domain pre-purchase appraisal

[findtim]

hi, i'm thinking of buying a 2 word domain, town + service, the service + town is taken and nothing happening, i'll try to get both.
the town is very large and has the population numbers to easily produce @ $40K net for the owner of a bricks and mortar, based on other sites i have trading.
given i intend to build the site and sell as a business what would i expect to be a fair price?
if it came up on drops i think it might go close to $800 but thats only because the market is weak IMO.
the town name is something like wollongong, newcastle, geelong, canberra, darwin, goldcoast etc so the population is there, @ 7 other competitors.
the service is like, seafood, optom ( one i don't have LOL ), florist, doctor, dentist, holiday, motel, weddings, resort.
please don't post $xxxx can you be more $1200 or something
thanks
tim

 

[Cooper Mills DomainLawyer]

hi, i'm thinking of buying a 2 word domain, town + service, the service + town is taken and nothing happening, i'll try to get both.
the town is very large and has the population numbers to easily produce @ $40K net for the owner of a bricks and mortar, based on other sites i have trading.
given i intend to build the site and sell as a business what would i expect to be a fair price?
if it came up on drops i think it might go close to $800 but thats only because the market is weak IMO.
the town name is something like wollongong, newcastle, geelong, canberra, darwin, goldcoast etc so the population is there, @ 7 other competitors.
the service is like, seafood, optom ( one i don't have LOL ), florist, doctor, dentist, holiday, motel, weddings, resort.
please don't post $xxxx can you be more $1200 or something
thanks
tim

that is a hard question to answer without knowing the actual domain, from an investors point of view most town + service domains are usually low value domains (there are exceptions though). The drops show this to be the case - but you are buying as an end user so it will naturally be worth more to you than the price it would achieve on the drops.

If you would pay $800 on the drops, then I would start at $500 and see what the seller has to say (the funny thing I see is that people might pay $5000 for a domain on the drops but if you go and approach them they will offer you $200 - go figure!).

 

[Bacon Farmer]

After a year, you won't care if it was $800 or $1,200, if it nets you $40k.

 

[findtim]

good point baconfarmer but its surprising how difficult it is to convince someone of that even when you have past evidence of proven sales and bottom line profit.
i'd keep it myself but you are then at the mercy of the service.

tim

 

[Chris.C]

Tough one.

Are there a number of potential alternative people you could sell the website to if your client has trouble calculating intrinsic value?

 

[findtim]

theres 7 potentials + 2-3 perimeter potential, who ever i knock off page 1 will want to talk i suspect, it won't be hard to get to organic top 3-4, the PPC would be to expensive to start but definately once up and making money.

tim

 

[snoopy]

If you think it would get $800 on the drops that is probably what it is worth.

Essentially the question is, "How much is it worth overpaying to be able to run a site on it?"

At what point is it worth walking away? I don't think someone saying an arbitrary amount will help you answer that.

 

[snoopy]

(the funny thing I see is that people might pay $5000 for a domain on the drops but if you go and approach them they will offer you $200 - go figure!).

I think people are generally going to offer well under the drop price. What they pay on the drop is the maximum they'd pay, not what they want to pay. Also then uncertainty of whether a name is even going to sell costs buyers money. For example on Namejet I don't bother with the "reserve auctions" because it takes a significant amount of time to evaluate names so I'm not going to bother much if something is unlikely to sell, or even if it has a 50% chance of selling. So the guy offering $200 makes sense, he probably is willing to spend 10 seconds thinking about it.

The other thing is someone doing outbound marketing, buyer's know that is a seller is a weak position.

 

[findtim]

buyer's know that is a seller is a weak position.

if that was true their be no outbound marketing and nobody buying anything, like, electricity, phone, solar, real estate

tim

 

[snoopy]

if that was true their be no outbound marketing and nobody buying anything, like, electricity, phone, solar, real estate

tim

People do outbound marketing because otherwise they'd get no sale. Selling a domain to a domainer via outbound market is very different to selling a phone via cold calling though. Contacting a domainer is contacting someone with a lot of knowledge, trying to sell them an item with little liquidity using a poor method. They know you are desperate.

For domainers this method is usually all done with poor quality domains or by brokers trying to get wholesale prices. There is exceptions to everything of course (like Vodka.com for example which sold for $3million) but mostly the results are not great. Typically people are in turdsville with this method. The problem is the quality of the inventory, if people improved that they would be far better off and wouldn't need to use this method.

 

[findtim]

selling turds v's vodka is obvious, but who wants a portfolio of turds? if you have one its your own fault.
tim
PS we have agreed on $700 + GST+COR

 

[snoopy]

Congrats on the purchase Tim.

selling turds v's vodka is obvious, but who wants a portfolio of turds? if you have one its your own fault.
tim
PS we have agreed on $700 + GST+COR

That is why some people (particularly people who have been in the industry a year or two) use outbound marketing. Because the names are not selling any other way (turd names).

When you hear of people saying this is a good way or selling domains be wary, it is a about the only way of selling bad domains.

 

[findtim]

i do a reasonable amount of time source a good name for new clients, one client came to me and said she had a domain name, it was : somethingforeverymum.com.au !
i asked what she did and she said "high teas" , there were 2 of them in their 50's starting a business for fun and extra cash.
i got them "hightealadies.com.au" as a hand reg of course, a name you couldn't sell but perfect for them and their business is running GREAT, branding is so much better for them.
but unfortunately some people ACTUALLY own domains like this to try and sell them off and thats where it goes wrong.
thats when it becomes a turd.

tim

 

[eBranding.com.au]

i asked what she did and she said "high teas" , there were 2 of them in their 50's starting a business for fun and extra cash.

Even better ...they could buy HighTeas.com.au

 

[findtim]

highteas has been taken long ago, who you searching?

 

[eBranding.com.au]

highteas has been taken long ago, who you searching?

Yes that's right, naturally it's not available for reg fee, but it's still for sale... its one of mine, hence the winking smiley face!

 

[findtim]

ohhhhh
its presently a HUGE business in the wedding market, now is the time to get rid of it.
my client wouldn't want to pay anything, it was hard enough to get them to switch from STFEM.com.au
tim