When it comes to buying domains, selling domains, developing your domains, or otherwise monetizing your domains, be careful of whom you seek advice from. As great of a resource as domain forums are, many domain name investors spread terrible advice about what domains are worth, how to go about selling a domain, where and who you should use to broker your domain, and how you should go about monetizing your domain. The 80-20 rule, when applied to the domain name world is the realization that 80% of the domain name investors out there don’t know what they’re talking about, whereas the other 20% are very helpful and well worth listening to most of the time if you’re new to the domain industry.

Let’s start first with domain appraisals — ask yourself if a person may have hidden motives behind giving you an appraisal on your domain or asking you to get an appraisal on your domain. In many cases, domain appraisals are asked for from the owner of a domain appraisal company — he’s not interested in your domain, he’s interested in your money! Worse still, these domain appraisals are rarely accurate, so you’re no closer to understanding what your domain is worth. When asking for domain appraisals, a couple rules to follow are to never pay for the domain appraisal and never take a single domain appraisal as anything more than one domain name investor’s opinion. Seek out multiple domain appraisals by asking for a domain appraisal on a popular forum such as Namepros or DN Forum. A popular way of mine to get a better idea of what my domains are worth is to pretend I’m interested in selling them — put the domains up for sale in the “Make Offer” section of domain forums and observe the offers you get. If you’re still unsure about whether you’re getting the most for your domain that you can on the domain aftermarket, consider placing the domain on auction at a popular domain auction venue such as Sedo, AfternicDLS, Godaddy Auctions, or even eBay. If you decide to use eBay for your domain auctions, be sure to make sure you read the information on my blog about selling domains on eBay and how to make sure you get as much for your domains on eBay as possible.

This is something most domainers already know but for any new domainers reading, please be careful when using sales comps. I was reading Namepros today and came across a post about someone who paid $2500 for an LLLL.com. Now as much as I like LLLL.coms, there really aren’t a whole lot out there that are worth this price.

If you look at DN Journal, you’ll see that each week there are a few LLLL.coms in the list. The thing you have to remember when browsing DN Journal is that they only list sales above $1000, so the LLLL.coms you see listed on DN Journal aren’t necessarily a good representation of what they would normally go for. More often than not, they tend to be what I would lump in the “extreme outlier” / end user category. With keyword domains, there are far more that are worth $1000+ and so it’s much easier to use a resource like DN Journal to get an idea of what a certain keyword domain may be worth — there are still end user sales here that are for more than domainers would be willing to pay, however by looking at several months of DN Journal weekly sales reports, you can get a pretty good idea of what a keyword domain is likely worth when considering the price it went for and applying other metrics. You can read all the DN Journal sales reports you want and not be any closer to understanding what your LLLL.com is actually worth because of that $1000 minimum which is in itself already an extreme outlier for the large majority of LLLL.coms.

Aside from pronounceable LLLL.coms, it’s a fairly safe bet to suggest you’re overpaying if you spend $2500 on an LLLL.com. In this particular case, it looks like the domainer might be somewhat of an end user himself — I’m not really sure what to make of it as he asked other domainers what they thought it was worth but then did go on to mention that the reason he bought it was that it was the closest thing to his forum username that he was able to buy.

Another area new domain investors are misled is with threads on domain forums (or on other domain name websites) promising them returns on their domain investments which are impossible to guarantee. What I’m talking about here are the domain investors who push domain name landrushes and domain name buyouts on other domain investors — while these occasionally work out (I made about $70,000 within about 4 months following the LLLL.com buyout), most domain investors lose money. As I always tell domain investors — do your own research. It’s your money, so don’t let anyone else tell you how to make your domain investments. It’s fine to read and even listen to domain advice, such as that which is provided on this blog, however be sure to then do your own research and make sure that any domain investments that you make are the right domain investments for you. There are many variables which could impact whether you should be investing in a certain domain name segment or another — for example, your need for liquidity. Certain domains are much more easy to liquidate than others. For the most part, it’s generally difficult to quickly liquidate for top dollar both very cheap domains and very expensive domains. The sweet spot is probably domains in the low $XXXX range from what I’ve seen — it’s a price which isn’t too high, so as to be affordable by most domain investors, yet it’s a price high enough that if you need some emergency cash, it’ll make a difference. Suppose in example you had 100 domains worth $10 — you’d now have to sell 100 domains to earn that same $1000 that you could have earned by selling a single $1000 domain. It’s not hard to see which domain investment is more liquid. Liquidity aside, we next need to consider how important these domain investments are to us. If you have a good (guaranteed) job, a nice stock portfolio, and no debt whatsoever, you’ll likely be less concerned about whether you lose a small domain investment than if you’re working a 9-5 deadend job for minimum wage, without benefits, and without any guarantees you’ll have a job tomorrow. While I haven’t surveyed domain investors, I would imagine most fall somewhere between those 2 extremes. I would imagine it’s obvious but I’ll say it anyway for any new domain investors (which are often referred to as “new domainers” in the domain business) reading — the more important your domain investments are to your financial well-being, the more conservative you should be with your domain investments. The converse isn’t necessarily true — many domain investors are well off but still don’t want to lose money on their domain investments, no matter how small.

So, what would we classify as a conservative domain investment and what would fall into the aggressive/high risk domain investment category? I would argue that no domains (and not really any stocks either) should be classed as conservative investments with how much uncertainty at present — if you really need the money to be there tomorrow, put it in your bank in preferably a high yield savings account or something else which is guaranteed. One step up from that would in my opinion be strong keyword which produce revenue. Many top domains have a lot of end user potential and the possibility to form a brand around, however if you need or think you may need money, you’ll want to go with not only a good domain but also a domain which is paying dividends - be it through domain parking, through the domain already having been developed, or through you buying the domain and developing it.

Related posts:

1. Why You Should Ask For Domain Appraisals
2. 9 things I hate to hear noobs say when domaining
3. Some LLLL.com Data