Reglikedomain industry desk

Domain Broker Working for You or the Other Party? — Is Your

Marketplace brokers need to clearly state their interests.

A couple months ago the founder of a startup reached out to me for advice regarding getting the domain name that matched their firm name. The founder wasn’t having any luck contacting the owner of the domain name but it was listed on a marketplace. He tried to negotiate through the marketplace but ultimately the domain owner was unresponsive.

I suggested he engage the marketplace’s brokers directly given that he was looking at a five figure purchase. This approach was successful and he bought the domain name.

As I discussed the outcome with him it became clear that he wasn’t happy with the outcome. It wasn’t paying five figures that bothered him, it was the process. The conversation went something like this:

Founder: The broker kept coming back to me and asking if I could raise my offer. But his commission is tied to the offer.

Me: It’s a lot like real estate. The broker ultimately makes more money if you pay more.

Founder: But in real estate you have a buyer broker and a seller broker. The broker isn’t playing both sides. It’s clear who they’re representing.

He’s right. In this case he has a legitimate question. Was the broker really working for him, or was he working for the seller?

I’m not sure who he ought to have been working for. The seller had listed the domain on the broker’s marketplace, following all. But the buyer had an expectation that the broker would work to get the domain at the lowest possible price by representing his interests.

I’m going through the process of buying a house right now. In residential real estate (at least in Texas) the broker has to be clear regarding who they’re representing. If they’re representing both parties they have to remain neutral and this has to be clearly explained to both the buyer and seller.

I’m don’t know whether a broker that works for a marketplace ought to represent the buyer, seller, or be neutral. But they ought to be clear and explicit regarding it up front.

Also on the wire

Other reporting from the domain desk.

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