without making him feel like he took advantage of you).