I was discussing the price of a domain name with a seller, and he shared a few public comparable domain name sales to justify his asking price. One of the comps seemed abnormally high to me. Although the sale price was apparently accurate, the domain name sold many years ago and the market has changed since then.
As a buyer, it is important to look beyond the sale price of the domain name. The date and venue are also important considerations that should be made by the buyer to understand more about the sale.
A domain name that sold ten years ago may be a good comparable sale, but the value has likely changed since then. Some values have gone way up and others have gone down. Even sales that occurred just a few years ago may involve domain names that fluctuated in value substantially.
The venue is also an important consideration. Sales that occurred on NameJet, DropCatch.com, or GoDaddy Auctions are likely sales at wholesale prices. Domain names that sold via Sedo, Afternic, or via domain brokerage are most likely end user pricing. Domain investors should obviously use this information to their advantage when negotiating a purchase.
It’s always a good idea to have a good idea about comparable sales. It’s just as important to understand that the date and venue are important aspects to consider.
This post opens up a HUGE Pandora’s box about what the right and honest way to evaluate a domain name really is to begin with.
Comparables may not really be so comparable when examined closely.
Who’s to say a domain is not worth more now rather than less?
This is the right and honest way to evaluate a domain name:
https://onlinedomain.com/2018/02/22/domain-name-news/%ce%b1-domain-name-worth-buyer-willing-pay/#comment-230456
(There are of course various nuts and bolts considerations implicit in that, such as when and if sld search volume factors in, etc.)
This focus on “comps” also illustrates the limitations, flaws and defects of taking the great “real estate analogy” too far when it comes to the domain industry. I love the analogy too, but this is a problem. It’s a mistake virtually everyone is making. People mistakenly think the real estate analogy means they can and should evaluate domain names the same way that residential homes and apartments are normally evaluated, with reference to the “market” and purported “comps,” but often nothing could be further from the truth for evaluating a domain name properly. And as I’ve already pointed out elsewhere, people compound the mistake by thinking in terms of “residential” real estate instead of what domain names almost always are vis-a-vis the analogy, which is “commercial” real estate, i.e., real estate that makes you money.
This focus on “comps” also illustrates the limitations, flaws and defects of taking the great “real estate analogy” too far when it comes to the domain industry. I love the analogy too, but this is a problem. It’s a mistake virtually everyone is making. People mistakenly think the real estate analogy means they can and should evaluate domain names the same way that residential homes and apartments are normally evaluated, with reference to the “market” and purported “comps,” but often nothing could be further from the truth for evaluating a domain name properly. And as I’ve already pointed out elsewhere, people compound the mistake by thinking in terms of “residential” real estate instead of what domain names almost always are vis-a-vis the analogy, which is “commercial” real estate, i.e., real estate that makes you money.
Sellers that use comps to justify their asking price to the potential buyer, lose half the negotiation game. It’s the same when a buyer justifies their low offer using other comps, as a counter to the asking price.
Im disappointed I misssed out on Keywords.net which sold for $2,888 on Namejet (wholesale price as you mentioned). Its now being resold on Sedo for near $25,000. Airline.net sold for low figures on Godaddy auction then resold for around 6x.
Some sellers overprice their domains exceedingly though. $50,000 for a gtld? I won’t pay more than $5,000 for a gtld.