Domain Sales

I read a report this morning on iGamingBusiness.com that announced the sale of OnTheBox.com and ForExSpace.com for £250,000 in cash for the pair of domain names. London-based Media Corporation was the seller of the domain names, although the registrant information for these two domain names does not appear to have changed yet.

According to this morning’s report, the company appears to have done very well with the sale:

“Media Corporation revealed that the domains were on its balance sheet at £130,000 with the sales representing a profit of £120,000 while it estimates annual staff and associated savings of approximately £350,000. ForExSpace.com was only recently launched and had yet to generate any material revenues while OnTheBox.com came in as a loss-making enterprise for the financial year to September.”

Because these domain names seem to have websites built on them, it’s questionable about whether the sales will be reported as pure domain sales or not. I guess it depends on what the new owner plans to do with the domain names post-sale.

One interesting tidbit from the article indicates that Media Corporation is doing what many domain investors have been doing these last couple of years: selling assets that aren’t making money to increase the amount of cash on hand.

I’ll keep an eye on the Whois information to see who bought the domain names.

Thanks to Chris for the tip.

I am interested in knowing your feedback about a topic I’ve discussed in private with a few people during the last few years.

“Double dipping” is where an intermediary (can be a broker or marketplace) takes a percentage commission from the buyer of a domain name as well as the seller, and each person believes he is the only entity paying the commission. Similarly, this can also mean the broker or intermediary is pocketing the difference between a buyer’s price and a seller’s offer, and taking a commission on top of this.

I want to share two hypothetical examples to illustrate what I mean.

• A broker contacts me on behalf of a buyer and offers me $10,000 to sell ElliotsBlog.com to his client. I agree to the terms, which includes my paying a 15% commission. The broker also told the buyer he needs to pay a 10% commission for closing the deal, without mentioning that I am paying, too. Instead of making just $1,500 or $1,000 total on the buy or sell-side commission, the intermediary is actually making $2,500.

• I list ElliotsBlog.com for sale in a newsletter or on an aftermarket site for $10,000. Later, I am informed that an offer of $8,000 was made, and I accept it. The intermediary tells the buyer that my price is firm, and he agrees to pay $10,000 to buy the name. The broker pays me $6,800 after taking my 15% commission from the supposed $8,000 sale and also keeps the $2,000 difference between what the buyer paid and what I thought the sales price was. In total, the “commission” was $3,200 instead of $1,500 on a $10,000 deal.

In both of these cases, the buyer and seller are willingly accepting a deal that’s presented to them, so it’s not entirely unacceptable since both parties agreed to the deals as presented. However, neither would likely be happy if they knew that the broker wasn’t presenting the full offer or was charging double commission.

There aren’t as many legal regulations on brokering domain names as there are with real estate, where this would likely be prohibited.

If the buyer and seller are both happy with the deal as presented to each, is there an issue with this happening? What are your thoughts on this type of thing?

Not all domain brokers and brokerages were created equal. Some brokers will use a newsletter to sell a domain name, and others will personally pitch end users via email or phone. Some brokers have significant experience selling specific types of domain names, and others don’t specialize in a vertical. Different brokers charge different commission rates for different sales efforts.

There are many differences between the various brokers and brokerages in the domain industry.

When people have emailed me in the past to ask for advice about working with a domain broker, I’ve generally recommended that they issue a RFP (request for proposal) to their top 3 or 5 brokers and brokerages. The purpose of the RFP is to see how the broker will go about selling a domain name and how much it will cost you if the domain name is sold.

I am looking to sell CallCenters.com, and I am going to take  issue an informal RFP to the companies I intend to engage. I want to share the questions I plan to ask, so you can see how I set up a RFP. Feel free to recommend other questions or ask why I am asking something, and I will address it.

1) Have you sold similar domain names, and if so, what names and what were the sales prices?

2) If you are given the exclusive contract, what marketing activities will you undertake in order to sell the domain name (phone calls, press releases, emails, mailing list newsletter, placement on your website…etc)?

3) What is your valuation of this domain name and where would you price it?

4) What is your commission rate and exclusivity period?