A lot of domain investors facilitate domain sales basing their approach on how the real estate market operates.
While there are similarities in this analogy, there are also differences which make the use of real estate an imperfect example to demonstrate how the domain market works.
For example, realtors are licensed professionals that abide to a code of ethics. The domain brokerage or self-brokered market requires no such certification.
Comp sales in the real estate market more or less define a home’s value, but with domains, the figures can be all over the place, depending on the ability of the seller to facilitate a sale.
But whether there are similarities or differences between the two markets, one thing is certain: making a sale requires both sides to agree on the price, and both sides need to be educated on the subject.
When the buyer lacks education on how domains are priced, things can get tense pretty quickly.
A recent inquiry for an investment domain by a real estate professional, gave me the opportunity to engage with them on the subject of pricing. Their offer was a paltry $25 dollars on a domain suited for a multi-billion dollar market in luxury real estate. My quote was in the mid five figures, and the NYC based realtor quickly started questioning my valuation.
It’s easy to ignore such inquiries that hit a wall early on, but in this case I put myself in their shoes. What if a house were listed for a million dollars and the realtor was bombarded by offers in the five figure range? Would that be a price to consider, or even respond to? Would it be ignored, or be treated as a “joke” of an offer?
As I expected, the realtor became very defensive instantly and instead of acknowledging that I had shifted the paradigm into their own domain of expertise, they came back with gloved insults. I informed them that they lack professionalism, and let them know they had just blown any chance of getting this domain from me.
Why would a realtor react in a manner inconsistent with the code of ethics they are trained in? There is no explanation other than ignorance leading them there, to an unknown terrain of investment opportunities – the domain aftermarket.
The bottom line is, that using the similarities between domain names and real estate can be a useful approach when the two markets cross each other. I’m certain that there are many educated realtors out there that honor their code of ethics regardless of their field of expertise. In this case, the realtor’s ego blinded their ability to accept the facts and figures that the domain market operates on.
There are no comps for human behavior, unfortunately.
Having been a Realtor for the last 20 years and a Domain Investor for the 15 years, I have to agree 100% with this article, most realtors have no idea of the value of a lead or the cost of that lead, hence the very low offer of your domain name, when I have sold a Real Estate related domain, I had to show the value based on ROI, example would be coronalistings.com, could a local Realtor dominate the first page for corona listings, and if so how many leads could they expect, on average they would receive 20 plus leads per day.
I filmed a DomainSherpa episode today where I talked about this exact same lack of professionalism on the part of buyers. A sense of entitlement, I called it. The episode should be published within a few weeks.
Richard – I’m glad you’re able to see both sides of the coin! It’s a great example of industry crossover, and you clearly have an advantage.
Logan – Sounds like a show to watch. Entitlement is rampant in every industry but definitely when domain names are involved. Most buyers don’t want to understand or process the logic behind the cost of an intangible asset. It was the same with mp3 music in the past.
These real estate brokers are going to fly right. With an avg commission of 20K they better pull their head out of their ass. With over a 50% turn over rate every 5 yrs there is a realtor house cleaning. Yet domains keep producing leads. Too stupid to differentiate themselves from the pack Realtors pack their bags and move on. Yes and they are going to be straighten out..