Working With Domain Brokers | DomainInvesting.com

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 http://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.


About The Contributor: Eric Borgos is the owner of Impulse Communications, Inc., a 19 year-old Internet company that owns over 300 websites such as Dumb.com, CheapFlowers.com, and Adoptme.com. Eric is also an active domain name investor who at one point owned 9000 domains, and in 2008 he sold his Bored.com network of websites for $4.5 million.

Reach out to Eric: Blog | Twitter

Comments (5)

    Ron

    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.

    November 20th, 2014 at 1:26 pm

    Mark

    So you paid $1MM broker fees? Huh.

    November 20th, 2014 at 1:38 pm

      Eric Borgos

      I think brokerage fee was 5% on Bored.com and also on that million dollar sale to the buyer I had previously sold to. So the commission would be $50,000 on a $1 million sale.

      In reply to Mark | November 20th, 2014 at 1:40 pm

      Mark

      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.

      In reply to Eric Borgos | November 20th, 2014 at 1:59 pm

    Eric Borgos

    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%.

    November 20th, 2014 at 2:20 pm

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