This morning I was reading about selling domain names and web sites and how massive amounts of money are changing hands for what seem, to me, to be common-a-garden domain names and web sites, many I consider not even as good as some in my own domain name and web site portfolio.

I was sitting there imagining all that lovely cash in my lap when I decided to check forums for advice about handing domain names over to their new buyers, mainly because I’ve never sold a domain name before and I’m not sure how the payment and transfer process works.

In one domain investment forum people talked about receiving hundreds of thousands of dollars in bank drafts and even cash, with many really large amounts being processed through PayPal accounts. 

Oh I could just imagine myself waking up every morning to find emails telling me someone had purchased one of my domain names and had already paid me hundreds of thousands of dollars through PayPal!

How long would it take to transfer to my bank account, I wondered, and what should I buy with all that lovely dosh? 

Answers to these and many other questions were being bandied about by forum members, all messages very positive, making me feel even more excited about my proposed new business of selling domain names and web sites through online auction companies. 

Then IT hit me between the eyes …..  someone asked a question  ……  followed by lots of people requesting much the same advice from more experienced forum members.  That question, and similar, went much like this:

“I sold my domain name, the buyer paid through PayPal, I transferred the domain name right away ….. then PayPal sent me an email saying the transaction was fraudulent and the buyer had paid me using a hacked account.  PayPal say they have reclaimed the money on behalf of the person whose account was hacked into, meaning I’ve lost my money AND my domain name!” 

Variations on a common theme included PayPal taking back payment due to chargebacks and other unexpected events, all from people who’ve passed high price products to rogues with little chance of being paid and perhaps also unable to claim back their products.

Now what?

Well, until today I’d have considered even a very high PayPal payment quite safe and I’d have expected the site on which I’d sold my product to back me at least in claiming back my goods.  But in fact this does not seem to be the case, rather it appears big companies, no names mentioned here, do not support the seller if a transaction turns horribly wrong.  Claiming back domains and other high price products, confronting and bringing rogues to justice, that all takes time, and that is time the company prefers to spend generating more commissions on big spend products, in this case domain names and web sites.

Thankfully, most problems I read about today were based on seller and buyer arranging payment and transferring domain names without third party assistance, and that is where the main problem lies because most sales through professional domain name and web site marketing companies go through without hitch.  Most such companies, including Sedo and other household name domain and web site transacting companies, arrange the entire transaction between seller and buyer, even taking payment and transferring the product, before taking their share of the proceeds and passing the rest on to sellers.

That means the biggest problems went to sellers preferring to arrange transactions direct purely to cut out the middleman and keep all of the profits. 

That’s not a good idea unless except, sometimes, for people you’ve done business with previously.  And yes, a broker’s share can represent a lot of money, based usually on a percentage of your product’s price, sometimes with a basic flat sum also charged on lower price sales.  Prices can be high, though almost always worth paying, so check out fees before listing your domain name or site with companies such as Sedo or Moniker and be sure you study and understand the rules before offering your product for sale. 

In all cases you should play it safe and never allow valuable goods out of you hands until payment has passed and your product is safely in your buyer’s hands, and accepted by the buyer, with payment and product acceptability verified by an outside independent agent.

If you’re not into growing incredibly wealthy – I WISH! – from buying and selling domain names and web sites, and you prefer to bank huge sums of money selling high price products on eBay, then escrow is just as important to prevent you handing over goods and subsequently having payment snatched back. 

There is one way, called ‘escrow’, for buyer and seller to work direct to ensure a happy transaction for both parties, where seller gets paid, and buyer receives and decides to keep his product. 

An escrow company is one that takes and holds on to payment from the buyer then informs the seller to ship the goods to the new owner.  Once received the buyer then informs the escrow service that the product has arrived and, hopefully, that the buyer likes the product and intends to keep it.  Once that happens the escrow company sends payment, minus a processing fee, direct to the seller and everyone ends the day happy.  Usually, because buyers are usually allowed to return the product for refund, and sellers also are allowed to refuse to take back the product and refund.  Where this happens the transaction goes into dispute mode and the escrow company has the final say.

Companies like Sedo, my favourite middleman company, alongside most of their other top level counterparts, act as their own escrow service and mediate between seller and buyer through all stages of the transaction. 

For companies like Sedo the escrow service comes as part and parcel of their service with no extra charge, making Sedo one of the best places to turn for a totally hassle-free sale of your domain name or web site.