In my 10+ years of buying, selling and developing domain names I’ve seen quite a few things. I’ve seen people sell names way below their true value, and the opposite. Throughout my years of being a domainer I’ve even had the privilege of doing a few small broker deals for premium names. These were five-figure sales that I managed to close and after announcing them on my old blog I began to get emails from other people who were wanting me to sell their domains as well. There was one big problem though. Practically all of the names people wanted me to sell for them were not premium. That means these domains would never fetch five figures like the ones I had previously sold. The craziest part about dealing with all those random domain investors was seeing how many of them completely overvalued and overpriced their internet real estate. I’m not going to give out any names or examples here, but trust me when I say that this type of stuff happens all the time. I doubt I’m the only person who’s had someone ask them to sell a really bad domain for a crazy sum of money. To illustrate this point a little more I’m going to use an example with random domains I’ve found across the web.
So, why does this happen? Why do so many people overvalue their domains? I thought about this quite a bit and decided to come up with 5 different reasons why some investors feel the need to overprice. Read these over and don’t make the same mistakes!
1. They hear or see other people doing it – People will hear or read about a domain that sold for lots of money and then (with no experience usually) think they can do it as well. If one domain sold for a million dollars why won’t another? We’ve seen it all before. Someone jumps into the game, hears about a domain selling for a hundred grand, goes out and registers “Online-InsuranceQuote123.net” and then sticks a price tag of only $500,000 on it. Hey, that’s 50% off!
2. Good keyword selection, but a bad idea – Lots of people come up with domains that sound good in theory, such as taking two good keywords and putting them together. However, many of them miss the point that someone will be buying that domain so they can develop it into a business plan. One great example of this would be the domain GrandmaForums.com. These two terms aren’t bad and the extension is great. However, do grandmas talk on internet discussion boards much? This type of name could have some value in the reseller market, but you likely won’t find many end users out there for it.
3. It’s in the news – The death of celebrity Michael Jackson is a great example of this. First, registering domains in relation to something that was just announced in the news or media is not a bad thing. In fact, it can actually be extremely wise and profitable. You just need to be selective in how you do it. For example, DonaldTrumpForPresident2020.org is not good, but WiiForums.com is.
4. Overestimating the domains true potential – Lots of people simple overestimate the potential of their domains. They might have a great name like “JumpRope.com” and want a million dollars for it. Sure, JumpRope.com is a great name, but is it really worth a million dollars? Think of all the other high quality domains you could buy with a million dollars. There’s potential for revenue in starting an online jumprope store, but one million dollars? Don’t overestimate the potential of your domains!
5. They paid too much for it and want to get their money back or profit – Although the stubborn ones won’t admit it, lots of us have made a stupid mistake or two when obtaining a domain. People overpay on all different kinds of things in this world and domain names are no different. When some investors overpay for a domain they want to spend their time trying to pawn it off on to someone else, sometimes for a profit. This is one good reason you should always do some research before making a bid on a domain, even if it looks to be great. Think of the JumpRope.com example next time you see a one-word .COM in auction for something like $20,000. It might be a great word, but can you really make that $20k back from it? What other names could you buy with that $20,000? I just saw a great one-word .COM in expired auctions last week going for around $2000. Upon looking at the sales history I noticed in its lifetime the name never sold for more than less that (it had sold twice before). Once I saw that I immediately felt the name was overvalued and stayed clear.