Problem With Buying via Domain Broker

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There are quite a few exceptional domain name brokers. In fact, I believe there are several who have sold at least eight figures ($10+ million) worth of domain names. I like seeing what domain brokers have for sale, but as a domain investor who often tries to quickly re-sell domain acquisitions, there is an inherent problem with buying a domain name from a broker.

After a domain broker signs an exclusive brokerage agreement for a domain name, he or she likely creates a list of prospective buyers. The list likely includes companies who would want to buy the domain name because it matches their branding or initials, and it also likely includes venture capitalists and angel investors. I would imagine these companies and people are the primary target audience for valuable domain names, with domain investors being a tertiary target audience.

If I am presented a domain name that I like that seems to be listed at a fair price, I really need to think about one question: Why did the well funded companies and financiers pass on this opportunity? If they passed because the domain name was too expensive, it is probably going to be problematic for me to profitably sell the domain name. If they didn’t buy it because it took too long to reach a decision, it may be tough to sell it to them at a good margin since they know what I paid for the domain name. Finally, the company could do what more and more companies have been doing and file a frivolous UDRP, which would cost me quite a bit of money to defend.

The best domain brokers know who to contact at major corporations and smaller angel investment companies. There is likely the same chance that I could contact a prospective buyer as they could contact that same buyer. Suffice it to say, if a domain broker hasn’t sold it to the most obvious buyers, there is probably a reason, and if I buy the domain name, it will likely be a long term hold.

I have bought good domain names via brokers before. Some sellers would prefer a quick deal and end user buyers may take longer to make a decision. Some sellers don’t want the broker to risk TM/legal issues, so they don’t contact companies that might use the broker email as a grounds for legal action. That being said though, there could be a problem buying a domain name from a great domain broker if the goal is to re-sell it quickly.

1 COMMENT

  1. Thanks for your advice! I am researching brokers and how to choose a broker for my domain holidaygifts.com

    I always find your article and blog posts timely and informative.

    • Thanks John. I’ve had this one for a very long time. Used it in my business and sold a lot of merchandise with it. Time for a change so looking for the best broker to move it. I also deal in real estate and noticed that in real estate some agents will go for a fast deal by offering a house cheaper than what its worth as opposed to the best deal for the client. Did not want a broker like that so I am scouring the blogs trying to learn.

  2. There are certain ‘domain brokers’ that don’t aim for the big bucks and never sell domains to the full extent of their value. Instead, they prefer to mass-email the most willing domain investors and seek a price that their client is willing to accept, in order to sell the asset. The best performing domain brokers research the market, have connections in many corporations, and know of their needs. They analyze potential buyers and only then they contact them. Cheap domains being brokered aren’t necessarily problematic, but I’ve come across a few that weren’t kosher either.

    • Exactly! That is what I was saying in my reply to John. Granted a domain is always worth more to its owner- but- how simple can you get? HolidayGifts.com -One stop shopping for all your holiday gifts

      To me its a premium yet generic domain good for a great many buyers.

      My challenge is to find a broker that recognizes that.

      Thanks for your comment and your help!

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