Some Sales May Not Seem to Make Sense to Me, But They Make Sense to The Buyer | DomainInvesting.com

Some Sales May Not Seem to Make Sense to Me, But They Make Sense to The Buyer

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I frequently see domain sales reports that don’t make a whole lot of sense to me at face value. The sales prices may seem off the charts compared to names I believe are similar. Does this mean that a sales venue or seller has fraudulently reported it or that there was something else nefarious that caused a sale to happen? In most cases, that is unlikely (especially because Ron does his best to verify sales). It’s more likely that the people analyzing the sales – like myself – just don’t have enough information about the sale in order to form an educated opinion on it.

As I have mentioned in the past, you sometimes need to overpay to get the domain name(s) you want or need for a project. Sellers frequently need to be convinced to sell their domain names, and it can take a significant offer to make it happen. With a proven business model or a strong business plan, these domain acquisitions may make sense to the buyer, although they leave others shaking their heads.

Likewise, a domain name may have certain attributes (like type-in traffic) that results in significant revenue opportunities. When this is the case, a buyer may have a plan to monetize the traffic much better than the seller, and he can therefore pay more for the domain name than others would value it at. A sales price may seem high, but in reality, the price is favorable to the buyer.

Aside from questioning the validity of specific sales, another thing that some people do is transpose their perceived rationale for a domain sale onto the value of their own domain names.  “XYZ.com sold for $100,000, so my domain name, e-XYZ.net must be worth $10,000,” some people exclaim. This is usually not the case since domain names are unique.

While abnormal domain sales take place all the time, uninformed domain investors shouldn’t question the validity of the sales without any type of evidence (other than their own perception), especially in a public forum. Further, domain investors shouldn’t presume their domain names are worth the same amount since all domain names are unique assets.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (12)

    rob sequin

    Good point.

    Very few domains are wanted by more than a small handful of people. These are the most valuable domains.

    MOST domains are maybe wanted buy one buyer in a lifetime. That one buyer’s motivation coupled with the motivation (and negotiation skills) of the seller determine the price.

    That’s why most of our domains just aren’t worth much. However, sometimes we never know which one domain is being looked at by that one buyer.

    Always know your buyer.

    March 28th, 2010 at 5:52 pm

    Tommy

    Ahem…..all my domains are worth a stinkin’ fortune. I’m not sure what your domains are worth though. :) :)

    March 28th, 2010 at 6:23 pm

    NameWitheldByRequest

    True Story:

    I was reviewing old email and saw an offer on a domain I once owned which I had since let lapse. It was a garbage .net domain in the casino space. On a lark I did a lookup to see who owned it now, it was available. Nobody had ever bother re-registering it, it was that bad.

    On a lark, I re-register it and flip the guy an email “sorry I never responded the first time, if you still want this domain, I’m open to offers now”

    He offers me 10,000 British Pounds! I accept and he actually followed through on the entire transaction.

    The domain has never resolved since and he almost let it lapse again before transferring it out from my registrar to his. It’s been over two years and the domain does nothing.

    I’ll probably never understand what the deal was there, but I still own the two pounds of gold I bought with the money (and even that is worth about 40% more now too).

    It’s not my best return for under 10 bucks, but it’s certainly the weirdest.

    March 28th, 2010 at 8:32 pm

    Kedaar

    @NameWitheldByRequest
    You made that gentleman bankrupt. 😉

    March 29th, 2010 at 5:32 am

    Keep It Secret

    I had a dot info which I would have happily sold for $500. I got an offer of $5000 and immediately accepted it.

    After almost two years it says “Under Construction” .

    March 29th, 2010 at 9:48 am

    rob sequin

    I know. It’s crazy. I sold MobileBlog.com for $10k five years ago.

    From day one after the transfer until right now the domain never resolved and the buyer never even parked it.

    March 29th, 2010 at 9:56 am

    Mike

    Does anyone know WHY people buy domains, sometimes for lots of money, and never do a darn thing with them?

    In the end, the domain is only worth what the buyer is willing to spend. No amount of estimates, appraisals or recent sales charts will EVER come close to accurately determining the value of our domains.

    March 30th, 2010 at 12:23 am

    J.R. (the real one)

    Value is absolute and instantaneous, always changing with the viewpoints of interested people. It is all between the ears: What’s crap for one can mean gold for another. Nothing has value by itself. Value is attributed by individuals, as an individual or in a group. People can gather in groups with common visions about any matter, value inclusive. Different people, and different groups, can have identical, similar, or completely different viewpoints. What seems fair on one place may appear unreasonable else. Objectivity is always subject to fact interpretation, that is comparison of something to some accepted rule, structure, interpretation. Statistics are true for past things, but only some indication for trends.
    Interesting blog. Realistic. people. Nice money can be made from anything, incl. domains. It only takes somebody willing to pay for it.

