We just sold our home and it made me think a lot about the domain name market.
We recently sold our home in Austin. I can’t help but compare the residential real estate sales process to domain names.
Let’s start with observations about the Multiple Listing Service (MLS). The idea is that there is a central repository for home data — both for sale and actual sales prices.
There’s a parallel between MLS and what Afternic and Sedo offer. If you list your home in MLS it is instantly searchable to all MLS subscribers in the area and is cross-posted to many real estate websites like Zillow and Trulia. (I realize that syndication is negotiated by each local MLS and is not done in all areas.)
Afternic created DLS and Sedo created MLS modeled off of this. The LS in both of these names — and the full MLS in Sedo’s! — are not by accident. If you list your domains with these services they will be promoted across dozens of websites. It gets the domain in front of more domain searchers.
These syndicated systems have done wonders for sell-through rates in the domain name industry.
My second thought about MLS is what it says about data. People who have access to MLS data have an advantage. It depends on where you live, but in Austin, the actual sales prices are not public. Only MLS subscribers (licensed real estate agents) have access to this data. They want to keep it this way because it gives them an advantage and a reason for people to hire them.
Imagine if only domain brokers got access to sales data!
In some ways, this is already the case in the domain business. While Sedo releases most of its data, GoDaddy’s Afternic doesn’t. This means GoDaddy has an advantage when it comes to acquiring domain portfolios and understanding their value.
(Side note: GoDaddy provides some of this sales data when you use its appraisal tool. Rather than just griping about GoDaddy’s appraisal values, domainers should understand how they can leverage this tool.)
In Austin, the county appraisers don’t get access to MLS sales data, which is part of the reason their appraisals for property tax rarely align with reality. They’re working from a limited set of data.
In the case of Afternic, even it sees only a small slice of data. So much happens “off market” in the domain industry. Most deals are private.
In the case of our home, we never went on MLS. This means the sales price won’t make it to MLS and agents won’t know how much it sold for. It turns out that a fairly large percentage of home sales in certain segments are done “off-market”.
This draws another parallel: access to deal flow. You need to network in order to get access to a lot of domain inventory, just like you need to do to get access to pre-market home inventory.
Now, on to a controversial part of residential real estate: the 6% commission. I cringed when I saw how much we paid in commissions on our closing statement.
But I’m a firm believer that you hire an expert. Just like how Carrot founder Trevor Mauch said he would have saved hundreds of thousands of dollars plus time by hiring an expert earlier, there’s value in professional real estate agents. (Of course, you need to hire a good one. There are a lot of bad ones out there.)
That said, a big advantage that agents have is data. This is eroding and many companies are stepping in to try to break up this model. Some are just lower fee providers such as RedFin. But OpenDoor is upending the entire model in lower price ranges.
Finally, saving the best parallel for last: did you know there’s “house sniping” in real estate? Much like how we grab domains the moment they expire based on our own metrics, some of the large private equity home buyers have systems set up to make offers on homes the moment they hit the MLS if they meet their requirements.
Crazy stuff.
sass says
Congrats on selling the house!!!
Richard Morris says
That’s where the parallel’s end Andrew, and here are two HUGE differences;
1. The “average” house according to Realtor.com is on the market 65 days, and the “average” domain is on the market for YEARS, and considering a year has 365 day, it’s at least 10 times as long.
2. The mark up sales price on an “average” domain is at least 10 times the average mark up on a home.
To attempt to compare the two is an exercise in futility imho!
Andrew Rosener says
Not true. At least not in the premium domain market. If you list your domain name with a GOOD Domain Broker like MediaOptions, the domain time on market to sale is around 150 days on average if I eliminate the outliers.
Now if you dig deeper there are several reason for this:
1. As Andrew pointed out, the brokers have the data! We know what sells, to who & at what price. We know trends.
2. We are proactively marketing the domain name to QUALIFIED end users, educating them, using our data to support the valuation & creating pressure through competition & reputation.
3. A domain name is not really “on the market” unless it is being proactively marketed for sale via a qualified domain broker. Saying that most domains are on the market for years is like saying most houses are on the market for years while people are living in them or just letting them rot. Until someone places there house formally on the market for sale those days on market don’t start counting…
Derp says
LOL!
Acro says
The differences between real estate and domain names are more than the similarities.
There is no title of ownership for domain names, unlike real estate. Domain comps are based loosely on achieved sales, as opposed to established value of property sold in the neighborhood. No Realtor worth their salt would undersell a property, but it happens often with domain names – knowingly or unintentionally. Realtors are licensed, trained professionals that observe a ledger of ethics, and can lose their license if they don’t. Good luck getting the same standards enforced in domain brokers.
The MLS isn’t a free billboard to add homes, it’s an industry tool that follows rules and regulations, including the land’s assessed value and taxes. No such connection exists in domain names.
Linking domains to real estate is an easy method in order to provide distilled arguments about value to potential buyers.
Fat Anon says
Not in every part of the world, LOL
Adam says
One of the reasons we keep plugging away at NameBio is to provide more of the data that you talk about. We encourage domainers to consider publishing any and all of their sales.
If you sell a domain on Afternic or Godaddy send us an email. You should have an email from them with all the sales info you can forward.
Delete this if you think it’s too muc astroturfing
Andrew Allemann says
It’s only astroturfing if you pretend to not be with NameBio 🙂
Andrew Allemann says
There are certainly lots of differences. I think it’s smart to study all markets to look for how you can apply best practices.
Andrew Rosener says
Domains are most likely empty lots zoned for commercial real estate. The corner lot of a major intersection in a major metro area is like a tier 1 .com domain.
steve says
Yes, Andrew, I also compare the two in buying and selling domains/homes.
The real estate market/industry at least has 2 decent appraisal tools: Zestimate with an accuracy rate of only 6% off, and Redfin only 2% off.
Prime .com names also are like having a home in a desired location. I sold the home we lived in for 15 years in 2014 — I listed it on the web. Within 10 minutes, I had 3 offers. and closed within 30 days. This was in one of the most coveted locales in the USA. With the proceeds, we purchased 2 small homes – one in California and one in the mountains — both are decent locales, but not the most coveted — so it would take several ,months to sell these properties, not minutes.
Congrats on your sale, Andrew. I know real estate in Austin is hot. But I believe we’ll see a cooling off period for a while, including in the Bay Area, unless these upcoming IPOs create another mini boom with insta-millionaires. 1 BR shacks going for a million USD. Crazy
I heard Zuckerberg’s entourage went door-to-door offering to buy all the unlisted homes in his neighborhood, offering 35% over its Zillow estimate. Many took the money and cashed out. Luck — they owned a home in the hood that a multi-billionaire decided to settle and who cherished HIS privacy.
Brad says
I think the similarities are stronger when you consider commercial real estate concerning businesses seeking to buy a storefront in a good location to attrack walk in business. The cliche “Location, Location, Location” surely applies to both.
Luc says
Hey Andrew, are you sticking around Austin or moving away? If so, where are you moving to? Congrats on the sale!
Andrew Allemann says
Moving to Seattle
Bert van Zuylen says
With the complementary integration of WWW and Blockchain tech completing the circle of doing business from finding, Buying & selling/getting paid plus now being able sending tokenised, digitized, secure assets and directly being able to get payed/paying Peer to Peer decentralized in an instant and total secure, The domain name will be even more valuable/Important as the whole spectra of doing business in the digital world hinges on your digital address! Never mind more and more Subscription products to be marketed as well
hu.flatfy.com says
buying real estate domains is a great business. The guys from https://hu.flatfy.com/ created cool sites where you can look at real estate and choose the right house or apartment