Every day, NameBio reports the largest public sales that transacted at domain name aftermarket platforms and auction platforms from the prior day. Nearly every day, I see at least one domain name sale that leaves me scratching my head a bit. “Why on Earth would someone pay $x for this domain name,” I think to myself.
A critical error a domain investor – especially a new domain investor – can make is buying or registering other domain names that look similar based on the sale price of an outlier domain name sale.
People and companies buy domain names that make sense to them but may not make sense to others. Perhaps the buyer is working on a marketing campaign or wants to secure a domain name for a project or rebrand. A domain name is a unique piece of Internet real estate, and sometimes a company or person needs a very specific domain name when an alternative will not work. If the domain registrant is unwilling to lower the price and the buyer has the funds, it can lead to a sale that stands out to others. This is obviously great for the registrant, but it likely doesn’t mean that similar domain names are worth any more than they were worth before the sale.
Here’s a fictitious example:
Let’s say 5 college friends want to start a company called 5 Crazy Guys and decide they need 5CrazyGuys.com for their website. They see the domain name is registered (this is an example and is not registered – nor should be), and the owner won’t sell it for less than $25,000 because he bought it for a specific project. Well, as the name would tell you, these guys are crazy and decide they need this domain name. They buy the domain name via Sedo for $25,000. Both parties are happy.
Shortly after Sedo reports this sale publicly, NameBio, DNJournal, and perhaps others will record the sale. Domain investors should not look at the sale price and decide similar domain names are worth anywhere close to the sale price. For instance, people probably should not try and register names like 4CrazyGuys.com or 5CrazyDudes.com because they are similar. Likewise, people probably shouldn’t register names like 5Crazy.Guys either.
Each and every domain name is unique. It is why one domain name can be worth thousands, and a domain name with a one letter difference may be worthless. Comparable sales are important, but people need to know how to identify outlier sales and not rely on those sales for their own purchases.