Advisory: Sell Your 3 Letter Domains
June 7, 2008 · Print This Article
There is a mantra among domainers: “shorter is better.” And to a large extent, when speaking about domain names, this is true (although some say that it’s not how short your domain is, but what you do with it, that matters).
Following this mantra has paid off handsomely for many domainers. The value of three letter dot com domains has soared in recent years. According to the leading site for tracking prices for 3 letter domains, 3Character.com, the minimum wholesale price of an LLL.com has gone from $3,700 to $7,600 in the last year. That’s more than doubling your money in just one year – a rate of return that’s hard to beat.
What’s more, this year, while much of the rest of the domain market has been flat, declining or even collapsing, the 3 letter dot com market continues to do extremely well, likely outperforming every other segment of the domain market.
Generally, I like LLL.com domains. In addition to their historically high rate of returns, they are attractive particularly for novice domain investors. While understanding and valuing generic domains is complicated and can take a lot of time and experience to understand, the three-letter domain market is fairly straightforward to understand in comparison.
In addition, three letter domains offer liquidity that most other domains do not. If you need to raise some money, you can put a three letter domain up for sale, and get a decent price for it in days, rather than weeks or months.
As well, there’s always the potential of a big payoff from an end user sale. If your three letter dot com contains decent letters, chances are that there is a company out there for which those letters form an acronym. Usually end user sales of three letter domains are for a solid five figures.
In all fairness I should also point out that there are some risks associated with owning 3 letter dot com domains. Companies have been aggressively launching UDRPs on these domains. And three letter domains tend to be particularly targeted for theft because of their liquidity and popularity.
Three Letter Domain Advice
Despite all of these good things going for them, and despite the fact that I generally like three letter domains, I recommend that you start selling off your holdings of these names. This does not necessarily need to be done immediately, but should be done gradually over the next few months.
While there are a lot of good things to be said about three letter dot com domains, the current market looks significantly overheated. It simply does not make sense that this one segment of the domain market significantly outperforms the rest of the domain market, and even does so much better than quality generics. There are no fundamental market reasons for it. While LLL.com domains are great, one can’t say that they are significantly better than good generics.
I don’t think that the situation will change overnight. The LLL.com market seems to be going strong and I expect this strength to last for a few more months, at which point there will be a market correction.
In addition to this, over the course of the next year, given the recessionary environment, there are likely to be a lot of good bargains to pick up. It will pay to be in a strong cash position. Selling off domains that are overpriced in the current market is one way to raise that cash. LLL.com’s fit the bill nicely.
Think that three letter domain prices can’t collapse? After all, supply is fixed and demand seems to grow each year. However, believe it or not, there have been price crashes in three letter domains before. For instance, in April 2007, three letter .us domains were going for a minimum wholesale price of $110 each. By April 2008, their minimum wholesale value had fallen to $45, and even now their prices remain stuck at that level.
In short, I have nothing against three letter domains and in the past these have been a solid investment. However, the LLL.com market appears to be significantly overheated. It is significantly outperforming the rest of the domain market and there is no fundamental reason for this. While this will likely continue for a few more months, it can’t continue much longer than this before there will be a correction and LLL.com prices will drop. Make sure you aren’t holding any LLL.com’s at this time; use the funds you free up to bargain hunt for recession induced domain fire sales.
Written by admin · Filed Under Fundamentals
Great post there.
When it comes to .com’s VS country code domain names the .com’s will sell at a much larger $$ amount.
Let’s say Computer.com sold for $2 million + and now in the upcomming Paris Moniker auction there is a Computer.hn domain name for sale which will sell for less than the Computer.com domain name sold for.
I think 3 letter.com’s $$ value will increase in the next 5 years 150%. (demand for those 3 letter domain names will be large as many more Company’s will buy those domain names).
@Damir – I agree with you.
@Jeff – You may be right, the market may correct itself at some point when it calls for correction. LLL.com’s are still undervalued. If you’re currently buying domain names with dollars, it only seems prudent that until the dollar shows signs of rebounding that the intelligent internet investor would be wise to hold on to their “highly liquidable” assets. To those of you who get the UDRP boogie man creeping up to your door – DEFEND YOURSELF! With proper counsel you can establish a strong case and maintain rightful ownership of your domain name. Don’t just give your internet assets away (or sale out due to fear.) There are plenty of savvy domainers, and in-house corporate counsel legal teams that would be happy as hell to get your LLL.coms at paying current market value or by judgment. One day, maybe there will be just as many knowledgeable law firms out there ready and willing to help domain owners defend their names. Great post Jeff, and as always, it never fails that I learn something new when I read your blog.
While I agree that the LLL .com market is overheated, I think some of their increasing value is justified as more and more LLL .coms are bought up by end users that will develop and hold them. That, of course, keeps fewer LLL .coms on the market for domainers to trade back and forth, and when many newer LLL .com investors want to buy up LLL .coms, their value naturally increases.
At the end of the day, you still can’t beat a one-word generic, category killer, or targeted geo domain.
First of all I don’t like that you compare LLL.com with LLL.us. LLL.us were just bought out because LLL.coms were growing in price, there was no “normal” demand for them, just a pure speculation…
On the other hand I agree that LLLs are growing too fast in the past years, I hope and think that they won’t crash, but their growth will surely slow down…
People who bought them last year and are selling now, are very smart…
@Oskars – The point of the comparison is just to show that three letter domains can go down in price. Yes, people who bought them last year and are selling now are doing really well. On today’s DNJournal, Ron reported that GXD.com sold for $8,400. Ron said: “To show you how three-letter .coms have gone up in the past year, the previous owner had picked up GXD.com for $3,600 at Enom’s Club Drop last July, so they turned a $4,800 profit in less than 12 months.”
Hadn’t seen your blog before – great to discover it!
I know what you mean. I have Fda.com for sale for a client but we are holding out for $3 million. I had a few offers over a million but we are in no hurry to sell until the right buyer finds us.
i m having c-j.in . . . .any idea how much can it earn me ??
What do you think about 6wn.net (With 1500 backlinks)
and
elisions.com ( 25000 global search volumes for the keywords elision and elisions,)
You can see a list of available three letter domains at http://3ld.biz/ for many popular extensions.