Seller financing for domain names

Seller financing allows the purchase of an asset to be financed without introducing a third-party lender. Secured against the asset, seller financing provides security to the seller and flexibility to the buyer. Seller financing is most often encountered in business, where assets are more difficult to value and less liquid, which complicates third-party lending against the asset.

Securing finance against a domain name

As part of the domain name system, the registrant of a domain name delegates control over the domain’s DNS records to one or more name servers without relinquishing ownership of the domain. Seller financing for domain names is an innovation that leverages this ability to assume control without ownership.

In a seller-financed domain name sale, the seller transfers ownership of the domain to an intermediary, who then delegates control over the domain’s DNS records to the buyer, allowing the buyer exclusive use of the domain for the duration of the agreement while protecting the seller from delinquency.

At the end of the agreement, once the buyer has made all payments, the intermediary transfers the domain’s registration to the buyer to complete the transaction.

Lease-to-own

Offered by most domain name marketplaces (including GoDaddy¹, DomainEasy² and Atom³), “lease-to-own” is the most common form of seller financing for domain names. A buyer chooses the agreement duration, and the platform splits payments evenly across the duration. After a buyer makes the first payment, the seller transfers the domain’s ownership to the marketplace, and the marketplace delegates control of the domain’s DNS to the buyer.

Domain name holding

In a more formal arrangement than lease-to-own, the buyer and seller sign a sales agreement, then the seller transfers the domain into domain-holding with the intermediary, such as Escrow.com⁴. A sales agreement is much more flexible than lease-to-own and may include variable payments, non-cash consideration and additional terms covering missed payments. As with lease-to-own, the intermediary delegates control of the domain’s DNS to the buyer.

Is seller financing safe?

Yes, as the intermediary holds the domain name registration. The buyer may end the agreement early, but the seller may not. If the buyer ends the agreement early, the intermediary returns the domain to the seller. After the buyer satisfies the sales agreement, the intermediary transfers the domain’s registration to the buyer.

Why finance a domain?

The right domain name can be key to the success of a business’s online presence, but the upfront cost can put undue stress on finances, tying up capital that is better deployed elsewhere. Seller financing unlocks all the benefits of the right domain without tying up capital.

For further insight and guidance into financing the purchase of premium domains, get in touch via hello@g0t.com⌝.