Lately I’ve been finding some incredible sales on Flippa and in the domain space that don’t make sense to me. I’ve found plenty of legitimate sales and even posted about one I thought was legitimate last night. Many of my readers cast doubt on the sale and I’ve spent some time investigating it to try to figure it out myself. Every time this happens I ask myself the same question…how do we know the sales data we’re looking at is valid?
For those who really know me you know I’m a data guy. What does that mean? It means that if you just tell me something is selling well or a trend is really hot I usually respond by saying, “That’s great – now show me the data!” I use the DNJournal Sales list as my main source of domain sales data and the Flippa “Just Sold” list as my main source of website sales data. Heck – these are both considered the most reliable and top resources for their respective sales category. Here’s the magic question, How do we know if a reported sale price is real?
Last Tuesday Free-Counter.com sold for $61,000 – there were 15 bids…but all those bids took place between two bidders. Also a long history of sales data is not provided in the auction. Sounds sketchy doesn’t it? I didn’t pick it up at first but my readers dug in and I think revealed a fraud here. So what happens?
If this was a house or a car it would be a HUGE fraud case and the police would most likely get involved. However with virtual property be it a domain or a website we never really know what happened. At least with a website data you can use tools like compete, alexa and Google Pagerank to get an estimate of the real traffic a domain name is getting. With a domain sale you oftentimes don’t even know who the buyer and seller are (or if they’re the same person) if the name goes from one whois privacy account to another.
There are plenty of Flippa auctions that go-into the five-figure range oftentimes with over ten different unique bidders…how do we know which of these is fake? Private domain sales happen every day, what’s to stop the buyer and seller from agreeing on saying it sold for a higher price than it did? Since we’re talking about virtual property there’s no blue book value and no rules when it comes to sales.
Could you imagine selling a $500,000 house without paperwork being a legal requirement. Of course most people selling domains in the five, six, and seven figure range use contracts…but they don’t have to, there are no rules. When you buy a house a legal document is created, you can’t say you sold the house for $500,000 if you really sold it for $120,000…but with a domain or website what’s stopping anyone?
So my question to all of you is how can you trust sales data? How do we really know what the average .com sales price was in 2010? Are we looking at reliable data?
Now please understand by no means am I pointing the finger at DNJournal or Flippa or anyone that reports domain or website sales. What I am asking is how can we trust this data if there is no way to ever know if the buyer and seller were in collusion? I’m an honest person and hate to see people get scammed, I also hate getting scammed myself…but spotting these scams can be next to impossible if you never know what a domain or website really sold for.
Domain auctions, especially live auctions I think offer a reliable way to really see what a domain or website sells for in the open. It would be interesting to compare the average sale price of a .com in a live auction vs. general reported sales. Domain sales services that leave it up to the buyer and seller to simply check a box when the transaction has been completed could be generating erroneous sales data. What is done to really make sure that a sales transaction ever took place? So, I’ll ask the question again, how can you trust sales data? Comment and let your voice be heard!
P.S. Not trying to be a conspiracy theorist here but I do think this is an important topic. Thanks to all my readers yesterday who picked-apart that Flippa sale and exposed what I now think is a $61,000 FRAUD!