Amazing story where the buyer wanted the name for 3 years from the seller and only now both finally agreed on a price. With a seller having the cohonas to hold out and the buyer having persistence to get what he wanted.

Is this a true story?

No.  but it’s a lesson in valuation for many of you fools. Every time a name sells for something more than what you think its worth the bandwagon starts where many rant and rave why this name can’t be worth that much.

It is quite comical to be honest.

Sure, I will jump on the bandwagon for those names bought BY domainers for sale TO domainers. This never-ending cycle is like the dog wagging the tail where 95% of investors have no idea what makes a good domain let alone what markup is realistic by selling only to domain investors. If you buy a name for $10,000 in auction (where 100 of the same people you are actually hoping to sell it to are in) how much do you really think your profit is going to be when you try and flip the name to the same people a few months later? Find price points lower its gets better but there is a cap for this kind of liquidity and a lot of risk.

End user sales are different – an “end user” here includes corporate buyers and even domain investors who have a real vision for development down the road (not some dream where he has NO experience in development today nor gains any knowledge as every day passes but those who are developing and simply acquiring to add to the to-do list one day). These people are actually end-users but participate in name trading/ selling – domaining would not be their sole activity.

When a domain is sold to an end-user the value only does one thing for most domainers.

It brings interest to the assets we all hold and love dearly.

More interest = More players = More Money = More buyers = More Value

Sometimes the press is great with 7 figure sales like Candy.com and sometimes its just a heartwarming story about how a guy quit his ugly day job to enter this industry. Stories like this help overcome the bad press about cybersquatters and validate the industry and these assets as a respectable way to make a living.

However the actually dollar value of a sale to an end user can not be correlated in value to similar domains.

We have many clients as end users and we never send out emails highlighting the amount of Google results, what names Frank or Kevin own that are similar (who the hell is Frank and Kevin most would ask), why an asking price of $10,000 is ok since Johnny sold one last week close to this.

All of this shit that many of you recycle to sell to one another doesn’t matter.

An end user will pay only what they think its worth to thier business plan.

Nothing more.  Anything less is a deal.

Your only job as a seller is to find a price which you are happy and start there.

That target price should be based on your cost, your loss of value, your need for cash, your alternative outlets for sale and many other variables which are all outside and have no bearing of what Johnny’s similar name sold for last week.

This industry has grown pretty fast over the last few years but we are in an environment where a calculation for logical liquidity is sought after by most domainers, dynamics of what makes a good name is entirely changing with keyword development names finally getting the respect they deserve and parking multiples fading out.

The entire point behind this article is do not look outward for your price points – look within.

Everybody could have made another dollar if they held out 5 minutes longer or picked a 35 instead of 36 in Saturday’s powerball but real business is not made of what ifs – its made of what you do.

Use the sales reported to maybe find ranges if you have no idea what a name is worth to you but if its an end-user buying throw it out the window since 90% of the people you hope to sell this domain to will be domainers and those valuations are less.

We get in deal mode every time but I can tell you the most irritating thing behind any seller is having them quote the number of searches in Google or who owns similar names.

We know how much the name is worth to us to buy or sell.

If Frank, Kevin, Rick, IREIT or any of the industry names own similar – whopdef*ingdo.

Back to the $1miilion info sale.

If it happens (and it will one day for A DEVELOPED site which all you .info lovers will claim credit for having foresight which is crap since the power was in development not the name) then you need to respect the PR received, congratulate the two parties – since (a) the buyer was happy to pay and (b) the seller was happy to sell.

The name was worth that much since both parties walked away happy.

Any sale is a good sale.

Trying to find logical value in this industry if your only client base is domainers is like a dog chasing its tail.

They are all moody as hell and would rather buy in auction then buy direct.

You know it.

You are one.

©2012 Newfound Names LLC. All Rights Reserved.

One comment was “You can be honest and tell people you are promoting your own domains or just keep doing what you are doing” – this comment struck me as it really gets to me when people who are INVESTORS would rather take time and complain about something that has no relevancy. For the record I disclosed we did own some (but not all) of the names but hey, if want to think we own all of them go for it – doesn’t matter at all to me. The purpose of the article was to simply provide examples of high quality keyword names for sale at Snap vs. so many we see at NameJet that have no keyword value, no Google results and absolutely no logic as to why people would bid on them.

