Why I'm Not a Domain Broker | DomainInvesting.com
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Why I’m Not a Domain Broker

20

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!


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 (20)

    RKB

    good points but one must also have a flare for being a broker or salesperson. I am also one of those who just can’t be a salesperson:)

    Most of my replies to offers are: here is the price. that’s it :)

    May 16th, 2009 at 12:26 pm

    theoretical

    I don’t claim to be great at selling domain names but I think I’ve got a knack for acquiring domains at the best possible value. It amazes me when I make an offer on a domain that is well below market price and the seller accepts without countering. It’s almost as frustrating as when the seller wants 10 times the market value and won’t budge… there’s no satisfaction there. No adrenaline release. In fact, when someone just gives in and sells at the first offer… I get worried! :)

    Reminds me of a bit in the movie “Life of Brian” where the street vendor wants Brian to haggle but Brian’s horrible at it.. it just gets the street vendor angry :)

    May 16th, 2009 at 1:41 pm

    Reece Berg

    I would never broker domains for someone without the domains being pushed into my account first. Just don’t have time to deal with the headache of trying to get paid otherwise. I have to agree with you though that in general one could most likely make more buying their own domain and finding an end user for it.

    The biggest hurdle to overcome with brokering are the domainers with unrealistic expectations of what can be achieved given a limited period of time to work with.

    May 16th, 2009 at 4:18 pm

    Solid Namer

    I’ve never brokered a domain before and probably never will, but I can certainly see the point in it for a person with a very limited budget. If for an example you are from a poorer county with minimal wages, being a domain broker would definately be a good hobby :)

    May 17th, 2009 at 1:54 pm

    Rob Sequin

    Elliot,

    Again you capture the truth about our industry.

    Proactively brokering domains for sale is a challenge. First I have to see the potential client’s domain name(s). People call me regularly asking me about my commission, my references etc before they tell me the domain(s) they want to sell.

    I’d say about 60% of the time after they tell me the domain(s) they want to sell I tell them there is nothing I can do for them and then we wrap up the conversation.

    The other 30% of the time they want too much money so that ends that conversation.

    5% of the time we have a very serious conversation but for one reason or another, we don’t sign a contract.

    So, about 5% of the time I sign a contract with a client to pro-actively broker a domain for sale and then the work begins.

    I would much rather work as a domain buyer broker since the client is then the buyer with a target domain and price.

    May 17th, 2009 at 5:40 pm

    Domainatrix

    Very interesting. As usual, you make a lot of sense and so do the other posters here.

    Unlike other sites, you tell it like it is and I appreciate that. There is a level of truthfulness about your blog that a few other sites lack.

    Out of curiosity, who do you recommend as a domain broker?

    May 18th, 2009 at 4:57 pm

      Elliot

      @Domainatrix – Thanks :-)

      I’ve used Kevin Leto and Rick Latona before. I also know Rob Sequin is a well regarded domain broker as well.

      May 18th, 2009 at 4:58 pm

    Rob Sequin

    Elliot,

    Thanks for the kind words. Kevin and Rick are certainly the big dogs in this business.

    Since every buyer, seller and domain are different, there is enough room in our industry for several good brokers.

    May 18th, 2009 at 8:59 pm

    Nick

    Being a broker is a special thing, not many can hack it. I have been in the real estate business for 25 years. It is not an easy thing to do but the rewards are great. I sell buildings in NYC and there have been checks in the 7 digits for agents that only worked for a year. Same with the domain business, if the name is premium an agent can make 100k or more, now if that agent lives in a trailer park that is a life changer deal, but you will have to swim with the sharks if you can hack it.

    June 28th, 2009 at 8:56 am

      Elliot

      @Nick

      That is all true, but it would be nearly impossible for a “newbie” to come in to the domain business, lock up a 7 figure domain name with its owner exclusively, and then be able to find a buyer where others couldn’t. It’s not impossible, but it would take an incredible amount of time and effort. When all is said and done, the broker would have to hope the deal is straight up cash, rather than equity/owner financed, or the 10% commission might not be as expected. There are a whole lot of variables – not to mention the time and effort wasted if a sales isn’t completed.

      I have a couple of friends in commercial real estate in Manhattan (Cush Wake & CBRE), and it’s a cut throat business – especially these days.

      June 28th, 2009 at 9:00 am

    nick

    in this market it is easier to gain access to “the big guys” due to the in activity. Yes the market is slower, but now is when you build your life long relationships, if your not a schmuck.

