Working With Domain Brokers

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Elliot’s blog posting yesterday about conflicts of interest with domain brokers reminded me of what happened when I sold my Bored.com network of sites in 2008 for $4.5 million.

I was not really looking to sell Bored.com, but a broker approached me and asked if he could shop it around (like to Google, Yahoo, etc.). I had never heard of this broker (I don’t think he is still around) but since I was not actively looking to sell the site I figured it couldn’t hurt. After around 6 months he did not generate any offers so I sent out some emails on my own, since I had not given him an exclusive listing.

A few months later one of my potential buyers made me an offer. At the same exact time the broker also found a buyer. Both started in the $2 million range but I played them off of each other and made a bidding war out of it and eventually both ended up around $4.5 million. My own buyer was a much better fit for the site and I preferred to sell it to them (plus I would not have to pay a commission), but they were a big company and needed 6 weeks to do due diligence on the deal (they requested all sorts of detailed traffic stats from me), and that meant there was a chance it might fall through for whatever reason. I told this to the broker’s buyer and they responded that were not willing to go any higher but instead offered a $500,000 non-refundable deposit with a closing in 3 months.

I took the deal through the broker since it was much more likely to close.

A few days before the deal was about to close I found out that he was representing both the seller (me) and the buyer (he was getting a finder’s fee). I don’t think it really mattered any, since I ended up doing the negotiations myself, but he should have disclosed it to me ahead of time. I don’t regret using this broker but the dual agency part left a bad taste in my mouth.

Another thing that popped into my head after reading Elliot’s posting was that out of the few dozen sales I have made through brokers, two were to buyers who had previously bought domains from me. One of these two repeat sales was for over $1 million and the other was for around $20,000. In both cases they were to contacts at these companies that were different than who I was usually dealing with. The brokers had no way of knowing this, so it was not their fault, I just was surprised by it. But, I was still happy I got the sales.

Overall I would much rather use a broker than try to find a buyer for a domain by myself. Elliot has a good list of domain brokers at https://www.domaininvesting.com/guide/list-of-domain-brokers/. The only thing I would add to it is that Flippa.com is also a good way to sell domains. I have found the sale prices to be on the low end, but if you are eager to sell, at least you will find some bidders. You can always set a reserve so it does not sell for less than you are looking for.

5 COMMENTS

  1. Some brokers that work on behalf of companies actually take a percentage on the unused amount they didn’t have to use… so if the company had a $100K budget, and they got the domain from you for $20K, and the broker had a 25% fee on top of their regular fee they would end up making more than the domain owner.

    • Hmmm. Sounds unrealistic. Would you mind to share more information about your brokers? I never heard of any broker who would accept 5%, even with 7-figure sales.

  2. The Bored.com sale was 8 years ago, so I may not be remembering it all correctly, but I think the original commission rate was 10% but because I had my own buyer willing to pay the same $4.5 million price, I negotiated him down to 5%. Otherwise I would have sold to my own buyer with no commission. I don’t remember the name of the broker.

    For the $1.3 million sale in 2011 to the buyer I had already sold to, the broker was huntingmoon.com. I checked my records and the commission was 5.77%. I think it was a graduated scale, something like (I am just guessing on these numbers) for the first $100,000 it was 15%, $100,000-$250,000 was 10%, and then over $250,000 was 5% so it averaged out to 5.77%.

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