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As Elliot and I have predicted in mid-February, aftermarket prices of 4-letter domains have finally dropped in what I would call a market correction. According to Reece’s LLLL price guide, sales prices went down 2-16% depending on the domains’ quality and letter combinations. Prices of four-letter .com domains were previously driven by last year’s buyout and flipping among domain resellers, in my opinion. It was no question that prices would fall at some point in the near future. Don’t get me wrong, I still believe that LLLL values will continue to rise, they will just do so at a more reasonable rate that will be less inflated than the weekly >10% increases we’ve seen as of late.
To sum things up, if you’re going to invest in LLLL domains now, be it .com or .net, concentrate on aged domains with higher-quality letters. Also, consider LLLL domains a more risky investment than generic .com domains and don’t count on making >100% short-term returns, as the early LLLL investors were able to rake in. The market for four-letter domains has slowed down and you will be better off keeping the domains and selling them peu à peu in the long run rather than flipping them after a few days only.
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Well Said Dominik!
I saw this coming as well and offloaded all of my lower quality LLLL.coms (1850 of them) between mid-January and mid-February. Some questioned my logic at the time, selling out at an average of $40 apiece on a commodity which at the time was still rising at the time… It couldn’t of course keep rising at the rate at which it was and I was fairly certain there’d be a hiccup before the $100 mark was reached, which indeed there was.
I’ve since diversified into higher quality all premium LLLL.coms, LLL.coms, and LL.ca. Now that this market has matured a bit, I think a diversified approach is necessary. As I’ve told many domainers already, the days of “get-rich quick” profits on LLLL.coms are over. They’re a long term play now and must be treated as such if domainers want to be successful in this market.
Long term the LLLL.com’s will increase in value as many more people enter the domain name market.
Sure every domain name ext be it .com or otherwise will drop down in value now and then.
Damir, you must not forget that the rate at which LLLL.com prices rose was way too high. That’s why it had to slow down at some point, although many LLLL domain investors did not want to see this coming.
Indeed the growing rate was meteoric and demand for lower quality LLLL.com has slowed down a bit which caused a slight drop in prices as most newcoming LLLL investors prefer the lower risk high quality LLLL.com domains.
I think eventually better quality LLLL domains will go up in price and drag the lower quality ones behind.
When I’ve researched it a month ago I’ve found that most end user sales were for not premium 4 letter domains, some we’d even call crappy. So statistics show that related to their price the crappy LLLL’s have actually better end user potential
You might be right Dominik, but I do wonder to what extent the wider economic environment is influencing people.
Are sellers thinking that with a possible world wide recession on the horizon that now it is time to sell? Are buyers less confident at the moment because of gloomy economic predictions and not paying extravigant prices for these particularly speculative domains?
I don’t know what the answer is but I am not 100% sure that a ‘natural market correction’ is the only factor influencing prices.
It is right that the recession is one possible factor causing lower domain sale prices. This is a phenomenon affecting the domain name market in general. But certain domains are more vulnerable to this than others.
I am pretty sure LLLL domains belong to the group that is more vulnerable to fluctuations in value due to the fact that they don’t generally possess any generic name value as keyword domains do. Most four-letter domains do not receive much type-in traffic, either.
Still, the rate at which LLLL prices rose was inflated because of flipping among domain investors; monthly price increases of 30-50% are neither normal nor good for the market in the long run. It was only a question of time until this rate would start to fall. That’s not a bad sign, in my opinion. It shows that the LLLL sub-market is about to mature as well, and to grow at a more reasonable rate.
Too many buy-outs happening at the same time and late investors feeling like they missed the boat on LLLL.com, bailing and putting their money elsewhere, hoping to get the ROI that LLLL.com had… maybe!
So where does that leave the average “joe” that has a 100 LLLL.coms and 100 LLLL.nets?
Are the pros suggesting that everyone dump there double and single premiums? This will lower the price because of supply and demand, but eventually big players will be sitting with thousands of names and the price will only go up from there. If I was a betting man, (and I am) I would easily say that LLLL.coms and .nets should easily stay on a 50 percent incline for the next five years.
Average LLLL.coms
$60 year one
$90 year two
$135 year three
$200 year four
$300 year five
What would you bet on?
I’m well below the “average” joe domainer, but I’m going back into pre-LLLL.com craze mode. All my average to good LLLLs, net and com, are going in the freezer, or I’ll flip with equal name to just extend the reg time.
There are other niches people are paying for giving good payouts, even from reg fee. No sense flipping at today’s $50 having bought at $30-40.
I think the big players are already sitting. Now we’ve got scraps and we’re talking in years again for good ROI. Ahhh, how I miss January!
With a lot of these LLLL.com and .nets being offloaded, there have truely been an upsurge in new domainers entering the market. So the trough that was predicted and the level the market finds itself is not sustainable therefore i am confident in saying that the market will rise even faster than who you have determined above. I have just purchased jyro.net for reg fee. This is a high level LLLL and very brandable. So will be holding on it like so many others!!!