Domain Broker - Worth it for $xx,xxx purchase (not sale)?

[Truth]

EDIT: After several answers and discussions, I have come to the conclusion that you do not need a domain broker for a single purchase DN transaction. Instead, you should consider them when (note: this only applies to purchasing, not selling domains):

a) You have a set budget and are looking for a premium domain that meets your criteria (i.e: not one specific domain)
b) Feel you cannot adequately negotiate such that you'd waste the 15 - 20% broker commission
c) Aren't confident in doing the transfer process for yourself

Hello everyone,

I've searched forums for "domain broker" and almost all threads are on selling domain names or a portfolio of domain names. I'm interested in buying a premium, one word dictionary / generic domain name that I'd be willing to pay up to around $30,000 for. I am an end-user. Would it be worth it for me to find a domain broker for BUYING a domain name, especially given I have not engaged in domain name second-market activity before? It's an interesting dynamic, given the broker is actually encouraged to buy it at the highest price possible within your budget. I have found a ton of opinions on using domain brokers to sell names, but not on buying them. Thanks.

P.S (skip if not going to warn me): Before the crusade of warnings come in about making a high value purchase, I want to say this: The domain name is worth at the lowest $1x,xxx and likely worth around $5x,xxx based on comparable sales for similar domain name length, brandability, and being a decent, albeit not entirely relevant, keyword (100k - 1m monthly searches + Alexa ranking despite no developed website all from type-in traffic, sub 10 million ranking). It's the type of name I wouldn't mind owning for 10+ years even if my intended use for it fails. It's not a banned domain. If you want to issue a warning anyway, that's fine, but I don't intend on attempting to purchase this name until I've slept on it for a while and have had adequate time to think it over. Until then, I'd like the question above answered. Thank you.

 

[biggie]

try negotiating yourself first



then, if not successful, wait a while, then try again,
but this time you be the borker


but note that, each inquiry tends to give owner reason to seek highest price or hold and continue to renew

imo....

 

[Truth]

Thanks biggie,

I recall recently reading an article that discussed some beginner mistakes made in negotiation for such premium domains. Wish I could remember it now, but I guess I have to wonder if the broker is going to be worth the extra $1.5 - 4.5k. Can they save me that much in negotiations realistically? I understand using them to sell domain names since they can use their extensive networks to find potential buyers. I'm not as sure about it on the purchasing side. I forgot to say this in my original post, but this would be a private transaction which, from my understanding, demand a higher premium since they aren't "for sale" so to speak.

 

[biggie]

that extra $1.5k > $4.5k could be added to counter-offers, if initial isn't accepted.

just saying....


imo...

 

[Truth]

I tend to agree. This domain name has been in the hands of the same owner for a LONG time. I don't think they'll part with it for less than $50,000 honestly based on how long they've had it, so every extra thousand counts.

 

[RJ]

Kudos for doing your research and taking your time to approach the situation.

The real value in the broker is that they act as a middle-man to protect your identity and your need or desire for the name, and they handle the negotiations and transfer process so you don't have to.

I wouldn't expect to save a lot of money by using a broker. In most cases, the domain will be worth what its worth to the buyer and seller regardless of broker involvement.

 

[Truth]

Kudos for doing your research and taking your time to approach the situation.

The real value in the broker is that they act as a middle-man to protect your identity and your need or desire for the name, and they handle the negotiations and transfer process so you don't have to.

I wouldn't expect to save a lot of money by using a broker. In most cases, the domain will be worth what its worth to the buyer and seller regardless of broker involvement.

Since I don't have an established business in said name (yet), nor am I a prominent figure in the domain industry (I'm nonexistent!), I am assuming protecting my identity is entirely irrelevant. The only reason I'd hire a broker is for handling negotiations and transfers then. I'd say I am more worried about the transfer process than negotiations. I'll have to read up more on escrow - I am assuming that's the safest way to do a transaction of this size without being scammed?

