It makes sense only in limited circumstances.
One of the more interesting features of domain marketplace Sedo is the ability to push a domain name to an auction if you receive an offer on the domain.
Let’s say you’re negotiating with someone for example.com. They offered $100 and you asked for $2,000. You negotiate until they get to $1,000. You decide you’ll sell it for that much but want to see if there are other interested parties. By pushing it to auction, it will be listed in Sedo’s auctions with a starting bid of $1,000. If no one else bids then it will sell to the person you were originally negotiating with.
This is a somewhat controversial mechanism. If an end user negotiates to buy a domain, they will probably be surprised if they are suddenly in a public auction.
Nevertheless, this can be an effective way to extract more money out of liquid domains. It might make sense when you’re selling a domain that could be purchased by a domain investor (and the price is a domain investor price). It also makes sense if you’re received prior offers on the domain; Sedo will notify the inquirers that it’s now on auction. But it doesn’t make much sense for domains that lack broad appeal that have end user bids.
Reviewing Sedo auctions this morning, there are a couple where I don’t think the owner should have pushed them to auction: Kanabi.com at $10,000 and PetClassifieds.com at $12,000.
While it’s possible someone could swoop in and bid, I doubt any domain investors will. Maybe, just maybe, someone interested in the domain will type it in, see it’s on auction, and place a bid. But if I were the domain seller, I would have just accepted the offer and closed the deal before adding friction to the process.