Lesson Number 324: Check to See If the Domain You Are Buying Has Been Whored Out

Mar 20 2013

We all want a virgin domain.  A domain that was owned by non domain investor. A domain that has never been offered for sale but has some age.  Those domains require a lot of leg work and a lot of time.  The reward is the untapped possibility that you are going to sell it for a great return because it hasn’t been priced or had a value placed on it by the general public.

While it doesn’t mean that a domain that has been offered on forums and multiple brokers is tainted goods, it does mean that either the previous owner wanted too much or the buyers weren’t interested.  You will eventually find out and that’s the risk.  I easily recognize the names that have been passed around because I read every domain of every auction and every newsletter and have a calculator, super sharp, elephant memory mind.  I try and judge who was trying to sell it and where it was being sold to try and make a judgement of whether I believe I can do better.  But there are times that I can’t and that’s when I have to pass.

There are some damn good brokers in this industry and if they have a name that they can’t move after a month there is only one way I am going to buy it and that’s for a lot less than listed.  It has to be less because their reach is so much greater than mine.  They’ve offered it to a large list of clients from corporations to big domainers.   If they all passed then what do I have that they didn’t that will help me flip the name?  Nothing.  My uncanny ability to detect smells serves me no purpose in this case.

If you follow horse racing you’ll understand this analogy.  When you own a horse you have two types of races.  Allowance races and claiming races.  Allowance races the horses simply race for money. In a claiming race a buyer can buy your horse for that price BEFORE the race and at the end of the race you own it.  The competition is easier in claiming.  There is easier money to be made.  As a horse owner some times you drop a horse down and take a risk that it won’t be claimed in hopes of easy money.  You also can play some games like put it in allowance and then drop it into a high claims race.  Makes people think that it might be a classier horse trying to steal a few easy win dollars so they try and scoop it up.  When in reality you are trying to trick them into a buy.

You can play those same games with domains.  Send it to a broker with a real high price, doesn’t sell and then you put it up for auction at a much cheaper price.  “Wow, that was listed at $8K and I stole it for $2200” says your new buyer.  There is no tricking a knowledgeable domain investor but there is such thing as working the market.  And that means working the market without having the domain splashed across every publication.  Once people see it listed a few times they assume that it’s used goods and that if it could be sold, it would have been.  The point of this article is not to keep you from buying names off Namejet or brokers, but to merely check the history of the domains you are buying. Who owns it and why are they selling it.  If a high quality broker has worked the name then you either need to have better contacts than the broker or more patience.  I have purchased many names at the high end of the scale after it has been “whored”.  Because I knew it was a fantastic domain that may not have a buyer now but eventually one will come and I have patience for super high quality domains.  Things always work out in the end for good domains, and if they aren’t working out, then it’s not the end.

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Outsmarting the Dumb, Outworking the Smart

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