In a weird coincidence on Saturday I was reading a post on Namepros about domain brokers and transparency when someone called me with regard to the same topic.
I think there will be differing opinions on the subject as it’s not the first time the discussion went off in different directions.
My friend who called me on Saturday had mentioned they had a broker approach them on a name, they quoted a price, the broker came back with SOLD!!! Good news right?
Now this happened in December, so now there is a live website on the domain name. My friend contacted the company because he liked the look of the site and wanted to congratulate them. So he mentioned in his communication that it was $10,000 well spent on the domain name. The owner of the site was a bit confused and in a phone conversation let my friend know they paid $25,000. My friend was furious.
Now back to the Namepros thread that I was actually reading when my friend called.
Namepros member Mr.Mu wrote:
A broker comes to inquire about one of your domain names and closes the deal for $5,000 (and takes your 20% commission)
In reality, the buyer paid $10,000 for the domain
You end up netting $4,000 and the broker gets a $5,000 difference and a $1,000 commission.
Several friends around me have personally experienced this kind of thing. After the transaction was completed,
They found the contact information of the buyer, contacted the buyer and learned the amount the buyer finally paid for the domain name, and found that they were scammed by the broker.
This may be the rule of the game in the domain name industry.
May I ask if you have encountered or heard of similar things, welcome to discuss.
People started pouring in with replies, some believing that just so long as you got what you wanted, who cares if the broker got their buyer to pay more. Others considered this a scam or shady. Other stating that in their country, this would be illegal. (I am no lawyer, not sure about that part).
Fred Mercaldo wrote:
Not going to mention any names here, as both proposed seller and “broker” have apologized to me. But I was offered a name for $25,000 that the broker has received a directive from the seller to approach me at $5,000. Not cool, funny story about how I found out about it, I confronted both parties after I found out (seller was upset also) and no harm other than to the brokers reputation. I didn’t buy it.
Later he mentioned:
There was another incident a year later. I severed ties with the broker; stayed with the registrar, and the broker apologized and stopped what he was trying to accomplish, which was enter into a very competitive venture against one of my main businesses. I understand now that their corporate counsel demanded that the incident “go away.” I had no desire to get the person terminated or sue the organization; but just a real eye opening experience.
What is the answer?
I would say you need to be upfront with a broker, and be sure to know the difference in hiring a broker that you sought out, and someone contacting you out of the blue and saying they have a client. Because to be fair the person could approach you not as a broker but just inquire about the price, if it was below their expectation, they could purchase the domain name and then flip it to their client.
No one should be taking advantage of you and you should ask questions upfront, like will you sell this to your client for more than I am asking?
You could take the GeorgeK route, as he wrote in the thread, “My company insists on “principals only” to avoid this potential situation (and for other reasons).”
Back to my friend, I asked him was there any price where he would have been satisfied with? Meaning if the broker got $50,000 for him and then sold it for $100,000. Would he be happy then? His reply was an emphatic no. I said then you should never hire a broker, or reply to one out of the blue. If you are never going to be ok with someone making as much or more money off your digital asset then stick to the GeorgeK way, principal only.
4 Replies to “Some people should probably never use a domain broker”
Fortunately or unfortunately, if one doesn’t establish any ‘ground rules’ with a potential buyer, be it in a contract or oral agreement, when a price is accepted, what happens in regards to what the buyer does with the purchased item is their business and not for the seller to complain about. The bottom line is that ‘Business is Business’, and no one owes anyone anything that has not been agreed upon prior of a dealing.
Kevin,you seem like a broker that would lie on behalf to a seller you are representing.
Some brokers will get you more for giving them an opportunity to handle their digital assets. Business is Business indeed if its done in an ethical manner .
What brokerage do you own or represent?Need to avoid doing business with you and them .
I would not use grit brokerage as my broker due to an experience. They offered me $1000 for a name claiming that was their buyers budget .Brian Harbin with all his experience and million dollar sales has been added to my blacklist of brokers i won’t deal with.
His so called story on buyer do not have a large budget 🙄. His client came directly and offered more than his $1k offer .
Believe a broker at your own risk .Saw is another one with weak brokers who want you to listen to offers you can handle yourself .
My advise is just take your time and handle your sales or seek advise from other investors. So many helpful articles out there .
Insight, get over yourself. First, I don’t broker domain names. Second, tell me where it’s stated that anyone who makes an offer to buy something/anything from someone, and the seller accepts that offer, that the buyer is ‘required’ to tell that seller in advance what they plan to do with such item afterwards, be it sell it for more or use if for their own needs. Once a seller agrees to accept an offer with ‘no agreed upon pre-stated/agreed upon stipulations’, it doesn’t matter what the buyer does with that item. It’s really a plain and simple concept, which why ‘you don’t understand’ such. I’ve brokered hundreds of thousands of dollars of equipment from and to banks, credit unions, government institutions, casinos etc., and when there’s been no agreed upon buy/sell pre-conditions, there’s never been a need to disclose to either party what the financial results etc. of such were, prior or after, to the dealing. It’s not ‘lying’ if nothing is set prior. Happens everyday in all types of buy/sell situations. Good grief.