Why Most People Will Lose Money Trying To Buy And Sell Domain Names

dot-com

I started buying and selling domain names back in 2007. When I started people told me I was late to the game, all the good domains were taken and I wouldn’t stand a chance. Those people were partially right, most of the good domain names were taken, where they were wrong about is thinking that the only way to buy domains is to hand register them.

The vast majority of domain names that I have sold over the years are domains that were already taken, I had purchased them in the aftermarket. This means I either bought the domain name directly from the owner or through an aftermarket domain sales site like NameJet or Go Daddy Auctions.

namejet-logo

Sure some of the domains I’ve sold have been hand-registered, it’s awesome when it happens, but those sales are not the norm and I could not have built a great portfolio out of hand-registered names. Earlier this year I did sell a name I hand-registered, ZenVodka.com for $4,890, I paid under $10 for the domain. While that may sound great, that happens maybe once a year it’s not a regular thing for me.

Most of what I sell is names I paid more than $10 for and someone or a number of people owned the domain before me. Which leads me to why the average person will lose money trying to sell domain names.

I find that most people trying to break-into the domain space head to a site like Go Daddy and start making things up trying to find what’s available, that diamond in the rough. They’ll typically register 50-100 domains and then list them for sale on marketplaces like Sedo hoping for a huge return.

A year goes by…no sales. Another year…no sales. After a few years they say, “well that was stupid, all the good names are taken and I wasted thousands of dollars!” Yes – you did waste thousands of dollars, but it’s not because nobody is making money with domain names, just look at DNJournal.com’s YTD sales, domain names are selling like crazy…just not random domain names that people are thinking up.

DNJournal

Yes, you could get lucky, but anyone that shares a story like my ZenVodka.com sale and tries to play that off as them being a “successful domain investor” is probably trying to sell you a story because that’s not how to build a real portfolio of investments. Some people invest in stocks, others in real estate, I invest in domain names, but just know if your portfolio is all domains you made-up yourself, you’re probably not really making investments, you’re playing the lottery, and like most gamblers, you’re going to lose.

If you’re in this situation you have two paths to take, one is to give up, the other is to learn. If you’re looking to learn there’s no need to spend any money, just check-out a domain forum like DNForum, NamePros or DomainState and make sure to read Domaining.com to keep up with all the great content in the domain investing blogosphere. Don’t buy, take a step back and learn, ask questions, and you might just find that there is a path to make money, it’s just not the same path that you’ve been on.

{ 6 comments… add one }

  • Antonio May 16, 2015, 7:20 am

    Good post, Morgan, but I think it’s even simpler than what you described. Those who indulge in the new gtlds are the ones who will lose money in both buying and selling domains. These are a sure way to watch your investment diminish rapidly.

  • Leonard Britt May 16, 2015, 9:21 am

    While I believe there should be transparency in the industry, I also believe the reported sales are not representative of what the typical end user is willing to pay for a domain name. Thus, investors are led to believe end user prices are much higher than they normally are – leading to lost sales. On the other hand, low $XXX sales don’t pay for too many renewals.

  • Jacek May 17, 2015, 1:01 pm

    Domaining is an art. It takes years to be good at it. It also takes patience (among other skills) and knowledge. After a few years of being a domainer (started in 2010) I make sales that give me 10-100 x ROI/year but these sales are not a coincidence: it takes knowledge and practice to succeed in domaining. Knowledge is money.
    Lack of knowledge and patience has costed me over $100k in losses at the beginning , which I am still trying to recover from (because I did not have either knowledge nor patience at the beginning). I wished I listened to professionals like Morgan more. Hope You learn on my mistakes

  • Morgan May 17, 2015, 7:43 pm

    @Antonio – thanks, I appreciate the kind words. While gTLDs definitely do represent a very high level of risk, hand-registering .COMs can be equally risky if you don’t know what you’re doing.

    @Leonard – excellent point and 100% agreed, it’s always important to remember that reported sales make up only a small fraction of the sales that take place.

    @Jacek – glad to hear you are sticking with it and thank you for the kind words!

    • sagar patel November 18, 2016, 10:12 pm

      Hello morgan i found that you are prevoius owner of zenvodka.com so i contact you i have a perfect domain name for your business (brandvodka.com) easy to remember would you like to buy it?? If you intrested plz contact this email :patoliyasagar111@gmail.com we can discuss price there .thank you

  • Theresa Essid August 11, 2015, 10:09 am

    Thanks for the info. I registered the above name because I think it would be good for many different uses including reselling. I have not tried to sell because I know too little about the market. I’ll try for more insight before continuing, thank you.