Working With Domain Brokers
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.
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