    March 30th, 2010 at 4:11 am

    Jason

    You can sell your domains if you price them reasonably. Many people think they can attach a $50,000 tag to something that is only worth $150. It almost funny because these people don’t do enough research to determine the value of their domains.

    I went on a domain spree last month. Now I have a nice portfolio. Most domains are easily moved at $350 or less. People think someone will make them
    an offer for a doman they put up for $20 million. That amount is only reserved for business.com, loans.com and othervaluble markets. People have to pay attention to the keywordstars. I recently purchased domains which target a specific product or service.

    There are some good deals out there. You just have to invest time into creating names that are appealing, target a market, and that will generate keyword searches. Placing high price tags on domains that have no significant value wont attract a buyer. Instead, put work into the domain. Host it to increase traffic. I have one domain that pulls in 800 uniques a month without even
    lifting a finger. Imagine the traffic after hosting it.

    This domain is only 6 weeks old. It has already generated over 1200 uniques. Another domain I recently won inan auction used to be awebsite. It receives around 400+ uniques per month. It used to pull in 700 a day. Just don’t make up any name, well unless you plan to build it into a traffic giant.

    It takes time to make a sale. Be patient. I trust Sedo to conduct the transfers. It is well worth the commission. I purchases taxtransparency.com. It is worth around $350. It is a popular term, but seems to have very little value. I’ll use my experience to write about the subject. As time permits, this domain will increase in value. Target specific markets.

    March 30th, 2010 at 4:47 pm

    Jason

    Domains hold value. You have to communicate to a buyer what they can with the domain. Trying to sell your domain for huge amounts of money will decrease interest. Everything has a price tag attached to it. That is why Estibot is actually a reliable appraiser.

    If I didn’t have a clue as to what I should charge, estibot and Sedo’s price suggestion help me to determine a fair price. Think of flipping domains like selling acar or home. If you don’t put work into building interest into the product, then you will come across as inexperienced. Through free advertsing, I sold two domains in the last 3 days. I know it works because people purchased these domains in the areas I advertises within.

    I put a lot of work into creating good names. Now I can put in the effort to sell them. Once I make money, I’ll invest more into buying other domains. I have a list of many I want. Sometimes people will buy them, bur for the most part they always stick around. Think about the Jenny Phone that sold Ebay. That is worthless to me, but a business would view it as an advertsing magnet. Every domain has a value because of its keyword popularity in Google.

    Put in the work and you’ll see the results. Think about how people attract you to buy their products and services. It is Avery easy way to make money. Know where to advertsise your domain. Place them in the areas that target the market. I’m not going to put rodeofanatic.net into New York. Either this domain represent a rodeo fan or a obsessed person who shops on Rodeo
    Drive. I understand the domain market very well.

    It took me a few weeks to catch on. Learning how to buy domains require understanding what us in demand. You can make money hosting a domain. People want to read the value of a domain. They are not going to trust an over price that has no end value. good luck.

    March 30th, 2010 at 5:03 pm

    J.R. (the real one)

    Overpayment is between the ears. It is a basic right to set any price upon anything, whatever other people say. Overpricing does not exist by itself. Some people can estimate something is too expensive, subject to some personal our group considerations. Other people can have different viewpoints. Value estimation is subject to what elements of the considered item are chosen, how they are interpreted and to what comparison model they are checked against. Everything has some value for somebody, sometime. Motivation and budget (a supply and demand rule) is the engine that drives economy. Not what people think something might be worth. Appraisers usually have no idea why somebody wants a particular domain. Once acquired, a domain may be used for something totally different than before, changing the SERP for the website.
    Appraising is okay, if it is done right: Explain that it is based upon custom chosen parameters, and that other appraisers might do it differently. It should be compulsory that appraisers say something like: This is not what the domain is worth, but what our company estimates it is worth. The domain has been valuated since the appraisal order to be worth …$ to date because .(report findings). Explain why the parameters were chosen, and how and why they are used to get the results. Is the existing web activity taken into consideration (SERP, revenue, etc), or is the appraisal just about SLD characteristics or/and TLD (.com etc.)?
    Domains have no value by them self, but subject to opinions.
    Estibot is not transparent, but is a better example of correct appraising: Not absolute, leaving room for interpretation. And, has everybody seen their disclaimer:

    “The purpose of EstiBot is to provide keyword data and information about a domain. The dollar valuation is not to be taken literally – it may change, and it is only an aggregate of the various metrics. Do not make a purchase or sale decisions based on this appraisal.
    Currency conversion is performed based on daily updated currency values. May not reflect latest currency trends (if other than USD).
    We are not associated with Google™, Yahoo™, MSN™, Altavista™, Overture™, Archive.org™, Word Tracker™ or any other registrar, parking company or third party mentioned on this site. Data provided AS IS. Please use at your own risk.”

    😉

    March 31st, 2010 at 2:41 am

    Mike

    Estibot doesnt give free appraisals anymore. They want you to pay 40/month. Bye bye Estibot….

    June 23rd, 2010 at 11:25 pm

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