Most website flippers have used the Buy It Now (BIN) on their Flippa auctions at one point or another. The question a lot of new sellers have is when is the best time to use it?
For those of you new to website flipping, Flippa.com is the most popular marketplace to buy and sell websites. One of the options sellers have is to put a BIN on their listings – giving buyers the ability to buy the website immediately so that they don’t have to get into a bidding war. As a seller, using the BIN option can be tricky. You not only have to know when to use it but you also have to know what price to use as the BIN so you don’t leave money on the table.
Based on my own personal experiences selling on Flippa, and after listening to what some successful website flippers say, the BIN is best used towards the end of the auction. Here are the two scenarios where using the BIN at the end of the auction can really pay off for the seller:
1. A Fierce Bidding War Has Extended the Auction
If a bid comes in within 4 hours of the auction ending, Flippa extends the listing another 4 hours. These extensions will continue until the bidding stops. As you can imagine, a website that is in demand can be extended several times. I’ve seen some listings extended a full 24 hours! While this may be good for the seller, it sucks for the buyers as the process can get drawn out to the point where they lose interest. One way to end the extensions and to make everyone happy is to put a BIN on the listing. Here’s how it works – and how both the buyer and the seller win:
Let’s say the auction is at $5,000 and it has just been extended. Bids are still coming in during the extension, but things have slowed down. There appears to only be two interested buyers bidding against each other and the auction is only up to $5,200 at this point. Clearly the buyers are getting exhausted. As a seller you could let it ride but at this point it’s likely one of the buyers will leave and you’ll end up selling it for around $5,200.
Put the buyers out of their misery – and make more than $5,200 – by putting a BIN up! If you put a BIN of $5,500 at this point, I can almost guarantee you that one of the buyers will exercise the BIN. The buyer wins because the bidding war is finally over and he has secured the site. The seller wins because he doesn’t have to deal with another potential extension and he gets $300 more than he probably would have gotten had he just let the auction end on its own.
2. There Is Only 6-12 Hours Until The Auction Ends
In this scenario you are putting the BIN up before any extension takes place. You’d do this if there wasn’t a lot of bidding activity and you didn’t think the auction would be extended, or you have a pretty good idea of what the BIN should be at this point regardless of potential extensions. Consider this scenario:
The listing is getting decent bidding activity but nothing crazy. It is currently at $4,500 with 10 hours left. You’re not sure it will be extended and even if it is, you have a good idea of what the BIN should be at this point. You want at least $5,000 and you’re confident given the bidding history and the amount of time left you’ll get that so you figure if you can get $5,500 from a BIN that would be icing on the cake. You put a BIN up for $5,500 and with just a few hours of the auction ending a buyer exercises the BIN! In this scenario the buyer avoids a potential bidding war and endless extensions. The seller wins because not only does he get the $5,000 he wanted, he gets an additional $500 to boot – and doesn’t have to deal with endless extensions!
I believe the worst time to use the BIN is right when you start the auction – especially if you’re not sure what your site is worth. If you exercise the BIN right out of the gate, you better know what the website is worth or you could leave a lot of money on the table.
When I listed my first website for sale, I put a BIN up at the start of the auction and it was exercised by a buyer within a few hours! I left $3,500 on the table. How do I know? I got to know the buyer fairly well so I asked him what he would have paid for the site had I not had the BIN in place. He said he would have been prepared to bid up to $10,000. Instead, he got it for the bargain price of just $6,500 thanks to my ridiculous BIN!
What say you? When do you think is the best time to use the BIN? Sound off in the comments.