Avoid Domain Name Auctions When You Sell Your Domain

by | Domain Valuation

So, you want to sell your domain and achieve top dollar for your investment.  You may want to avoid domain name auctions.

An auction seems to be the best way to go, right?

What better way than having 5 to 10 interested companies all bidding for their chance to control your valuable domain name.  The time constraints along with competition might even drive the price beyond your expectations.

Or is it….?

Domain names are investments that appreciate in value.  As an asset class, they have produced some of the best returns over the last 20 years.

When it comes time to sell your domain don’t make this rookie mistake.

Why Avoid Domain Name Auctions

If you have a valuable domain and are looking to maximize your return avoid domain auctions.

Here are several reasons why this is not a good venue to sell your domain if it is valuable.

  1. Domain auctions typically only attract the wholesale or domain investor
  2. Most companies will have no clue that your domain is even available for purchase
  3. Companies need time to get approvals for valuable domains (over 5 figures USD)
  4. If it does not sell this creates a data point for the market to evaluate your domain (even if NOT a fair data point)

FO.com fails to sell at NAMEJET

Two letter domains have appreciated in value and now regularly sell in the seven figures USD (see below).  They are valuable assets because of how they create simplicity for customers to access brands and are easy to remember in any advertising.  There are only 676 two letter domains.

When you want to sell a domain of this caliber you have to create the desire and need in the future buyers mind.  This takes time for strategic internal discussions.  This is a major purchase that will impact the foundation of a brands DNA.  Auctions rarely align with the an end user companies timing.

DomainGang.com captured the news on the most recent auction of FO.com.

 

Here is a list of the top 2 letter domain sales from NameBio.com. These are only for sales that have been made public.  My estimation is that 75% of sales are not made public because of NDA’s.

Here are the top 10 sales of two letter .com domains

Clearly the prices for the auction of FO.com were not even close to market value.

Ways to sell your domain

First it is important to understand the general ways to sell your domain.

Different ways of selling your domain name will attract different customers who will value your domain much differently.  Depending upon your needs each of these methods or venues will have a different appeal.   Each of these ways to sell your domain will also have risks and produce different financial outcomes.

  • Domain name auctions
  • Broker
  • Waiting for a buyer to reach out to you

Domain Auctions will typically attract the wholesale or domain investor that is looking to buy and flip the domain for a profit.  This means that they need to buy the domain well under market value.  The positive to this approach is that you will gain liquidity for your domain.

Using domain broker will ensure your domain is marketed to end user companies.  The closer

Another strategy is to just wait for a buyer to find your domain and make an offer.  This can produce some of the highest sales for a domain name.  Don’t be mislead though, most of the people inquiring are kicking tires or investors looking for a great deal on your dime.

Summary

Think strategically about how you plan to sell your domain name.

Each way to sell your domain name will attract a different customer that will value your domain differently.

Establishing the value for your domain name is directly impacted by how and where you market it for sale.

Any questions?  Feel free to contact me to discuss your approach.