 

[RJ]

Yes, escrow is the way to go. There are several reputable service providers. Typically the escrow company will, after you pay, provide you with a transfer authorization code, at which point you go to your prefered domain registrar to order a transfer of the domain. The whole process takes a few days and is usually fairly painless.

 

[Adam h]

Id test the waters on your own first, brand new email address and limited mention of your full name, phone numbers etc, when offers come in for domains every domainer out there will try and do some research first before replying, mainly to try and gauge limitations or sometimes to see if its even worth replying.

Going in with blank canvas so to speak will make the playing field a little more even generally, It may encourage an outlandish initial price though, so if they hit your sweat spot straight away, its likely they will go lower.

Keep your cool, be professional and be safe with escrow etc. Save your self the brokers commission. The ONLY thing I can think of as to why a broker would be a better deal was if you were selling the domain and you knew the broker had instant contacts to push it out to.........or you simply don't have the time to deal with negotiations your self.

Good luck

 

[Kenny]

Hello Truth and Welcome to NamePros.

All of the above are correct, and it sounds like you have your specific choice in mind but are not sure you can come to terms on the price.
A broker isn't going to be much help in that exact situation.
However. And this is also subject to how much is your time worth.
If you cant come to terms on your first choice, where a highly experienced (these are few and far between) broker can come in handy is finding a suitable alterative domain within your budget range.
The big shooters will already know who has what in your niche, and generally what they are asking.
That is if you cant close on your first choice, of course.

Good luck.

Peace,
Cyberian

PS
Can you guys imagine how flooded his PM box is getting?

 

[Truth]

Thanks everyone,

What's a healthy balance between a brand new e-mail and representing a real offer? If I don't go the broker route, I am concerned about the plausibility of me even being able to get a response from the owner of the name. I'm assuming that if I open with a decent offer (with good room for negotiation), that should be enough to perk most ears up and get a response even if my contact information basically says I'm Joe Schmo.

Cyberian, I have a specific domain name in mind. It's not as though I have a budget and I am looking for a great name - rather, I am looking for a great name and I will make my budget fit what is needed. This name is perfect. I haven't brainstormed another name yet that is better, and if this isn't a plausible purchase, I'll likely go with a much cheaper alternative. This particular name is great because it is brandable, somewhat descriptive, high monthly search volume, low competition on SERP, and SEO to get to first result would not be difficult. There are some downsides too, which I can bring to the negotiation table ideally (it's not a completely commonplace word and is not easy to spell if it's your first time hearing it, low CPC).

Anyway, from the sound of it, what I am looking to do is not a great fit for hiring a domain broker so I appreciate all the assistance. By the way, my inbox has only gotten 2 messages so far. I thought it'd be worse myself!

 

[Satyajit Adhikary]

Sometimes a name is too valuable in the eyes of an end-user as he knows what he is going to do with it in the long run. But the same name may not be that valuable to a domainer who is sitting on it for only a one-time profit.
Face your fears and approach the seller initially with 25% of your budget or maybe lesser.

However, there is one downside of dealing yourself. Suppose your deal failed and then you hired a broker, then the seller can guess that it is you and you are desperate for his domain.

 

[Ali]

There are plenty of ways to get the domain name you want without having to hire an acquisition broker.

Just reach out with a simple, professional email, decent signature and come across as someone who isn't a tire kicker and see if you can't get them to quote you a price first (don't make an offer first). Perhaps even hop on a call and be friendly, and passively tell them you're picking between some names and was curious how much this one would cost. Just don't lay your cards all out on the table or act too eager, and you should be fine.

If you do decide to go the brokerage route:

given the broker is actually encouraged to buy it at the highest price possible within your budget.

If you decide to go that route, pre-negotiate a flat fee with the acquisition broker - that way, their goal is to get the deal done, not to jack the price up for a %.

 

[johname]

I would be more worried by who owns the domain. Can easily be a person or group that doesn't sell at perceived market value

If you can buy it in your target range the broker fee better used in bumping up your offer.

