Recently I have seen many articles published online about domain name trading as a viable investment. The basic idea is to buy a (reasonably good) domain name that's not already taken, then auction it at domain auction websites, profit, then go back to step 1.
Naturally, all "get rich quick" schemes are to be taken with extreme caution, especially if it seems to involve minimal risk to the investor. However, taking a quick look at GoDaddy's recent domain name appraisal tool, it seems that some domain names might indeed constitute a good investment. An example is myquickexample.com, which is currently listed as being worth 565 USD, and GoDaddy sells it to you for 1.31 USD, thereby yielding a potential investment return value of ~43 000%. There are hundreds/thousands of similar domain names with very high potential returns, according to appraisal tools.
Obviously something is amiss here, but I can't quite get my hands on it.
- Is GoDaddy lying about the real value of the domain name?
- If not, then what prevents me from buying it for 1.31 USD, then re-selling it GoDaddy for 565 USD?
- Is it very difficult to sell a domain name?
- Are commissions so high that the investment is not worth it?
What are the other benefits and risks of trading domain names?
