One common mistake domain investors make when quoting comps

Domain Name Negotiations

Just like the physical real estate world, quoting “comps” (aka comparable sales) in the domain name world can be a very useful way to help a prospective buyer understand what the market value for your domain name could be.

When I’m in a negotiation, I often use comp – my go-to resource for the last decade has been NameBio since they make it super easy to search for domains that start with, or end with, a word, and I love two-word .COMs so I end up doing this quite a bit.

Recently I was looking at buying a domain name from someone and they sent me over a list of comps, I crossed-referenced it with NameBio and realize they were making what I think is probably the biggest mistake you can make when using comps.

The mistake is…drumroll please. Compiling your comps by performing your search for past sales, and then sorting by sales price, thereby sharing the highest priced names. While you might think this will help you justify the highest price possible, anyone that does a little research will find a big flaw in your logic – the sales could be over a massive time span.

If your comp list is full of names that sold 10+ years ago, all it takes is a simple search for a buyer to figure out that you’re not looking at the average of actual recent sales data. Of course, you don’t have to use only sales data from the last month but I’d try to stay within the same year if you can to really make a compelling case.

All this being said it’s true, most end-users won’t know what NameBio is so they might not be able to figure it out, but if they do some research, it’s not going to bode in your favor. What I think is more compelling is to include the sales date alongside the comp, that way you can actually show that domains like the one you’re selling are selling for the price range your quoting, this year – that’s a lot more powerful.

So next time you’re negotiating with a potential buyer, by all means use comps, just make sure you use sales that happened somewhat recently to really make your case that the price your quoting makes sense now.

{ 1 comment… add one }

  • Bobby June 9, 2020, 12:14 am

    Hi Morgan.
    Advice noted and will be used in the future.

    thanks

    Reply

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