When I am trying to buy domain names from registrants who have held them for many years, I am frequently told that their domain names are worth more than I am willing to pay. Perhaps they have turned down better offers in the past, or maybe the discussed the value of the domain names with a broker or someone else. Whatever the case is, some people believe their domain names are worth more money than I am willing to pay.
In all honesty, they are probably right. I would not be willing to pay $25,000 to buy a domain name as an investment if I believe it is worth $25,000. Obviously I can not pay an amount of money that I would hope to get if I was selling it myself. So why should someone sell a domain name to me for less than it is worth? Liquidity.
Here are Nat Cohen’s comments about domain investors who bring liquidity to domain registrants. I believe Nat’s company recently acquired Owen.com and Higgins.com, and his commentary is in the wake of those deals:
My recent domain acquisitions were long held by end-users and first registered between 1993-1996. Most premium domains were first registered 25 yrs ago or more. Many of the original owners are ready to retire or their businesses have been sold. These domains are turning over now.
— Nat Cohen (@domainarts) June 4, 2020
An unheralded role that domain investors play is to provide liquidity. I am prepared to hold for a decade or longer. But an owner may need to sell now, does not have an end-user buyer knocking on their door and cannot wait years for a sale. Domain investors solve that problem.
— Nat Cohen (@domainarts) June 4, 2020
Domain names are notoriously illiquid assets in a thinly traded market. Higgins.com, for example, might be worth $150,000 to a well funded business that has “Higgins” as its branding. That valuation is not firm, and it could take many years to achieve that result. Maybe Nat will get lucky and sell in a month. Maybe he will hold it for 20 years without a good offer. Whatever happens, Nat has provided liquidity to the registrant and has another great domain name in his portfolio.
Source: (https://domaininvesting.com/)
