Being an Internet business broker is similar to working as a real estate broker with a few important exceptions.
As an online business broker, you represent either the seller or purchaser (usually the seller) of an Internet business and typically get paid a percentage of the sale price at closing…or in installments if the total amount is spread out in multiple payments over a period of time.
Note that this is not domain flipping or speculation. An Internet business broker represents real online businesses rather than someone who has registered a domain name that may have value in the marketplace.
Should an online business broker represent both parties?
In rare instances, an Internet business broker can represent the transaction rather than the seller or purchasers.
Although it is possible in some places to represent both the seller and buyer, this is not a good idea and a recipe for a lawsuit if one party thinks you have favored the other party during the transaction.
A good rule of thumb is to represent one party (usually the seller) and make it clear who you represent so there’s no confusion.
Is being an Internet business broker like being a real estate broker?
One of the key differences between being an Internet business broker and a real estate broker is that an online business that doesn’t involve real estate isn’t subject to the same educational and licensing requirements for being a real estate broker.
Although there may be business broker licensing requirements (depending upon your location), they’re rarely as stringent as those required for brokers who help buyers and sellers of real estate.
It’s also important to note that an online business broker can’t tread into the territory of unauthorized practice of law. Many brokers retain a qualified Internet business lawyer to draft legal documents that they re-use in most transactions and consult the attorney on an as-needed basis for customization.
Your broker agreement
Assuming you want to get paid for your services, you will also want your Internet attorney to create an online business broker agreement that you will have the party you represent (seller or buyer) sign that states how much you get paid and when as part of putting together the deal.
This agreement will also define key other terms, such as the scope of the services you are going to provide in exchange for the commission. For example, how much marketing you will be doing, whether you will be involved in handling any escrow of funds, and whether your services include business valuation.
It’s dangerous to rely upon a verbal agreement or exchange of emails that can be misconstrued. In many cases, this means you won’t get paid your broker’s commission. Instead, you will want to have a signed broker agreement in place as a binding contract to protect your interests.
If you’re interested in having Internet Lawyer Mike Young prepare a broker agreement for you to use, simply schedule a phone consultation to get started.