For new domainers, its easy to get caught up in auction fever.  A name with 60 bidders – Yahoo!! – must be worth something.  Guess what – it’s not always the case.  There is no doubt NameJet has some great names but they also sell many names that would never be registered if they were available today and mark my words, will NEVER sell on the aftermarket should the buyer want to sell – That’s right, absolutely NO resale value!  In fact, I have seen several times a buyer winning a domain on NameJet, park the page a few days later, then post the name on the forums for sale wanting to sell the name and giving a good deal (lower than the auction price) – its called cutting your losses since they know the name was a bad buy.

Lets use facts (so the naysayers who focus solely on this article being self serving can be put aside).  Most, if not all, domainers agree:

1) Domain Appraisals mean nothing / there is no valid system that can truly and accurately represent the value of domain.  Too many intangible factors exist and the number of external factors (such as the increase in end user sales) will simply stop any such system from ever developing since end users do not value in multiple of PPC earnings.  In fact, – end users determine value on domains independently based on what the name means to them so very rarely will you ever have more than just a few companies feel the name is worth the same amount (except for the obvious ones like mortgage.com, sex.com and 2-3 letter names etc).  This makes any standard for valuation practically impossible.

2) Domains with NO keyword value but DO have PPC income are now being bought and offered by many domainers using smaller multiples then seen in the past few years.  PPC is becoming less relevant as companies try to attract the end users who don’t care about the parked revenue but want a brandable name.

3) DOUBT as in to the future of domain parking for low traffic names.  Sure, it will always exist but doubt creates lower values and until an alternative outside of just two (2) main providers (Yahoo and Google) is built than some domain owners are opting to sell good names at great prices meaning names with NO keyword value are even less valuable since other good deals are available.

4) Names with KEYWORD value are consistently some of the most sought after names at live auctions and reported at DNJournal every week. It’s very common to see a wealth of data each week from sales of domains that have keyword value sold from sources which provide NO traffic data.  Hence, buyers are buying the keywords to develop, resell, brand or hold.  Traffic has become less important because development or end user sales are the future.

5) MUST REALIZE that NO private seller and many registries in todays world are not going to auction or sell a domain that earns $500 a month in revenue at a $1, $59 or $99 reserve in an auction so the name must have value to an end user (keywords / action phrases), be very warm for development or engage a buyer’s interest as a worthy investment to part of thier bigger plan.  The newbies that still have faith in big business really need to use logic here.

6) Domains with keywords have DEVELOPMENT VALUE. Take Elliot’s article on what happened after developing TropicalFish.com.  From 1 to 100 visitors a day with a little work.  Develop a keyword heavy name right and search engines will reward you.

7) MUST UNDERSTAND or have an idea about how to use the domain for development (this is also part of selling a domain to an end user – regardless if you can develop it or not you must understand how it could be developed or you wouldn’t have bought it).  Only names with keywords, product names, people names and action phrases can make sense.  HotDogs1245.com does not work and will not hold any value down the road.  If a name like this has links and some existing traffic one day it will get scrubbed from the search engine and you have nothing.

8) END USERS ARE THE GOLDEN KEY – Domainers love to sell to end users because prices are not only larger but more relative to the value domainers can see in owning a good name – plus it’s almost easier to sell the larger investment.  A company who spends $10,000 a week on radio ads can surely drop 2, 5 or 10k for a one time investment in a solid domain name.  It’s just finding those end users and making them understand the asset you are selling.  BuyDomains is doing a great job at that – the company to take this kind of model to next level will win the game.

9) End Users DO NOT care about PPC Income – All end users have their own business model for earning income so the amount of income produced by PPC ads will mean nothing to them.  They may care about traffic but most companies who pay small amounts – like 5 or 10,000 – are buying a branding tool and traffic is not so relative at such small price points.  Trying to sell a domain for $100k – sure, they probably want some traffic but small money is not really concentrated on that.  And yes, small money is still a lot to domainers.

Obviously, the rare names – such as 2 and 3 letter domains are exceptions to all this.

So what if PPC stopped tomorrow….think about it?  It’s not going away but who knows – there may be a slower period ahead until somebody puts together a viable alternative ad provider outside of the goo-hoo system.  If that’s the case then all domainers who are betting the ranch and have no idea about development or understand the proper keyword elements behind domain names are gambling.  Keywords will sell themselves as the value is obvious to the right end user.

