I’ve seen it happen over and over and over again. Ten people bid on an expired domain and then two people battle it out bringing the price over-and-above what any end-user would realistically pay for the name. It’s a weird phenomenon but it happens outside of the domain world as well, it’s an auction mentality and it’s why auctions can perform so well for sellers in some cases.
The challenge with domains is that people can often confused the final sales price of an expired domain in auction with the wholesale value of the domain. In some cases this is true but in many cases it just takes two persistent bidders to bring the price way up and out of a range that wholesale buyers should be buying in.
What happens next is what can turn an investor into a collector. So you have a name that you paid $1,500 for and you now want to sell it for $3,000+. You think it’s worth $3,000+ because heck you paid $1,500 for it in auction and that must have represented the wholesale price.
The problem is, the domain really isn’t worth more than $1,000, you overpaid, you paid more than retail, but you didn’t know it. Now fast-forward ten years from now and you still have the name in your portfolio and you’re sure that $3,000 buyer must be out there somewhere. The moral of the story is a simple one but one that we all need to remind ourselves of.
It just takes one person to battle with you over a domain to bring the price up 10x from when you first started bidding. That one person may not have ever made a dime with domains and have no idea how the industry works…but they can turn a $200 domain into a $2,000 domain and take you along for the ride.
Been there before? Feel free to share your experience(s) below.