Using a Domain Broker RFP | DomainInvesting.com

Using a Domain Broker RFP

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Not all domain brokers and brokerages were created equal. Some brokers will use a newsletter to sell a domain name, and others will personally pitch end users via email or phone. Some brokers have significant experience selling specific types of domain names, and others don’t specialize in a vertical. Different brokers charge different commission rates for different sales efforts.

There are many differences between the various brokers and brokerages in the domain industry.

When people have emailed me in the past to ask for advice about working with a domain broker, I’ve generally recommended that they issue a RFP (request for proposal) to their top 3 or 5 brokers and brokerages. The purpose of the RFP is to see how the broker will go about selling a domain name and how much it will cost you if the domain name is sold.

I am looking to sell CallCenters.com, and I am going to take  issue an informal RFP to the companies I intend to engage. I want to share the questions I plan to ask, so you can see how I set up a RFP. Feel free to recommend other questions or ask why I am asking something, and I will address it.

1) Have you sold similar domain names, and if so, what names and what were the sales prices?

2) If you are given the exclusive contract, what marketing activities will you undertake in order to sell the domain name (phone calls, press releases, emails, mailing list newsletter, placement on your website…etc)?

3) What is your valuation of this domain name and where would you price it?

4) What is your commission rate and exclusivity period?


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (22)

    Vincent DiAngelus

    Thank you Elliot. I’ve often thought about contacting some brokers, but never knew how to start or find someone for a specialized market.

    Would you suggest sending this with an entire portfolio of domains and letting broker select some, or concentrate on a specific domain or group/category of domains?

    March 28th, 2012 at 1:27 pm

    Elliot Silver

    “Would you suggest sending this with an entire portfolio of domains and letting broker select some, or concentrate on a specific domain or group/category of domains?

    @ Vincent

    I wouldn’t send my portfolio. I don’t think anyone can expect a broker to try and sell average or low value names since he works off a commission, and 15% of a little isn’t worth the effort. I would only send my best few names, otherwise you probably won’t receive a reply.

    For larger portfolios of average names (some of which could potentially sell for a lot to the right buyer), I would and do use aftermarket sites rather than brokers.

    March 28th, 2012 at 1:31 pm

    Victor Pitts

    In addition, Domain Brokers should be well acquainted with intellectual property law, and trademark dispute policy, before they start marketing any domain.

    March 28th, 2012 at 2:26 pm

      Elliot Silver

      @ Victor

      I think that’s very important.

      March 28th, 2012 at 2:27 pm

    Joe

    Great post. Regarding the exclusive contract, is it a common requirement on the broker’s part? Of course, having more than one person work for you would greatly improve your chances of a sale.

    March 28th, 2012 at 2:27 pm

    Elliot Silver

    @ Joe

    Yes, in most cases since it wouldn’t be fair if a broker did the work and then the buyer went direct to the owner and cut the broker out.

    March 28th, 2012 at 2:30 pm

    gene

    @ Victor

    That’s an often overlooked and extremely important point; and absence of expertise in IP/TM law basically eliminates 95% of all domain name “brokers”.

    March 28th, 2012 at 2:41 pm

    Puranjay

    Excellent post Elliot, and very solid, probing questions.

    What would you say should be the minimum value of a domain (though I know that ‘value’ is a relative term here) for which engaging a domain broker makes sense? Personally, I’d consider a minimum value of $100,000 to be appropriate.

    March 28th, 2012 at 3:05 pm

    Michael Carter

    A broker is in a position to market/sell a given domain name. They should have a general awareness of the topics affecting the domain name market but leave the legal stuff to the lawyers (and I’m not one).

    Each party (buyer and seller) should perform rigorous due diligence about the domain name being marketed – this includes consulting w/ a seasoned lawyer. I would seriously question a broker that purports to be an expert in IP/TM law.

    March 28th, 2012 at 3:19 pm

      Elliot Silver

      @ Michael

      I would agree. I also think common sense goes a long way.

      March 28th, 2012 at 3:26 pm

    Victor Pitts

    @Joe, having multiple brokers working the same domain name in the market is not wise in my opinion. There is a very high probability that they will end up contacting the same prospective buyers which can lead to buyer confusion regarding the domain, the price, whom to negotiate with. If you put your brokers in competition against each other – they could start a bidding war to close the business before the other broker. The problem with that is those bidding wars tend to go down instead of up. You lose.

    From a brokers prospective when working a premium domain for the seller, the work comes in the form of sizing up the domain, identifying potential buyers, developing and launch a marketing plan to communicate the domains value to the prospective buyers, weed out the unqualified buyers, negotiate the best price for seller with the prospective buyers, close on the contract. All this before you collect a nickle for your time. If a broker takes on a project like that without the protection of an exclusive contract for a specific window of time – they are behaving stupid.

    March 28th, 2012 at 3:49 pm

    Tom Featherstone

    I contacted a well known broker with a question about a domain name, but never heard back from him. I think he shopped my domain around with a newsletter or email blast before considering it because my traffic shot up the day I contacted him, but fizzled out over a week.

    Not sure that I trust having one now, but I know they are necessary if you have a high end domain name.

    I am sure i will try again in the future when i start getting offers to buy the domain, or if that happen, do I really need a broker?

    March 28th, 2012 at 5:39 pm

    Maxi

    Apologies if this is a dumb question – but where are these brokers? Are there some that are well-known ? Do they only accept ‘premium names’ (depending on your definition of premium of course, I’ve seen any number of names on newsletters masquerading as premium) or do they accept general 2 or 3 word names?

    March 28th, 2012 at 7:01 pm

    rob sequin

    As a long time broker, I’ll give you my comments for what they are worth… in no particular order.

