8 Reasons Why You Should Sell A Domain At a Loss

May 16 2010

We all go into a domain purchase with the hopes of making more money on the domain than has been invested.  But that doesn’t always happen.  There are times in all businesses, even domaining, when you need to take a loss.  Domains are like stocks, sometimes they are sold for profits and other times you have to make the decision to hold or to sell at a loss, here are ten reasons why you would take a loss.

1.  Cash flow: Time is money.  In order to take advantage of good deals you always need have cash available.  If your money is all tied up in domains then you may miss an opportunity.  It’s common knowledge that all good deals come about when you have no cash

2. Your domain has cobwebs: Nobody has shown interest in years.  It generates $1.14 a year in parking and the whois lookup is 1 a month.  Time to get what you can for the domain.

3. You paid too much: We’ve all done it.  We’ve paid too much for a name.  The value is not determined by what YOU paid for it but rather what SOMEONE ELSE will pay for it.  Time to come to the realization that you most likely will never get back your money and you should sell it for a loss

4. Raising Money: Similar to cash flow, there are times when you have a another name to buy or another project that presents itself as a solid investment.  At this point it’s acceptable to liquidate names at less than cost in hopes of gathering enough money for one solid name. The old sell 10 poor names to buy one solid name method.

5.  Renewal fees: Half of the domains in most people’s portfolios aren’t even worth paying renewal fees (I know, I know, not yours).  In some cases “selling” for a loss isn’t actually a sale at all but rather not paying the $7 to renew.

6. Take a chance on an auction: You have to roll the dice every once in a while and put a domain at an auction with a reserve less than what you paid.  Lower reserves draw more bidders early and therefore draw more attention early.  More bidders put your name at the top of the list at an online auctions.  More bidders draws more bidding wars.  A name can go from $200 to $2000 very quickly as bidders get excited, where a $1000 reserve may have caused people to skip it.  This scenario can backfire as well as someone gets the name for opening bid and you lose money.  That’s life.  No risk, no reward

7. Broker Fees. Selling a domain for $100 more than you paid and then paying $200 broker is a loss.  Close enough.   If you’re trying to get out of a name it’s ok to take a broker fee loss because most likely you received the fair price and you would have never received it if the broker hadn’t help you find a buyer.

8. The revenue is gone. Many traffic names lose their value with time.  Unfortunately you caught the tail end of the traffic and the traffic driver has faded out.  Time to find a sucker that still believes they can milk this thing.  You know the stats and realize that you need to cut your losses and sell while there is a tiny bit of value left.

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Outsmarting the Dumb, Outworking the Smart

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  1. Luc

    Nice article.

    I went through this exact process about a month ago with 2 DVD domains of mine for which I paid $7K last year. I had received virtually no offers to date and don’t particularly like to have $7K to $10K locked up in an overpaid name that is generating no profit whatsoever. So I sold at a loss a few weeks ago at $5K. The funds were immediately re-invested in better quality names, that I have already sold at a great profit ($11K). So a good ending after all.

  2. Frenchy

    To date, in 15 years on the Net….I have never sold a domain at a loss, unless you include dropped domains.

    However, I do think your advice is sound for many domainers. I always traded on really high quality domains so I think that is why I have never needed to sell at a loss.

  3. brian k

    How many who is searches do you like to see per month.
    I have a few that get 10-20 per month and dont seem all that valuable to me.
    i have one site addsiteshere.com i used to use for automating my link exchanges.
    This domain gets 15 or so who is looks up per month.
    If you are getting a lot of who is lookups do you put this domain is for sale in the who is record?

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