Overpaying Today for a Deal Tomorrow

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It is arguably more difficult than ever to privately acquire a great .com domain names. The majority of investment quality, long registered, domain names are either in the hands of end users or registrants who will not sell cheap. Quite a few are held by investors who are rightfully seeking end user pricing to sell their assets. Put simply, there is a dearth of investment quality .com domain names available to purchase for investment-level pricing.

Off the top of my head, I can think of 15 people I know to be well funded who are regularly chasing after the remaining high quality .com domain names. Many of these investors are friends, and all of them are competitors. When I come across a domain name that is available for sale and the registrant indicates other offers on the table, chances are very good an investor (or multiple investors) I know is on the other end of the offer, biting at the bit to secure a deal.

From my perspective, domain investors seeking the best quality domain names need to pay close to today’s end user prices to secure a deal. Domain registrants have likely received and passed on substantial offers over the years and retain the inquiries that were previously in the event the name goes on the market in the future. While this might feel like overpaying (and likely is to an extent), my feeling is that it will look like a deal in the future as the value of these depleting assets have been increasing.

One of the biggest issues I face is trying to figure out how to buy domain names but not pay such a price that I can not get a ROI in the foreseeable future. Another issue I face is that it is difficult to spend six figures on several domain names speculatively and have enough capital remaining to be able to fund the business for a period of time should the market drop unexpectedly.

From my perspective, it is unwise for inexperienced investors to utilize this strategy. There is a fine line between overpaying for a top domain name asset and simply overpaying for an average asset. I have certainly overpaid for domain names I thought would be hot commodities that haven’t received nearly as much interest as I expected.

The general market appears to be down this year based on the reporting of DNJournal. Part of the issue (which is the same every year) is the highest end of the market has much fewer people discussing sales and sale prices. The other issue is that domain names are not turning over as much as they have because they are in much stronger hands who are not interested in selling for anything short of business or life changing money.

It is very difficult to buy exceptional domain names right now, and I think it is necessary to overpay today to secure a deal that will look like a good value in the future.

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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7 COMMENTS

  1. I will share my personal experience and track record with you all, happening over the past 6 months. But first a comment on reporting of domain sales. I have been involved with 5 deals over the past 2 years, all of which were each 7 figures; all have strict NDA restrictions. I believe the majority of transactions involve an NDA, making the determinations of how the industry is faring impossible.

    As a diversion to my full time responsibility in marketing our 23 City Geo Portfolio, I spend 30 minutes a day playing around and either hand registering names (yes…I still do this) or buying names and drops. While I have specific industries I target, based on where I believe markets are going to be strong in the future, over the past 6 months I have bought approximately 250 names; I have spent less than $4,500. Now, 4 sales have resulted and the gross amounts are $22,425. I believe the most I have paid for 1 name is $250.

    I enjoy this, and more exciting than my ROI that has so far been realized is the potential of the names that I own for future sales. No, I presently am not one of the 15 investors bidding on premium names, but I believe if I can do this with literally 30 minutes a day, other domainers willing to spend full time on this can make much more than I have, as again, it is a “hobby” and diversion for me.

  2. I have overpaid on some few inventories but the good thing is they are liquid and making 4 times returns is ok but I am for long term returns.

    Also I always suggest to not rush to sell off and make low returns since you have to replace your inventories with better quality. There are still 💎 💎 out there but most overlook some names.

    I picked one for $$ and sold for $12500 net .I refused 10 grand for it and I used part of the proceeds to get way better liquid names by dealing directly with owners who offered me their names and I never disappoint in buying or negotiating fairly.I don’t lowball and this helps sellers to have you in mind always .

    Most people don’t know how to negotiate. Build a good business relationship and you would be offered lots of sales by same people when they came across one .Build a good network and tell them to contact you when they come across good names with their other network.

  3. “The general market appears to be down this year based on the reporting of DNJournal. Part of the issue (which is the same every year) is the highest end of the market has much fewer people discussing sales and sale prices. The other issue is that domain names are not turning over as much as they have because they are in much stronger hands who are not interested in selling for anything short of business or life changing money.”

    Please…sales are simply down. The amount of excuses people have thought up to to try and argue the market is strong when tit clearly isn’t is getting ridiculous. Only the drops have held up.

      • Great that your sales are still on track. The issue from my opinion is people thinking up fanciful explanations about why the obviously low numbers are somehow wrong.

        Nambio data is down, Escrow.com which is mostly a different dataset of NDA sales is down by a similar %. Instead of people seeing the obvious explanation (Covid) they think up all sorts of theories.

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