    1. Your domains are not worth what you think they are worth.

    2. Most domains cannot be pro-actively sold by a broker or an auction. When I say most I mean like 95%+ and that’s for .com, 99%+ for other extensions. It does not mean you can’t or wont’ get someone who will pay you $10k for some domain, it means that THEY HAVE TO COME TO YOU. Brokers usually cannot push the rock up the hill for you.

    3. The value of a domain is the meeting of the motivation between a buyer (in most cases, ONE buyer) and a seller unless you have a high traffic domain with REAL revenue or it is one of the top 5% of quality domains that even your grandmother would say is worth something.

    4. Victor is right with everything he posted above.

    5. Sell your own domain. Yes, most brokers have buyers of particular keywords or industries but they are picky and want one of thost 5% domain priced at a wholesale price. Just search for potential end user prospects and work the phone, don’t bother with emails.

    6. Do not send me domains for sale.

    7. If you hand regged a domain or caught a drop in the past three years or so, it is only worth what you paid.

    8. Disregard all of this if you get an offer :-)

    When you get an offer, find out as much as you can about the buyer and milk him or her for every nickel because he or she is most likely the ONLY buyer that will EVER make an offer (unless you have one of those 5% PREMIUM domains. However, don’t burn the bridge unless you really don’t care about the money. Buyers are usually VERY fickle and will move on once their passion for the domain wears off.

    9. 95% of domains are scratch tickets unless you develop them or have an investment strategy. Yes, some scratch tickets pay off but most do not.

    10. Be patient. Patience. Patience. Patience.

    Sorry, I guess I really didn’t address the RFP. I guess you have to have a FANTASTIC domain and match it up with a broker who has an interest in and knowledge of the industry.

    So, what are there maybe 20 or less domain brokers and auction houses? Do the math… 5% of domains and only a handful of brokers/auction houses AND an RFP?

    I wish you well. I do think CallCenters.com is in that 5% top quality and it does have great value but finding a broker to market it might be a challenge.

    If/when you find the right broker, you will get full value for that domain.

    Good luck.

    March 28th, 2012 at 8:39 pm

    Elliot Silver

    “7. If you hand regged a domain or caught a drop in the past three years or so, it is only worth what you paid. ”

    @ Rob

    I’ve made a LOT of money re-selling names that I bought at drop auctions.

    Other than that, I agree with most of what you said.

    Ordinarily, I would do the work to find a buyer for CallCenters.com, but with a baby coming, I am looking to do much less work :)

    March 28th, 2012 at 8:41 pm

    rob sequin

    You operate in that top 5% :-)

    CallCenters.com is a great domain for the right broker.

    Congrats on the baby!!!

    March 28th, 2012 at 9:46 pm

    Kevin

    The largest domain deals have top brokers and lawyers working very diligently to make them happen from start to finish. Negotiations often require many months of intense discussions.

    They’re 6, 7 figures and beyond in size and cloaked in privacy by stringent NDA’s, never to be publicized in DN Journal’s sales reports.

    It’s by far the most challenging and exciting high stakes arena of the industry. For those fortunate to have experienced the rewards of selling domain assets at this level, they know certain the brokers and lawyers are well worth the dollars expended for their services.

    March 28th, 2012 at 10:30 pm

    Jp

    I think a great question to ask a broker is how much above the reserve do they tend to get for a domain. In other words, when you use a broker you specify a minimum price or reserve that you are willing to take. How often does that broker exceed that expectation? You would think they are always trying to exceed it by a ton because more commission for them, but of course it is much easier for them to move domains faster if they just sell ten at our reserve prices.

    March 28th, 2012 at 10:57 pm

    NameConnect

    @ Jp

    I’ve been a broker in the domain industry for over five years, company is NameConnect.com. To answer your question it’s not really up to the broker to attempt and exceeded levels, it’s whether your reserve is realistic. When speaking with clients I’m usually asked to evaluate a domain, at times this ends in dissapointment or inflated expectations, as a result I ask, “What are your expectations on this domain?” If the reserve is set well I run the risk of losing that domain should I say, “I believe this price to be unrealistic.” To compensate, I usually gauge buyers and feel them out, through newsletter, cold calling and emailing, sometimes even press releases, I then give my client a realistic look at the market and what offers have come through. That is the true determining factor of current value.

    Most of the time I pitch just above your reserve and I let the offers speak for themselves, if your reserve is outlandish than I just won’t take it on. Keep in mind I take on the top 5% only as well 😉

    March 29th, 2012 at 1:08 am

    Samit

    I’ve used brokers for a few sales but the basic issue is almost always pricing – if you and the broker don’t agree on a reserve price for the domain, you might as well not waste your time on all the other stuff.

    An RFP might make sense if you don’t know the broker, but then you’d only approach people with a proven track record, not otherwise.

    If you already know the broker and still expect them to submit ‘proposals’ wouldn’t that be slightly insulting to the top of the line guys?

    March 29th, 2012 at 1:21 am

    Domain Godzilla

    Thank you for a wealth of information. As a prospective domain name investor I appreciate the educational conversation. Thanks again.

    March 29th, 2012 at 6:30 pm

    mat walker

    Thanks Elliot always nice to read your articles!

    @rob sequin Brokers arnt always right,
    1. Your domains are not worth what you think they are worth.

    Brokers are not always privy to the interest/contact there is for a domain name, especially so when the interest/contact is coming from cashed up companies, admittedly though a sale isn’t a sale until its sold.

    It is exciting how the interest for a domain name can change over night or over a short period of time…

    April 13th, 2012 at 7:57 am

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