FP - Quick lesson from losing the deal...

[BrettM]

Ugh. Saw what seemed to be a dandy site the other day, and lost it.

While I was investigating it, another person swooped in a picked it up.

Being vague right now on the source, etc., as I may still be able to pull something out of the fire. However, one potential lesson... and one question.

Lesson: What I maybe should have tried, since everything looked really good and I was aware to get it off the market before someone else grabbed it, is kind of a real estate tactic I read about. Decide on a fair offer, and put it in Escrow based on conditions (confirming traffic / revenues, etc.) as well as the condition that you are the first bid in line, regardless who else comes to the table (tough to police I know, but there are good people out there ).

The goal is to get the seller to know your serious (money on the table) and effectively take it off the market while you review it. Don't know whether it'd work... came to mind after the fact.

Question: Any suggestions on how you would / have gone about this. Man, you find a good deal and you want to protect it while doing the due diligence. How do others tackle that?

Thanks in advance!

(P.S. I really wanted that site !)

[Bryan]

I feel for you mate. Been in the same situation oh so many times.

What you suggested may work, however you should be extremely careful because if you use Escrow.com then despite what terms you specify, they would release the funds based solely on the fact that the domain name has been transferred. This has happened over and over again, and will keep happening until Escrow decides to change their policies.

But back to the main point - in situations where I spot a very good deal and don't want someone else to grab it before I'm done with my DD, I often just say "the hell with it" and buy it. That's obviously after initial DD (which shouldn't take longer than half an hour) and in case the price of the site is on the low side. Sure, you'll end up with a dud every now and then, but that's nothing but a calculated risk.

Quite keen to hear how others go about this kind of situations though!

[Thomas]

Yeah, same as Bryan on this. We have quite a high risk buying strategy (low multiples, little history etc.) so will often just buy it based on our initial due diligence. We would never invest more than we can afford to lose and tend to make a lot of small/medium purchases than burning our whole bankroll on one deal.

In the brokerage world, you don't do due diligence (or even get access to this info) until you have submitted an offer (letter of intent). So theoretically, you can make the offer dependant on a few conditions. You don't necessarily need to use Escrow - get a solid asset purchase agreement in place and pay them via wire. As Bryan says, Escrow isn't all that safe if things go "wrong".

[BrettM]

Thanks Gentlemen!

I feel for you mate. Been in the same situation oh so many times.

That's obviously after initial DD (which shouldn't take longer than half an hour)

Quite keen to hear how others go about this kind of situations though!

Yup -- happens. Just really wanted this one . Re: DD taking half-and-hour, where's the best place to learn how to accomplish that in 30mins or so? That'd be worth gold to me as it's taking longer then that!

Finally, happy to keep posting / updating as I continue this month and into next.

Side notes (for others, as much as me / Bryan & Thomas):

Re: Escrow, I had heard you can specific terms, so if it's solely based on the domain transfer (which I'd had also heard), definitely worth being cautious. I guess one possibility is to agree in principle the domain will transfer last, one DD is done, etc. ... and don't provide domain info so they can't transfer early. Don't know if that's an angle.

Re: "the hell with it" / investing more than afford to lose, totally hear you and that's part of my strategy.

Will let you know how it goes!