 

[Truth]

I would be more worried by who owns the domain. Can easily be a person or group that doesn't sell at perceived market value

If you can buy it in your target range the broker fee better used in bumping up your offer.

I feel this is the case unfortunately, but I'd like to try anyway. I think the person who owns the domain wants to hold it forever basically, or until it hits 6+ figures which I can't justify spending (nor do I have the capital means right now to afford).

 

[Bannen]

Hi Truth, and welcome to Namepros.

Some questions:
- You say they don't have a developed site on the domain, but what do they have? Simple lander, some ads, just a parked page? Is there a 'this domain may be for sale' link on it that takes you to some fields to fill out with your offer? Or do they ask you to send them a 'price request', any of that?

- Have you checked any of the main domain markets to see if that name is listed for sale there? Go to Sedo.com and Afternic.com at least, hit the 'buy domains' links and type in your keyword with the dot-com extension, see if it pulls up any listings for that domain you want. Also type the domain (plus the .com) in quotation marks into Google, see if it's ever been listed on any forum... maybe the owner's even had it appraised here before

- You're doing a lot of homework, and asking questions here, which is good; but you don't sound like you're particularly knowledgeable about the domain valuation game yet, so I'm wondering if your value estimations for the domain are way off (in either direction)? There are so many metrics (search pop, cpc, etc) to consider, but in the end you do have to look at so many factors beyond the metrics. A very experienced domainer/broker can look at that domain, and usually tell you right away what price range to expect. There are some domain keywords that might have hundreds of thousands of monthly searches but for various reasons the actual domain might be difficult to sell even at $10K. There are other domains which may have very few monthly searches but may be worth 6 or 7 figure prices. There's a lot to look at. This domain you are considering... you're trying to valuate it yourself, and you're trying to do so by filling yourself in on a lot of info at once, mostly metrics and easy-to-read things...

But you're also saying things like 'not a completely commonplace word, not easy to spell upon first hearing, brandable, but somewhat descriptive also' - and with high searches (assuming you're reading those correctly) and low competition for serps, etc. So you're trying to build a price range based on metrics and pros and cons... but the value may not be anywhere near the range you think it is in. You could be thinking about one price, while a more experienced domainer/broker would look at that domain and say 'This owner would be tickled pink if you offered even $5K for it!!', or we might say 'No way, this owner wouldn't let this one go for less than $200K.

I'm sure others here may have asked you about the domain; I'll be transparent and mention here that if you'd like to PM me the domain, I can give you my opinion on value and how best to approach the owner. Not interested in being your broker, and I don't really think you need a broker. You just need an accurate valuation of the price range of this domain because right now you're trying to 'patch together a value guess' and you definitely need some more experienced input with this valuation. And then you can make a friendly and direct approach to the owner. Usually best to ask what their price range is first. If they refuse and ask you to offer, then if you have a realistic idea of the domain's value, you can devise a tactic based around what your first bid should be and what your maximum price would be. And then begin the negotiations.

Good luck, welcome to PM me that domain if you feel comfortable doing so.

 

[Matt Soehl]

I will be your broker. Hit me up about the domain name you want and I will take a look.

 

[Bannen]

OP did PM me the DN and I filled him in.

He was also wondering about the benefits of purchasing a premium domain at the startup phase of a business; I sent him this link, which is interviews with 93 (and counting) businesses who talk about how buying a premium domain has affected their business. I think this link was posted here years ago but I'll post it again, great read about businesses + premium domains:

http://www.webmastering.co.uk/domai...importance-of-their-exact-match-domain-names/

 

[Kate]

I'd be willing to pay up to around $30,000 for.

I want to say this: The domain name is worth at the lowest $1x,xxx and likely worth around $5x,xxx based on comparable sales...

Based on your own research, it is likely that your best offer is going to be insufficient. You are actually admitting your offer could be below market value.
If the name is that good, the owner probably has got inquiries in the past and possibly declined higher offers. It's something you should be aware of, you're not the first to show interest, nor the last.

