When someone emails you an offer for a domain name, its important to do whatever it takes to find out who the potential buyer is. Not only is it important to allow you to maximize a potential sale, but its also important to head off any potential legal issues that could come as a result of even good faith negotiations. The OpenDental.com UDRP decision shoes how negotiations can lead to a UDRP loss even when the domain name was initially registered prior to the Complainant’s use of the term.

Reasons why it’s important to identify a potential buyer:

1) Achieve a better price: Most people register domain names because they see the potential business that could be built on the domain name, although many people are buying domain names because they believe they make great investments, rather than because they hope to build a business based on their vision. Like just about every type of asset and other goods, most people will sell if the right offer comes around. This is why people engage in negotiations whether they intend to sell a particular domain name or not.

A buyer wants the best possible price and generally will not share the maximum price it can and will pay for the domain name in order to get a good price. Some corporate buyers have big budgets, but they won’t disclose who they are, since the seller would probably be less inclined to give a good deal. If the domain owner can determine who the potential buyer is and what his budget might be, he could achieve a higher sales price. Likewise, the domain owner could also realize he is wasting time with a fruitless negotiation, if the buyer is in fact a poor college student.

2) Legal leverage: Some people make offers on domain names in order to bait the domain owner into negotiations in an effort to gather evidence of a bad faith negotiation. Although a domain name would appear to be generic in nature, many companies will argue that they use the term for a brand or slogan, and therefore it’s not generic. With UDRP cases sometimes a toss-up, it makes business sense to pay $1,500 to file a UDRP rather than pay $50,000 for a domain name. If you know that this potential buyer may have a claim to your name (or has a litigious/UDRP-happy past), you can avoid negotiations.

3) Time/money wasting: With domain appraisal scams still in existence, a domain owner needs to know whether he is dealing with a serious offer or someone who is running a scam. Time and money can be saved by not replying to a domain appraisal scam email, and they are fairly simple to identify.

Ever since I added privacy to my best domain names, I haven’t received many unsolicited offers to buy them. Since a few of them are stand alone businesses, I figure if someone intends to make a strong enough offer for one, he will know they are fully developed and have advertising contact forms in plain sight. That said, I have a number of clients and friends with sizable domain portfolios, and I have been helping some do due diligence on potential buyers for a few years. This has paid off in many cases, and I think it’s important for you to investigate all potential buyers before you reply to a domain inquiry email.

Tomorrow afternoon, I will post 5 methods I use to determine who a potential buyer is.

Every day, people receive inquires on their domain names. People ask if specific domain names are for sale and some make offers while others ask the domain owner at what price he would sell the domain name. Now more than ever, it’s important to carefully consider how you respond to domain inquiries. Andrew reported on the OpenDental.com UDRP today, and the panel had one startling opinion:

“Complainant offered to buy the disputed domain name from Respondent for $500-$5000.  Respondent’s engagement with Complainant in these offers and counter-offers is evidence of bad faith registration and use.”

So there you have it. If someone inquires about your domain name and you engage in offers and counter offers, you could put the domain name at risk. In my opinion, this is a crock!

Everything I own is for sale at the right price. If someone came to my apartment and asked to buy it, of course I would tell him that I’d sell it for the right price. If he offered me double the book value because he really wanted it, I would sell it ASAP and rent another apartment while my wife finishes graduate school. I am not looking to sell it and don’t want to sell it, but if he was making offers that made it worthwhile, I would consider it, despite the inconvenience it would cause.

Likewise, I would sell my domain names and websites for the right price. I don’t wish to sell any of my geodomain names right now, but I am trying to build a business to make money. If that involves selling my business and domain name for a considerable profit, sure I would consider selling it. I don’t see how negotiating the sale of a domain name or a business implies bad faith ownership of it.

I really think that the OpenDental.com decision is poor, and the language in its findings sets a very bad example that domain owners need to consider. Fortunately, one decision doesn’t necessarily mean others will follow, but it sure should be noted for the next time you receive an offer to sell a domain name.