So, circling back to the initial paragraph about why we do not promote the names we sell.  No specific reason other than we just have no interest in blogging about our names – we would simply rather write about other things and try to help put some logic into a not so logical industry then turn this blog into one big sales pitch.

If we use some of our names for comparison so be it – sometimes we use yours.  Again, ownership of undeveloped domains is 100% not relative because at the end of the day we are simply comparing domain names.  It doesn’t take a rocket scientist to figure this stuff out.

©2012 Newfound Names LLC. All Rights Reserved.

The fact is most people buying on NameJet are domainers and a lot of the new people in this industry “follow the herd” when it comes to buying names.  I can tell you from years of experience this is not always a good decision.  Many of you will disagree with me (at least on the outside) but those of you who are investing for the future and tomorrow’s end user DO NOT care about what other domainers will pay.  Take for example, the recent auction of FixedLoans.com.  In our opinion, this is not a good domain.  Yes, it has history and was referred to as a famous domain from a not so famous book (no disrespect – but unless you sell tens thousands of copies then using the word famous is a little overrated).  Plus the amount of space this name got in the book would almost make any word famous … argh … anyway, it was just a silly comparison and a typical example of why we need to remove the “car salesman” pitches in this industry to bring more credibility.  (Another post will come on this soon)  We made our money in the mortgage industry online and I can tell you the term Fixed Loans is almost never used.  A “Fixed Rate Loan” or “Fixed Rate Mortgage” yes – but the shortened version is simply a made up expression that even with the best branding (which again, most domainers will never develop properly) the domain is too generic or confusing that people still will question – did they mean FixedRateLoans.com or FixedRateMortgage.com or FixedLoan.com – hmmm.  Bid as you will when the name goes to auction but I can’t see the ceiling on this name going any higher than it sold for back in 2006 – wait and see.

Back to NameJet.  Over the last 30 days we have seen such names which probably have no traffic and certainly have no generic value sell for prices that are driven by the number of buyers. Remember – you are an INVESTOR, not just a domainer.  The $2,000 spent on a dropped name that has no keyword value but a “possibility” of traffic might as well be a gamble.  Secure your investments on domains that have keyword value – leave the gambling for vegas.  Just because a name has 50 bidders on it does not mean its worth more if your goal is to develop or sell to an end user because guess what – almost all 50 of those people are NOT your target market and will almost never buy back what you paid for in an auction.

Just some thoughts….

Newbies …. buy names which you can develop or picture end users with.  Again, leave the gambling for Vegas.

Seeya … back to hiatus….

©2012 Newfound Names LLC. All Rights Reserved.

How much traffic does the name get?

From my experience (and we own some names with very good traffic) this question is one to avoid if you are a seller and your asking price is fairly low (under $50,000)

Some of you will say – $50,000 – that’s a lot of money.  Remember, I am not saying 50k is not a lot of money to you – I’m sure most people would be able to experience some great benefits having this kind of cash but it’s simply just not a lot of money to professional investors, corporations and end users.

Reasons to avoid providing this data are simple

#1)  All the daily auction forums – NameJet, SnapNames, Moniker, Sedo (for the most part), Afternic, BuyDomains – almost ALL listings provide no reference to traffic yet domains still command some high prices.  If a buyer wants the name they will pay for it. 

#2)  What incentive is there to provide a seller this information?  If they find you are making $1,000 a year from ABC domain but you are asking $30,000 – immediately most buyers will forget all about the keyword value in the name and say…wait….you want 30 years revenue – how about 7 times.

The ONLY time we would recommend providing data is to an END USER or for a sale of signifcant value.

The NUMBER OF VISITORS your domain gets can be a big part of their valuation and end users will generally never equate an asking price to a multiple of PPC earnings – (as they probably don’t even understand the PPC industry to begin with).  Their offer will factor in the number of “new customers” walking in through their door if they buy your domain – and believe me, the valuation per head is a hell of a lot more than a PPC ad.

Bottom line, selling a domain name direct should be no different than how the big boys are doing it.  The only time to provide user and revenue information is when you feel this data will help command a higher price – anything under $50,000 is simply not worth it.

©2012 Newfound Names LLC. All Rights Reserved.