I tend to agree. This domain name has been in the hands of the same owner for a LONG time. I don't think they'll part with it for less than $50,000 honestly based on how long they've had it, so every extra thousand counts.

What I would do is research the owner, what kind of names he owns, what names he has sold in the past (if any) and for how much. Some people will never sell for less than 6 figures, then you know you don't stand much of a chance.

In your situation I don't see obvious benefits in retaining the services of a broker. Not saying that you must not, but choose carefully.

 

[Truth]

Based off private conversation with Bannen, the domain is likely worth low 6-figures. I'm not surprised to learn this, albeit slightly disappointed. I also haven't mentioned the owner of the domain name has another domain name that is absurdly premium (3 letter word), so I wouldn't be surprised if they don't sell for less than 6 figures. I'll post the DN down the road once I'm completely certain I am not interested in acquiring it.

 

[Jv1999]

I know this might sound stupid *_*. . . But can't u just reggae the name with a the, a, an, s, or 1, 2, 3, in front/behind?

It saves you a ton of dough, which you can spend on webdev, content marketing, seo, that would lead to more conversions

 

[Truth]

If I was going to change it, I'd just go all out and brand several words. I have a few domain names I could get cheaply that are likely brandable. But none look as nice, none would be as professional / authoritative, none offer marketing in of themselves, and none would retain value as well as this would. Most cheap domains might as well be sunk costs.

While this DN could cost around high 5 figures to low 6 figures, it'll always be worth that. If I failed, 10 - 20 years down the road I'd just apply a required return of around 7 - 10%, compound that on my purchase price and try to sell the DN for around that. I wouldn't be surprised if it sold in about a year or two of advertising it that way.

It's not like because you spend a huge amount that it is "gone" with a premium domain name; in fact, that's the nice part about them - their resale value helps limit risk as long as you can deal with lower liquidity than traditional investments. I work in the field of investing and finance, so the concept of buy and hold for 20 - 30 years is not a tough pill to swallow (well, at least when you subscribe to Buffett's philosophies).

 

[Aspiring Billionaire]

The risk in doing it on your own (no broker) is that your emotions may dominate your common sense, we're human after all.

If you're willing to take advice from experienced domainers, you can ask for advice here on NP while negotiating with the owner yourself. Based on your content posted thus far, I don't think you need a broker - simply use this forum for tips on what to say and how to respond. As for the pre-guessed/perceived value: nothing ventured, nothing gained.

Good luck.

 

[Jv1999]

If I was going to change it, I'd just go all out and brand several words. I have a few domain names I could get cheaply that are likely brandable. But none look as nice, none would be as professional / authoritative, none offer marketing in of themselves, and none would retain value as well as this would. Most cheap domains might as well be sunk costs.

While this DN could cost around high 5 figures to low 6 figures, it'll always be worth that. If I failed, 10 - 20 years down the road I'd just apply a required return of around 7 - 10%, compound that on my purchase price and try to sell the DN for around that. I wouldn't be surprised if it sold in about a year or two of advertising it that way.

It's not like because you spend a huge amount that it is "gone" with a premium domain name; in fact, that's the nice part about them - their resale value helps limit risk as long as you can deal with lower liquidity than traditional investments. I work in the field of investing and finance, so the concept of buy and hold for 20 - 30 years is not a tough pill to swallow (well, at least when you subscribe to Buffett's philosophies).

It's true, you're right that the dictionary .com will rise in value

but even if u use a weird name instead, it will also rise in value because of the backlinks and authority it collects.

 

[Truth]

Hi Aspiring,

Nice to see you again. I'm fairly confident the value of this domain is beyond my current budget, but I could raise capital if the owner settles on lower end of range of valuation. I'll likely contact them and see how it goes later on. I have no issue with emotions when it comes to investing. That said, the larger the investment becomes, the more certain I want to be of its resale value in case of failure so I'll be doing more reading.