DomainInvesting.com

It seems that everyone in the domain business is becoming a domain broker. I suppose being a domain broker sounds good – you get to sell other people’s domain names without having to take on any of the risk of buying the domain names. You make a commission if the name sells, but don’t lose a dime if it doesn’t. Brokers also aren’t generally exposed to the legal risk of domain ownership. I know several top domain brokers in the business who I wouldn’t hesitate to use, and I think you should ask some important questions before you commit to a broker:

• How long have you been a domain broker?
• What other premium names are you brokering?
• Where do you plan to sell the domain name and by what means – (phone, email, letter)?
• Do you have Fortune 500 contacts?
• What are some of your past large domain sales?
• Will you be contacting end users and/or do you know potential end users?
• Do you require exclusivity, and if so, for how long?
• What commission rate do you charge?

I’ve seen a number of people mass emailing domain names they are “brokering.” The funny thing is that on one occasion, the domain owner didn’t even know his name was being brokered. The person inquired about a domain name, received the price, and then attempted to “broker” that name for the price + profit. If he found a buyer, he would have purchased the domain name. If not, well, he has little risk. The owner found out about it, but was more or less blase because it was someone that was trying to sell his name. Personally, I would never allow someone to claim to represent me without my prior knowledge and approval.
An issue you need to be cognizant of is that brokers don’t usually have any legal risk with the actual domain name. If they contact potential end users who decide that the name infringes on their brand, the broker could be the cause of a lawsuit or UDRP. They have no risk if they try to pitch McDonald.com to McDonalds (for example), so why not try to get the most money from the wealthiest potential buyer.
You should also discuss where the broker will be selling your domain name. Anyone can put a domain name for sale on a forum or a blog. However, if your broker has an active domain website or a well-subscribed to newsletter, that would be more beneficial. Whatever the case, you and your domain broker should devise a strategy specifically for selling your domain name.
There are a lot of people who claim to be domain brokers, but only a few who I would personally use. Before you commit to a domain broker, make sure you check his credentials to make sure he is legit. You will want to use a professional domain broker and not just a person who can’t afford good domain names on his own and just wants a cut of your domain sale. There are some great domain brokers out there, and it pays to use their services.

For a variety of reasons, I think it’s important that domain buyers and sellers use contracts when moving forward with a domain sale. It’s probably more important for the buyer to have an agreement, but both buyers and seller should use one – even if the escrow service you choose to use has an agreement, as I don’t believe it covers anything related to the actual domain name.
Like many other domain investors I know, I sometimes am lazy about getting a domain agreement, especially on a lower value deal. When dealing with non-domain investors, submitting a contract for review can be a hurdle, as many people are leery of a contract, and some will want to have a legal review done by their attorney, which can take some additional time and add additional costs to one or both parties.
When dealing with domain names that might not be considered completely generic, I strong recommend using a domain contract to add an extra layer of protection. Any domain or contract attorney can probably provide one to you at little cost, which can be used as a template for all of your purchases and sales going forward.
Some things you may want included in the contract include:
Terms of Sale
No Legal Problems with Domain
Any Encumbrances on Domain
Non Disclosure Agreement