Auction Bidding and Negotiation

After you’ve decided that you are interested in a website and how much it is worth, the next step is placing a bid. Keep in mind that you are legally obligated to pay if your bid is above the reserve price and accepted by the seller.

Mechanics of Bidding

You place a bid by entering the maximum amount you are willing to pay in the bid field and click the “Place Bid” button. By reading and agreeing to the Bidding Terms and Conditions, you fully understand that the obligation to pay is legally binding; click “Place Bid”.

Before your bid is recognized, the seller must approve you as a bidder. The only way the seller will know the amount of your bid is once they accept you as a bidder. After you are accepted there is no additional approval process for any of your future bids on that auction.

Note that you are placing a ‘Maximum Bid’ and that Flippa’s Automatic Bidding system will bid on your behalf in increments up to your maximum bid. This will enable you to retain the leading bid position until someone places a bid that is higher than your maximum.

Auction Extensions

To prevent buyers from sneaking in with a low bid in the final moments of an auction, auctions are extended whenever there is a new highest bidder in the last hour. A new high bid resets the auction clock to one hour remaining.

For example, if the current high bid is $1,000 with 20 minutes remaining in the auction, and another bidder bids $1,100, the remaining auction time is set to 60 minutes. This allows time for the previous high bidder to consider and make a bid higher than $1,100. With each new high bid the countdown clock resets to 60 minutes.

Auctions are not extended if the bidding is a result of the Automatic Bidding system incremental bids as in the following example:

Bidder 1 has a high bid of $1,000 and a maximum bid of $1,500 with 30 minutes to go in the auction. Bidder 2 places a bid of $1,100.  The Automatic Bidding system bids $1,150 on behalf of Bidder 1. The auction IS NOT extended because Bidder 1 is not a new high bidder.

Private Sales

In a private sale there is no bidding. You make your best offer, click the “Place Offer” button, and the seller decides whether or not to accept your offer.

If your offer is accepted by the seller, the sale comes to an end and no other offers can be made or accepted.

Bidding Strategy

Entering the maximum amount you are willing to pay saves you the trouble of monitoring the auction and having to enter ever increasing bids as you compete with other buyers in the auction.

You take emotion out of the equation by deciding the value of the website or domain at the outset and let the bidding take its course. This means you’re making better business decisions with a clear head.

However, making use of the Automatic Bidding feature by entering your maximum bid early and upfront results in more bids than waiting until the end of the auction to bid.

Auctions with more bid activity are higher up on the “Most Active” auction page and therefore attract more attention and more bids to the auction.

Finalizing the Sale

You won. The auction ended with you as the highest bidder over the reserve price. Now what?

Flippa provides a handy little portal called the “Sale Completion Area”. In the Sale Completion Area you will find:

• Buttons to Pay with PayPal, Leave Feedback, Pay Success Fees and Dispute Sale
• Sample Sale Agreements
• All of your private message communication with the seller
• The email address, phone number and PayPal address of the seller

Tip: Although you can communicate with the seller via email at this point, it is a good idea to continue to use the private message system so that the Flippa support team can find out what transpired in the event of a dispute.

About Sales Agreements

Unfortunately some sellers are unscrupulous. In order to fully protect yourself it is wise to always use an escrow process and a sales agreement.

Flippa provides a sample sales agreement. Flippa does not and cannot enforce the sales agreement themselves; that is your job. But the text of the agreement does contain useful provisions for the protection of buyer and seller in the transaction.

For large transactions consider using an attorney to create or revise the sales agreement.

Tip: You should know what the agreement says and add the specifics of your sale to the document. Make sure that you list the specific assets of the business like the domain, site content, physical inventory and anything else the seller has agreed to provide. Don’t forget services and assistance promised by the seller.

We have more infomration on how to value a business and determining the worth of businesses here.