10 Questions to Ask a Domain Broker | DomainInvesting.com

10 Questions to Ask a Domain Broker

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Hiring a domain broker is an effective way to sell a domain name. Reputable domain brokers will know most of the buyers within the domain industry, and more importantly, they know how to reach out to end user buyers to sell a domain name. They also should excel at negotiations in order to get top dollar for your domain name(s).

It’s my experience that a domain broker who is going to put the time into selling your domain name will want to know that they are exclusively working on your domain name so that their efforts and financial commitment aren’t wasted. They will also expect a specific commission rate for the sale of your domain name. All of this should be discussed in advance and worked out with a brokerage agreement.

I want to share 10 questions you should ask a domain broker before agreeing to sign an exclusivity agreement as well as why I think these questions are important. If you have additional questions that you think would be beneficial to ask, please share them in the comment section.

  • Is my asking price reasonable? If your trustworthy broker thinks you are asking too much from an end user perspective, you might be wasting time. You are almost never going to get max value when you are seeking a buyer vs when you receive a direct inquiry. If your asking price is reasonable, you have a better chance of selling your domain name. You will also likely have a broker who puts a greater effort into selling your name since he thinks there’s a good chance it will sell.
  • Have you sold similar domain names, and if so, what names at what prices? Working with someone that has experience in your vertical can help you sell a domain name more quickly. They know how specific buyers think, and they can give them reasons why your domain name is worth what it’s worth.
  • What other domain names are you currently selling that are similar to mine? If they have names for sale that are in the same field, they may be more likely to contact end user buyers to sell the other names. On the other hand, if they have better names at better prices, your name becomes less desirable to buyers and will look even more overpriced.
  • Will you be contacting end user buyers on my behalf? It’s great if your broker can sell your domain name at your asking price to other domain investors via newsletter, but if it sells via newsletter, it was probably priced lower than end user value. That said, quick cash sales serve a purpose and I am always happy to sell profitably, quickly. If you want to maximize the price you receive for your domain name, you will probably want your domain broker to pitch it to end user buyers.
  • Are your contact methods legal and/or spammy? You probably don’t want a broker to send out hundreds or thousands of spammy emails, especially if they use software to do it. First off, that might not be legal. Secondly, it might irritate a whole bunch of potential buyers and that could “poison” your name. It may be more efficient for the broker, but it’s probably not going to help you sell a domain name.
  • How long a period of exclusivity do you require? Most brokers who plan to put an effort into selling your domain name will require an exclusivity agreement. They don’t want to put time in trying to get someone to buy a domain name and have you sell it to them independent of them. Find out how long this period lasts.
  • What is your commission rate? Do you give a discount if I find a buyer while under exclusive? Most brokers charge between 10-20%, with 15% being the most common rate. If a broker is going to put more effort into finding a buyer (ie attending a conference on your behalf, you should expect to pay more). In addition, if you sign a 6 month exclusive agreement (I would not), and someone inquires about the name in the meantime, you shouldn’t have to pay the full commission rate. You should ask this up front to avoid making assumptions, because technically, you would be on the hook should a deal be struck while under the term.
  • Do you handle escrow or use an escrow service? I always recommend using Escrow.com even if the deal was brokered and the broker is willing to act as the intermediary. There is no reason for the broker to handle the money you are owed, and with Escrow.com, you can select a brokered transaction so the broker will be paid by Escrow.com.
  • Will you be doing anything special to sell my domain name? Some brokers go above and beyond when selling a domain name. They attend industry specific tradeshows and events to find end user buyers. Some put together pitch books sharing information about why a domain name has value. Others will meet with buyers in person since that’s how business tends to be done at large companies. Be sure to discuss who will pay for these marketing expenses.
  • Do you actually have a buyer for this domain name? One tactic I’ve seen and experienced is when a broker emails me about a domain name out of the blue to tell me they may have someone who wants to buy the name. In the excitement over the possibility of making a big sale, the domain owner signs an exclusivity agreement and the broker then proceeds to try and find a buyer. The initial email makes it seem like they have someone ready to buy, but in reality, it’s usually just a tactic to try and get someone to sign an exclusivity agreement so they can then start the process of finding a buyer.

About The Author: Elliot Silver is an Internet entrepreneur and his company earns revenue from domain names. Elliot is President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Elliot is the publisher of DomainInvesting.com. Read this blog's disclaimer for information about the publisher, comment policy, disclosures, and conflicts.

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Comments (5)

    Jeff Edelman

    One approach I’d recommend is this. In almost all cases, the broker will want a longer exclusivity period than the seller will want. If the broker wants 6 months exclusivity and you only want to go as long as 3 months, a responsible and respectful compromise to both parties would be something like a 3 month exclusivity, but the broker could be protected on a number of specific leads such as 3. That way, at the end of the 3 month period, the broker can specifically identify a few “hot” leads that they will continue to try and close and would be paid on if they do, but the seller is free to begin to pursue other ones at that time.

    December 26th, 2012 at 12:37 pm

      Elliot Silver

      Agreed… always negotiate with your broker. The better the domain name and more reasonable the price, the more likely it is that you’ll be able to work out a better deal (either commission or exclusivity).

      December 26th, 2012 at 12:40 pm

    Sharon Hayes

    Great tips Elliot. I also suggest to ask to have 2 items included in agreement(if they aren’t in there): 1. How often progress reports will be made and 2. If you turn over leads, how soon these leads will be responded to.

    We broker names for clients but it’s an area we’re moving out of to focus on acquisitions. We recently signed an exclusive agreement with a broker with a great reputation who a. gave us no updates proactively and only responded to our inquiries twice with non-answers and b. was given a lead list and leads and we have no idea who he followed up with and didn’t. He was with one of the brokerage firms and left right at the end of our agreement so they have no idea what he did either.

    December 27th, 2012 at 9:37 am

    patti

    15% on average for a domain broker? 10-20%—Thank you for the range and the insightful tips, Elliot.
    GoDaddy’s premium auctions ask for 30%—-I’m wondering if that’s worth it. : \

    December 27th, 2012 at 12:25 pm

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