The domain name aftermarket has been performing strongly for nearly a full year now. The last six months have been particularly strong. A look at the DNJournal year to date sales chart proves that, and the publicly reported sales are just the tip of the iceberg considering the volume and value of private sales that are unlikely to ever be reported.
With the considerable movement in the aftermarket, it has become very challenging to buy valuable domain names. When good domain names are available to purchase, the price to buy new inventory is getting much higher as well. My focus is on one and two word .com domain names, but I have seen and heard that other areas (.IO and .CO for example) are also becoming much more difficult to buy at wholesale level pricing.
In years past, I might open a negotiation with a $5,000 offer to buy a name I value in the $50,000 – $100,000. I know $5,000 most likely would not be enough to get a deal done, but if the seller is seeking under $50,000, it would often be enough to get a counteroffer or reply. These days, most of my offers are starting well above that $5k number. Oftentimes, I don’t get a reply or get a “no thanks” without a counter offer. Domain names are in stronger hands than ever.
The challenge right now, for me, is to acquire inventory for reasonable amounts, knowing the wholesale market is likely as high as it has ever been. I have no problem shelling out a lot of money for an exceptional domain name, but chasing down these exceptional domain names and closing deals has been a difficult challenge of late. I don’t have as big of a budget as some of my colleagues and friends, but I have made a whole bunch of six figure offers on various domain names and none of them have led to deals lately. Frustrating.
On the other hand, holding on to cash is also appealing. At some point, one must assume, the market could come back down. Perhaps there will be less funding going to startups and businesses, and they will need to close as a result. People may need cash and will be willing to sell domain names for less than their prices now. I think this is inevitable, but timing is everything. I’ve thought this about expiry auctions for the last few years, and that hasn’t happened yet, so who knows.
The most enjoyment I get from domain investing is making deals. Negotiating is exciting and closing deals is thrilling. I don’t care if it’s a $500,000 deal or a $5,000 deal. The negotiations have the same ups and downs, and I enjoy that adrenaline rush. However, the market is crazy right now, so the smart thing might be just to hold on to cash and wait.