Domainers need to think about their long-term strategy for the domains they buy.
Rick Schwartz wrote his viewpoint on the state of domain investing today. He’s never one to mince words, and I think he has some fair points in his post.
What stuck with me is how he concluded the post. Writing about what happens when you invest in a domain, Rick noted:
“They are not liquid. You own it and there is less than a 50/50 chance you will sell it in YOUR lifetime.”
Depending on the type of domains you own and/or the prices you sell them for, 50/50 is actually overshooting the mark. This is especially the case with Rick. He owns some fantastic domains but holds out for top dollar. Unless he ultimately sells his portfolio or liquidates them, he’ll take a lot of his domains to the grave.
That might sound harsh, but it’s the reality of domain names. Some people churn through their portfolio at 1%-2% a year. Others sell their portfolio to GoDaddy to head into retirement.
What amazes me is when people hold onto their very illiquid domains, passing up great offers with no real plan for the end game.
I’ve seen multiple times where the very best possible buyer (i.e., one of the only people in the world who could possibly be interested in a domain) makes a very generous offer on the domain. Their maximum offer. It is rejected.
Let’s say that person offers $60,000 for a domain. Given the domain and the pool of buyers, there’s maybe one or two other potential buyers in the world. The domain owner passes.
What are they waiting for? What’s their goal? Do they want to wait until the one-in-a-million buyer comes along and offers $100,000?
You also have to think about your annualized return. If you pass up $60,000 and that one-in-a-million buyer actually does show up 10 years from now and you sell for $100,000, you only made about 5% a year in that decade you waited. There are plenty of other investments that can return 5% a year.
There are collectors in the domaining space. People who consider a domain a piece of art that they want to own. It sounds weird but during the last 20 years I came across a lot of these guys. Well actually not “a lot” but certainly a dozen of individuals that I know who are just buying to own. Be it because the domain is one of the oldest .com’s from the years 1987-1993 or it is their first name, their family name or some other reason. There are definitely collectors out there and they just don’t sell unless someone comes up with a ridiculous offer. Sure, one day they will probably die and still own these domains. But you can’t reason with the heart of a collector 🙂
Rick Schwartz went nuclear on the ‘state of domain speculation’. This is why is so well respected by those who invest domain names. Thank you Andrew for having Mr. Schwartz and Gerald Levine on recently.
Quality 1-2 word dot-Coms with commercial or dictionary meaning along with tightening UDRP restrictions will define domain speculation moving forward.
A 2020 recession will wash away 90% of what ails the domain game…stay tuned.
> “Thank you Andrew for having Mr. Schwartz and Gerald Levine on recently.”
Did I miss a podcast with Rick?
https://domainnamewire.com/2018/07/09/domain-king-rick-schwartz-dnw-podcast-193/
Thanks Andrew
It’s a game that can be played in a variety of styles and techniques… I think people forget about the “game” and “play” aspect of it. The first rule of the game seems to be .. it’s not a game at all!
I find the questions in this post to be very odd. To answer the question “What are they waiting for?” Answer: “Nothing”. I’ve done what you said and turned down every generous offers for a domain with only one or two buyers. Then I regretted it, but so what? The other times I did the same thing and got nice five figure deals for the exact same scenario.
It’s a hard game to play.
I have “premium domains” that I won over several bidders in 2008 that have received few offers.
I planned to drop two domains and let them expire last year — 3 weeks before expiration, one gets an offer for 7500 USD and the other got an offer for 6000 USD, and these were 2 word .com(s)
I just let 50 domains drop as I’m trying to get my portfolio down to 500. And I will imagine at least one of those domains will go to auction and sell for xxxx.
Rick is right on, per the domain speculation game.
What If! 420 becomes globally legal and as accepted? Will 420 specific domains create a renewed buzz?
If the G20 mandated one industry globally, would a related domain name br of value?
I’ve been offered the same domain name several times in about 9 years. Clearly no one is buying it, yet they want thousands for it. You see, I already bought an alternate name that I use and have been known by for over a decade. The domain offered would be awesome to have, but I don’t *need* it… not for thousands.
I own over 1200 plus domains, and offers have started to slow down. I now understand what I did wrong!