closed Domains values to secure loans

[observer]

Assuming you have a good domain name (or think you do), how can it be included into the assets of a business? A lot of internet companies depend mainly on the success of their websites (and so their domains). I can imagine it might be possible to secure a bank loan this way, but surely the bank need to have an official appraisal. As we know most of them are not worth the paper they are written on, but are there some officially accepted possibilities?

 

[GiantDomains]

nobody will secure a loan with intangible property. There is no equity, only speculation.

 

[observer]

A theoretical construction, but as an example let's say the owner of the (often stressed) sex.com comes to you asking for $10.000 . You get 12.000 after a year, or, if he can't pay it back, the ownership moves to you. I'm sure a lot of people would like such a deal.

 

[President Gringo]

Originally posted by observer
A theoretical construction, but as an example let's say the owner of the (often stressed) sex.com comes to you asking for $10.000 . You get 12.000 after a year, or, if he can't pay it back, the ownership moves to you. I'm sure a lot of people would like such a deal.

A businessman would do that, but what do bank managers know about domains? I bet if you offered most of them sex.com for £100,000 they would turn you down.

 

[observer]

Originally posted by President Gringo


A businessman would do that, but what do bank managers know about domains? I bet if you offered most of them sex.com for £100,000 they would turn you down.

This might be right. So has anyone experience how accepted appraisals are in such cases?
Some people have quite a large collection of type-in domains, and it would be possible to estimate the value of the business via the income they generate, but this value is then certainly based on the domains. Banks must consider such customers, otherwise they would turn down a whole market.
In addition, if someone inherits such a domain collection, I can't imagine the tax man accepts a value of ZERO. It must be declared and estimated somehow - maybe a still undeveloped field, but surely bothering in future. What are your opinions?

 

[yesonline]

A South Korean bank is now offering "mortgages" on internet domain names, blurring the distinction between actual and virtual real estate.

Please visit http://news.bbc.co.uk/1/hi/sci/tech/533455.stm

 

[observer]

Thank you, yesonline.

 

[observer]

Another and probably the most important point, if banks start it: In opposite to most of todays "professional appraisers", who evidently tend to overestimate the value of a domain (as this is more satisfying for the customer or whatever - see http://www.dnforum.com/showthread.php?s=&threadid=6169 )
a bank will be seriously interested to find the current and future market value as exact as possible. This might lead to a new appraisal quality.

 

[prasit]

it's difficult to appraise domain name values. the bingo.com may be appraised at $200,000 in early 2000, but it is probably about $15,000 today.

Banks will not take risk in this kinds of business, unless they appraise it ways under value e.g. appraise bingo.com at $1,500 to reduce risk; or unless they're so certain that the domains are invalueable e.g. coke.com, business.com, sex.com,etc.

 

[observer]

Banks give credit cards to people (even students, not knowing how succesful they will be in future), to new businesses (where only experience with similar projects from the past can tell them what kind of profit to expect), to house owners (always quite stable), even for a new car, which can end on the next tree, leaving nothing than costs. They take a risk all the time, and they loose values - as long they make a proft in total, they are fine.
What I mean is they have a quality risk assesment, so if they start now to come into the domain business, this should create a clearer picture of domain values. They probably base it (like real estate) on the price similar objects have been sold for in the past, mixed with general market predictions. This would be useful for everyone. I wouldn't be afraid of underestimation - if the competition is high enough, some will take a higher risk to find a niche.

 

[Bob]

Originally posted by observer
Banks give credit cards to people (even students, not knowing how succesful they will be in future), to new businesses (where only experience with similar projects from the past can tell them what kind of profit to expect), to house owners (always quite stable), even for a new car, which can end on the next tree, leaving nothing than costs. They take a risk all the time, and they loose values - as long they make a proft in total, they are fine.
What I mean is they have a quality risk assesment, so if they start now to come into the domain business, this should create a clearer picture of domain values. They probably base it (like real estate) on the price similar objects have been sold for in the past, mixed with general market predictions. This would be useful for everyone. I wouldn't be afraid of underestimation - if the competition is high enough, some will take a higher risk to find a niche.

Banks also minimize their risk as much as they can. Yes, they take risk, butthey force you to paythemto take the risk.

Student Credit Cards: Credit Limit of $500

Home Owners: Use house as collateral - (in USA): The make you get PMI insurance unless youput a 20% downpayment or more (you pay the extra insurance for them to take the risk).

Vehicles: Banks MAKE you buy full coverage on your auto (youpay more for their risk) so if it does end up in a tree, you have covered their investment.

(I have a lot more stuff to say about banks, mostly derogatry, but I will not get into that as this is a domain name forum).

I doubt any serious bank would give you a loan based upon a domain name. As somebody else said, they want tangible assets.

I once went to a bank to try to get a consolidation loan. They asked what kind of collateral I had. I asked if I could use my baseball card collection. My collection was worth about $110,000. If you are not familiar with baseball cards, there is an established PRICE GUIDE for every card. The loan that I wanted was a mere $15,000. They would not do it. They bank said that they would not accept that as collateral. I asked why and they said that the only accept card and homes, so in case the person did defualt, they would be sure to get their money back.

The other end of the spectrum - the tax man - is an interesting situation. He would obvioulsy want to maximize the domain name value so he could get the most in taxes. . . Not sure how that would work.

-Bob

 

[Anthony Ng]

>prasit: it's difficult to appraise domain name values. the bingo.com may be appraised at $200,000 in early 2000, but it is probably about $15,000 today.

Unless you are putting down a fixed time deposit of say 12 months, all other securities (mortgages) are considered by banks as risky, whether it's real estate, bonds, stocks because prices DO fluctuate in markets.

Having said that, it will be VERY difficult to secure a loan with SOLELY domain names as your assets. Mainstream businesses tend to be pessimistic these days; so even if they accept your domain names, their evaluation would be LOW.

Of course, if it is something like business.com and comes with a really good business plan, you shouldn't have problems getting through (although I do have reservation about adult-related names like sex.com).

 

[BiggieBiggie is verified member.]

some of you "Big Money" boys shold start an "ebank"

 

[RON2]

If you are serious, you would have better luck securing a loan from an individual than a bank. I for one would gladly loan $1,000 to the owner of scripts.com if I were making a decent percentage in interest.

The domain would have to be held by a neutral third party or by the lender himself, and solid contracts would have to be signed ensuring that the domain ownership goes to the lender if the borrower defaults.

 

[prasit]

Originally posted by -RJ-
If you are serious, you would have better luck securing a loan from an individual than a bank. I for one would gladly loan $1,000 to the owner of scripts.com if I were making a decent percentage in interest.

The domain would have to be held by a neutral third party or by the lender himself, and solid contracts would have to be signed ensuring that the domain ownership goes to the lender if the borrower defaults.

now RJ wants to start ebank.

 

[beatz]

LOL

I just called up the headquarters of the mentioned "Industry Bank of Korea" in Tokio,Seoul and NYC - guess what : Nobody speaks english there or has ever heard of what a domain is - even the bank guy in NYC.
Give it a try,it's pure fun - especially the lady in Tokio saying "couuuudd yuuuuuu collllllllllllllllll baaaack laaataaa ?" (she needed like 1min.30 for that question but it sounded like 'i'm sooo horny')
Well i had a few laughs so it was ok.

 

[avs162]

interesting

new the korean bank used to do it thought they discontinued

how do you lien an assest not viewed in the eyes of the court as property

would think the best way to get cash up front to pledge to a affilate or ppc and take no funds until paid

good thread

sean