In the last week, I’ve received three requests to broker domain names, but each time I respond that I’m not a broker, and I refer the person to a couple of people who are successful domain brokers. Although I do allow domain names to be listed for sale on my blog, I am not a domain broker, and there are a few reasons for this.
When a person agrees to broker a domain name for someone, especially if that person is the “exclusive broker,” there is the expectation that the broker will contact likely end user buyers. These people are generally the group that can afford to pay the most for a particular domain name. There are two problems with this.
First, an end user is far more likely to pay top dollar for a domain name when he needs the name, rather than when he is approached out of the blue. Many end users still don’t understand the value of a domain name, and even if they do, many still won’t pay these great prices because they might shake their head like they understand, but when it boils down to it, they don’t always want to write a check for $50,000 for a domain name when they have employees to pay and other obligations.
The second problem is that it can be difficult getting in touch with the right person within a company, and it can be just as difficult to get a deal approved. If you haven’t made a sales call before, they can be very difficult – especially when it’s a cold call. Once you finally get through to a decision maker, you then need to convince him about the value of domain names, which can be an equally difficult task, even if you’ve convinced the marketing team that it’s the right move.
Another issue I have with acting as a domain broker is that it can take a lot of my time, but there is still a good chance nothing will come of it. I do enough work on my websites where compensation isn’t guaranteed for my efforts, that it’s difficult to justify working for someone else without any guarantee of pay. 🙂
Even with an exclusive agreement, it can be difficult to get a seller to pay a commission if he is marketing the domain name elsewhere at the same time and a lead goes directly to the domain owner with the hope of cutting out the middle man. I live by the fact that this is a small industry, and if you burn someone once, it can be the end of your reputation, so I wouldn’t do that. However, there are people that don’t seem to have issues with this. Sure, even under an exclusive deal you might have the legal rights to the 10%, but what busy domain broker is going to file a lawsuit over a few hundred dollars of lost commission?
I would rather spend money buying a name on my own in the aftermarket and selling it on my own, where I keep all the profit, than to sell someone else’s name to only make 10% of the sales price. I can sell the domain name on my own time, and I can target whoever I want. I take on all of the financial risk, but as a person who knows the market fairly well, this isn’t a problem.
Sure, it’s much easier to broker a 15 year old domain name for a guy who won’t sell for anything less than a premium price, but see the first two reasons I listed above as to why that isn’t always the best idea. There are several great domain brokers in the industry, but I am not one of them!