When Bidding on an Auction, See Comps to Find Better Deals

One of my primary domain acquisition sources is NameJet auctions. I have found some good deals when buying on NameJet, and I am involved in many auctions each day. I want to share a tip that I use to help guide some of my purchases.

When I am bidding on an auction, I use comparable sales and comparable sale listings to help guide my purchase, in addition to my own gut feel for names. If I notice other recent sales have been for much more money, I might be willing to spend more on a particular domain name.

Comparable sale listings on marketplaces like Sedo and Afternic are also important data points to consider, and I will share my rationale with you using two of my company’s domain names as an example.

Let’s say I am bidding on StartupConsulting.com on NameJet, and the bidding goes up to $xx,000. I really like the name, so I am continuing to bid strongly because I think it’s worth more. As I am bidding, I do some research and see that StartupConsultant.com is listed for sale for $x,000 on Sedo. It might be smart to abandon the auction and purchase the comparable domain name for a better price, or alternatively, at the conclusion of the auction, buy the comparable domain name as well. (I own both of the domain names I am using as an example to illustrate.)

There are two reasons why I think this is a good idea. Once NameJet reports the sale of StartupConsulting.com, it will serve as a solid comparable when a potential buyer inquires about StartupConsultant.com. I can show him what the market thought of that domain name when I am looking to sell the name I bought at Sedo. The other reason is that if I win the NameJet auction and don’t buy the comparable domain name that is for sale, a potential buyer might purchase the other domain name instead of purchasing mine. Obviously if I paid $xxk for the name at auction, I would have to sell it for more. Let’s say I only list it for $low xxk, a buyer could see the other name listed for $xk and opt for the less expensive purchase. He could also use that price as leverage to try and get me to reduce my price.

You’ll need to keep in mind that not all domain names are created equal. For example, there’s a huge difference between Cowboys.com (name of a professional NFL franchise) and Cowboy.com, aside from the fact that one is plural. You should also keep in mind that some names on NJ have high bids because of backlinks, traffic, and other factors that aren’t entirely related to the name quality. In my example above, StartupConsulting.com may have been a very popular website and that is more of a factor than anything, which means the less expensive comparable on Sedo might still be expensive.

If you are involved in an auction and the price is going above your comfort level, look around to see what other alternatives are there so you don’t spend more than you should. Keep in mind that there are factors above and beyond the name quality as well. Ideally, your research will be done pre-auction, but sometimes there isn’t time or you’ve decided to become a serious bidder in the waning moments.