I was on the Clubhouse domain investor chat organized by Jen Sale last Friday evening, and the topic of domain investing mistakes was brought up. I did not speak out in the Clubhouse room, but I want to share a domain investing mistake I have made many times and will continue to make in the future.
After selling a domain name to a buyer, I occasionally go out to look for similar domain names that I think could also be appealing to the buyer. By way of a hypothetical example, if I sold DomainInvesting.com, I might try to buy DomainInvestor.com or DomainInvestment.com in a private acquisition or future auction. Because of my past success selling the similar domain name, I tend to be more aggressive than normal in buying the subsequent domain name(s). After all, I have my own comparable sale to know the potential resale value.
In many cases when I have done this, the buyer was either not interested in the other domain name or the price was beyond what the buyer was willing to pay. When the buyer was interested in an additional domain name, they typically expect a break on the price because of our past business. If I sold a domain name for $20,000, the buyer might only be willing to pay $10k or $15k for the other domain name, even if it is arguably better.
There are two primary reasons for why buyers don’t always want additional domain names. First, the domain name they bought from me was for a specific purpose. If the wanted the other domain name more, they probably tried to buy it. Second, the buyer already spent their budgeted funds on the domain name they bought from me. Allocating more spend for an additional domain name may not be feasible for them.
I would guesstimate that more than half the time I have tried this I have failed. I would also guesstimate that I’ve undersold the additional domain name(s) when I was successful. That said, I was happy to sell profitably, even less profitably than I hoped, when a buyer was interested.
Even though the fail rate is regularly high, it’s a mistake I make over and over again.