    June 28th, 2009 at 9:09 am

      Elliot

      @Nick

      How do you think people who aren’t in the industry should make friends with “the big guys?” Why would they trust someone who has no experience selling domain names and sign an exclusive deal? Assuming they wouldn’t lock their domain name up with an unknown entity, why would that person try to find a buyer knowing they could easily be usurped and not receive any compensation?

      I am all for enterprising people trying to make sales, but I don’t think it’s nearly as easy as it might appear to be.

      Are you involved in residential or commercial RE? Where in NYC have you sold buildings? I’m on the UWS.

      June 28th, 2009 at 9:14 am

    nick spanos

    I don’t know why I am wasting my time, but here goes my perspective. I own a real estate business in SoHo NYC, 2 floor retail location. I myself have sold buildings all over NYC. I own about 12,000 domains, and sold 2 last week for a total of 80k. My father had a gas station and repair shop where I grew up. I went into the real estate sales business at 18 years old, were in the next 5 years I made over 2.5 million dollars in the type of business you are describing. Nobody knew me, I was a punk kid, but I kept my word, and worked my ass off. When I find a punk kid that doesn’t lie and works their ass off I give him or her a shot, and it most always pays off. Yes it might be the toughest business in the world, but that is where all the juice is. I can’t convince you, but maybe some young guy wants an exclusive on one of my 12,000 names for a month or 2, no big deal for me. nick@bapple.com No offense meant to anyone.

    June 28th, 2009 at 9:27 am

      Elliot

      @Nick

      Unless you have million dollar domain names, then we are talking about different things. There are plenty of people that would let a “newbie” broker good or average domain names because there is little downside. However, I don’t think it would be wise for someone who owns a 7 figure name to let any random person broker his names. Also, it’s easier to tell if someone is a punk or a balls-out hard working person when you have a face-to-face, which happens infrequently in the domain biz.

      There are less ethical regulations in the domain biz than the highly regulated RE biz. If you let a “newbie” broker your names, make sure he doesn’t take shortcuts and:

      1) Spam hundreds of people
      2) Make misrepresentations about your domain names (traffic/revenue #s)
      3) Email companies who could have potential trademark claims on your domain names, putting them at risk.

      In Manhattan, where the value of a nice 1 bedroom apartment is somewhere in the ballpark of $750,000, a sale leads to a 6% commission, which is generally split amongst the buyer’s broker and seller’s broker, right? A single 1 bedroom apartment sale would gross $22,500 (3% commission). There are many more $750k+ apartments and buildings in Manhattan than $225k domain names to sell. Not saying that it’s easier to sell an apartment than a domain name, but it’s easier to tell if you are getting a good deal on an apartment, where you can easily see local recent comps in the MLS.

      As an aside, with your 2 sales, did you find the buyers, or did the buyers find you?

      Anyhow, when you’re on the UWS (72nd & CPW) hit me up and we’ll grab a coffee and talk domains.

      June 28th, 2009 at 9:55 am

    nick

    a sedo broker sold getaroom

    June 28th, 2009 at 10:36 am

    nick

    A sedo broker sold getaroom.com and the other one I was contacted by the end user. One man’s garbage is another man’s treasure. I bought my names in the early and mid 90’s there not bad if I say so myself. I just bought cuphalffullblog.com I can point it to you if you like. No offence.

    June 28th, 2009 at 11:22 am

      Elliot

      @Nick

      Clearly it’s easier to sell a domain name if someone comes to you than if you try to broker it to people who aren’t necessarily interested.

      If you’re buying domain names like that, you should stick to your day job. I am a very positive person (and realistic), otherwise I wouldn’t have left my corporate job to be a full time domain investor.

      BTW, if you had the foresight to buy thousands of names in the 90’s, you should be retired by now :)

      June 28th, 2009 at 11:24 am

    nick

    I bought the name for you.

    June 28th, 2009 at 11:31 am

      Elliot

      @Nick

      I assume you’re trying to be humorous. I guess it’s a slow day at the office.

      June 28th, 2009 at 11:33 am

    nick

    I did buy thousands of names in the 90’s, but since your primary mental strategy with in coming data is to mismatch it or counter example it, of course you wouldn’t believe it. It is a primary function of cup half full mind sets. I don’t fault you for it.

    June 28th, 2009 at 11:41 am

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