Domain Values – From an End User’s Perspective

Even now, in a piss-poor market, if a tumble-down, ramshackle house comes on to the market, the estate agents are quick to recognise the redevelopment value of the plot and substantially increase the asking price.

Some may say that this is just business and that it’s always been that way, but in truth, it hasn’t and though some may say that it’s just business, it’s actually greed.

You see, by inflating the asking price, the profit is being taken away from the purchaser – and it’s the purchaser who’s taking all of the risk in the transaction. It’s the purchaser who has the cost of the redevelopment, whether the redevelopment is ultimately for profit or not.

That isn’t to suggest for a moment that the seller shouldn’t benefit from the sale of an asset, simply that the seller shouldn’t necessarily expect their profit to be at the expense of the risk taker when it’s the risk-taker’s vision and not the dilapidated property on it’s own that decide the eventual outcome.

In that scenario, the seller is simply the person holding the asset and after that, becomes irrelevant.

Why should he or she profit from somebody else’s vision when they could just as easily take a development risk and make even more money?

The problem with the property market here in the UK at present, is that good properties are being down-valued while the derelict ones requiring huge investment have a huge premium attached.

Right or wrong? I don’t know and my own view might ultimately come down to whether I was a buyer or a seller in the current market – and I’m neither. But I do look and watch closely to what’s going on around me.

The domain game is similar and now that I’ve stepped back a long way from it, I can see it a little differently.

Whenever I’ve sold domain names in the past, I’ve placed my own valuation on them – and very often have achieved the price I wanted, sometimes with a little negotiation, other times with little resistance.

Always, in such circumstances, sellers remorse suggests that the price might have been a little low. I guess buyers remorse might occasionally cloud the buyers viewpoint too.

But there are some in the market who think that the sales price should be based on the purchasing power of the buyer, meaning of course that the richer the buyer, or the more profitable their market place, the more that particular buyer should pay.

I also know that their approach works and works well.

That doesn’t mean that I have to agree with it though and I suppose as long as the buyer can then do something that makes many times more than the amount expended, it must be ok and everyone’s a winner.

But let’s face it, most domains don’t fall into the kind of category where that approach is always applicable and where a valuation based on wealth would be possible, certainly not in the UK where the value of domains is less known or even accepted. (Yes, it’s sad, but we are behind the times somewhat).

But taking that aside, just recently I have made enquiries about certain domain names and have been stunned by some of the prices asked. It could be that the sellers just think that because I have been involved in the domain game for a while and because my ultimate goal is to develop, that they can sting me for a high price.

Perhaps if I wanted a domain that badly, they could – to a degree, but going back to the property analogy, it’s the development and consequent promotion and marketing that determine the ultimate outcome and profit, not the name of an by itself.

That isn’t to say that certain names don’t have some value – they obviously do. That’s why I acquired BuildingsSurveys.com – but that had been parked for years and probably earned nothing in that time.

As owner of a building surveying practice, I can see some value where others might not. In this case I feel the sellers (TrafficZ) got a good deal. I also think I did, so both parties were happy.

The value to them was releasing what was a nice keyword domain that was earning little to nothing.

The value to me can only be realised with further investment, work and continued promotional effort and not from direct type-in traffic. No, my investment has only just begun because now I have to create original content and make that content not only appeal to my target audience, but also to the search engines that will deliver my prospects.

I do believe that when that name appears in search results, that my target audience will be drawn to it – simply because it is so generic. It’s up to me to make that click work though.

Did I need to spend five figures to get the desired result? In truth, I didn’t. It was as much a vanity purchase as anything else.

One of my £6 hand-registered domains that to most people would have no value at all is getting clicks at the moment that are generating five and six figure enquiries. It does so in exactly the way I have described above – people see it in the search engines and they click it because it exactly or closely matches what they were looking for – so they are intrigued. I know, because I ask them!

They don’t expect to find me. They expect to find a contractor. My content delivers to them, a service that they haven’t considered. When they talk to me, I sell them that service at least 50% of the time.

I hope to replicate that with BuildingSurveys.com, but it’s not as niche as the example above, so I know it will require a lot more effort.

This is what development is all about – there is always additional expenditure and risk.

That’s why I don’t reward people who ask for extortionate amounts for their domains. There’s a balance in business – and sometimes, it’s better to walk away when the seller gets greedy. You might disagree.