A Suggestion For Flippa | Buyer wants final sale price kept SECRET

[midascode]

Hi Everyone

Now I am not enough of a Flippa expert to know if I have got all the facts correct here -- but my son recently sold a site via Flippa and several of they buyers said they did not want the Final Sale price revealed.

In the end he went with one of these buyers and I believe explained that on the Flippa tread. Now lets be clear -- he was not trying to do Filippa out of their Success Fee -- indeed in this instant they earned their Maximum Success Fee

The 'problem' was that there is as far as I can tell no mechanism on Flippa at present to deal with this eventuality?

How about a 'quiet sale' option -- where buyer and seller agree to reveal sale price to Flippa -- but that price does not get published on the listing?

Now I know all you guys who like to keep track of sales and Stats won't like this - but it is my experience especially with larger sales that Buyers will want the sale price kept quiet.

Also, some buyers will object because they may feel they never got to know the Max Bid -- and as such never got a chance to compete against it. Well that is tough -- but really if they are a serious buyer they should be at least PM'ing the seller their interest -- allowing seller option to ask all parties to submit their max or best bid. (Best bid does not have to be max bid)

And yes, I know that can be exploited by dishonest sellers -- but not if Flippa was the Honest Broker in the situation and those bids were via them. Indeed Sellers / Buyers should expect to pay more for that situation.

As I'm sure we all know here, it is not only about the price -- it is about the buyer, how much we can trust them and how quickly they can act.

Anyway, just a suggestion for Flippa. As I see it right now, Flippa are the market leaders when it comes to creating an honest market for websites -- and this would be a worthwhile addition.

If on the other hand this option already exists - can someone please point it out and how we go about it

Many Thanks

Barry

[LukeMoulton]

Thanks for the suggestion Barry. We do have a Private listing option that allows you to solicit private offers and not reveal the final sale price, however you currently can't change from a normal auction listing to a private sale, mid-auction. In an auction style listing I can't imagine it would be possible to keep the final sale price private - that would defeat the purpose of a public auction.

[Clinton]

I can see why some buyers might like the price kept confidential, but disclosing the price helps others see what's selling and the type of prices they're selling for. You've commented in other threads with your observations of some multiples you've seen. Nobody would know anything about going multiples if all top bids were hidden.

Blind auctions involve putting a lot of trust in the person managing the auction. I have no reason to mistrust Flippa but when big sums of money are involved not every first time player is going to put his entire trust in the market operator.

As I'm sure we all know here, it is not only about the price -- it is about the buyer, how much we can trust them and how quickly they can act.

Sites often get relisted. When they are you can check how much they sold for the last time and who the non-paying buyer was. Lots of useful info in there. Blind auctions would remove all that.

[midascode]

Of course you are right in your points Clinton -- and I like to know the multiples as much as the next guy -- but when the buyer is offering significantly more than the Top Bid currently on a listing and they request for the final sale price to be kept confidential, I would accept it -- subject to my own due diligence of the buyer of course

Indeed in the example I mention -- there was two bidders who made that request -- and you may be interested to know my son did not in fact go with the highest offer in this instant. He went with the one he felt would be easiest to work with and most likely to complete the transaction quickly

The subject of keeping the price confidential is more likely to come up on larger transactions in my experience

[Clinton]

Oh, don't get me wrong, I'd like the price kept confidential if I were buying. And I have.

Flippa won't like this, but why even bother with bidding in the thread? Let's face it, on the higher value sites most of the business happens via PM and email. On a $100K+ site there's going to be a lot of negotiation and give and take behind the scenes, it's not simply about a headline price. There may be seller financing, or a reduced price with a performance related bonus, or a management arrangement with the seller...it's a package that's being agreed, not a price.

So if the bidding has reached, say, $15K and there's someone in the wings with a higher offer, take it to PM, close the auction and give Flippa their success fee. Flippa doesn't need to know the final sale price if they're getting their full whack. Or even who the buyer was.

Were your two buyers insisting on bidding in the thread?

[daveslutzkin]

Flippa won't like this, but why even bother with bidding in the thread? Let's face it, on the higher value sites most of the business happens via PM and email. On a $100K+ site there's going to be a lot of negotiation and give and take behind the scenes, it's not simply about a headline price. There may be seller financing, or a reduced price with a performance related bonus, or a management arrangement with the seller...it's a package that's being agreed, not a price.

So if the bidding has reached, say, $15K and there's someone in the wings with a higher offer, take it to PM, close the auction and give Flippa their success fee. Flippa doesn't need to know the final sale price if they're getting their full whack. Or even who the buyer was.

Actually, I've thought about this a bit. Obviously there are different ways of making sales on high end sites, so we'd like to give as much flexibility as possible, within reason. The way I would see it going is as an "expression of interest" thread which allows the seller and a particular buyer to go back and forth. We'd allow each message to include a formal bid/offer if the buyer chooses. That would allow maximum flexibility for both sides, I think.

Whether we'd allow the final price to be hidden is another question. It definitely hurts transparency in the market, which is a consideration. We might be more likely to allow the domain to be hidden from the general public, with it displayed only to approved bidders.

[midascode]

Clinton -- both buyers did not wish to bid in the tread.

The 'nice' thing about Flippa is that there is a Max Success Fee -- so once you get into that regions it makes no difference to Flippa which bid a seller accepts. This is important because in my experience it is not unusual to NOT go with the highest bid

Dave - I like the idea of an expression of interest option. As for transparency in the market -- well the theory is good, but there is always going to be a certain percentage of sales that will remain confidential.

What could happen is that Flippa knows the Final sales price -- but it is not published. Right now buyers and sellers are doing 'deals' outside of Flippa -- and that is not transparent at all. That is of course unfair to Flippa -- what I am saying is that is there was another way, then that would happen less often

[Clinton]

Right now buyers and sellers are doing 'deals' outside of Flippa

Where such activity happens below the ceiling there is potential for Flippa to lose out financially. It would be in their interest to judge the extent of this risk and take steps to mitigate against it.

The expression of interest does sound like one good way forward, Dave.