Sellers State Asking Prices, Buyers Respond to Asking Prices
A common mistake made by domain name and website sellers is they list their domains and websites for sale as “Make Offer” with no price, sit back, and wait for the market to price their assets for them. They list and hope that buyers will state an Asking Price for them.
Frankly, this is human nature and applies to people selling all types of assets. People list their new or used products on eBay and other marketplaces with no asking prices. The reason why sellers do this ultimately boils down to this:
The seller has no idea what the asset is worth. He is afraid that he’ll price it too low and leave cash on the table. Or he’ll price it too high and attract no buyers.
This is the seller’s dilemma. And the easiest solution for him is to list the asset as “Make Offer” and wait for the market to tell him what the price is. Thousands of these “Make Offer” listings can be seen all over popular domain marketplaces like Sedo and GoDaddy.
Well, 99.9% of the time, the market says nothing. These listings often sit without receiving any offers for years. If they do get any offers, they’re usually from curious buyers making offers that can’t be taken seriously. The assets never sell.
Serious buyers rarely ever bid on assets that have no price. Why? Because they’re human too and have the same fears as sellers. They too have no idea what the asset is worth. So they’re afraid to bid too high when maybe they could have bought the asset cheaper. And they’re afraid to bid too low and not get the asset at all.
This is the buyer’s dilemma. And the easiest solution for the buyer is to move on to an asset listed with an asking price. It’s so much easier to just walk away.
A buyer will never tell a seller what his asking price should be. The seller owns the asset. The seller decided to sell the asset. The seller listed the asset for sale. Therefore, the seller must state the asking price.
Buyers respond to the seller’s asking price.
If you’re a seller and you have no idea what your asset is worth, then what do you do?
Get it professionally appraised by a reputable company. If you truly want to sell it, it’s worth the cost. If you use a broker, they’ll usually do it for free. Otherwise, your asset sits on the market forever with no asking price and never sells. That costs you more in time than an appraisal fee.
If you don’t boldly ask for what you want, you cannot receive it. You must state your price.
In fact, state any price. Why? Because any price that you state brings you back information about the market. If you’re over-priced, the market will tell you by making low or no offers. If you’re under-priced, the market will tell you with lots of buyer interest.
A “Make Offer” listing out there brings you back no information. The market says nothing because you said nothing. There is no exchange of information. It’s a waste of time. Buyers glance at your listing and move on.
Many sellers are, of course, scared to under-price their asset and sell too low. What if the buyer was willing to pay more? That’s a possibility.
What’s important is whether the seller received his desired ROI on the deal. If he did, then that’s all that matters. Maybe the buyer could have paid more. But he didn’t.
Good for the buyer who got a great deal. And good for the seller who got his desired ROI. Everyone’s happy. Move on.
What could have been is totally irrelevant as long as both parties got a good deal. This is business. It’s not about home-runs. It’s about singles. It’s about people exchanging money and assets in amounts that they both agreed to. It’s not even about what each party thinks the asset is worth. It’s about what each party is willing to give and receive for the asset.
An asset is worth whatever a buyer and seller are willing to give and receive for the specific asset at a specific time.
Once both parties agree, that is the price of the asset. What the asset could be worth tomorrow is irrelevant. Whether this buyer or another buyer could have paid more money for the asset is irrelevant. Today, the buyer and seller set the price.
But nothing begins until the seller states an Asking Price. Then, the buyer responds to this Asking Price.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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