DNJournal is reporting that Q1 2008 sales blew away Q1 2007 sales in terms of average sale price and dollar amount of domain sales. This is good news for the domain industry and would indicate that the domain economy is in good shape. A few weeks ago, I was one of the people who stated that the domain industry was in the midst of a slowdown. I still feel that way today, despite the positive news.

I believe that it is more difficult to sell second tier domain names than it was just a few months ago. I am not talking about names like NewHampshireCheapInsuranceQuotes.com or something crazy like that. I am talking about very good names that aren’t top tier names like Funding.com or Widgets.com. From my experience, people aren’t spending as much on the second tier names than they were previously. If the name doesn’t fit into someone’s development plans or doesn’t make strong PPC, many buyers are reluctant to spend the money on these names.

I have also found that there are less buyers now than there were a few months ago. Unless a domain name is on the market at a great price, it is likely to not sell without a strong price drop. Many people (myself included) are focusing on developing their domain names rather than acquiring domain names. Sure people are buying names if the prices are great, but I see less people spending large sums on good domain names, focusing on what they have rather than new acquisitions.

One source of high value sales is on the drop auctions. As great as the value of these auctions seem, there aren’t a ton of people spending big bucks on these auctions. If 2 or 3 of the high value bidders decided to buy less dropped domain names, we would see a huge drop in sale prices. As they say, all it takes is two people to make an auction. If one bidder drops out, the result will be a significantly lower sales price.

Although I still believe we are in the midst of a market slowdown, I am bullish on the longterm prospects of the domain industry. I continue to buy domain names for development, but I think it’s important to maintain a strong cash position.

I just bought a mega geo domain name, which is currently in Escrow and will be announced next week. I am looking to raise capital to fund this purchase. Therefore, I am reducing the price on IsraelVacations.com.

IsraelVacations.com is now on sale for has sold

Here are a couple of things to think about. Israel is currently promoting its 60th anniversary and encouraging people to take a vacation in Israel in 2008. Tourism is one of the biggest revenue generators for the Israel economy, and tourism will remain strong.

Additionally, here are some comps for similar names that have sold recently:

CaribbeanVacations.com $130,000
EuropeanVacations.com $85,000
VacationWorld.com $45,400
VacationPlans.com $35,700
IrelandVacations.com $17,250
AustraliaVacations.com $16,000
AsianVacations.com $15,000
VacationGetaway.com $14,640
VacationAlaska.com $12,750
BudgetVacations.com $10,300
CanadaVacations.com $9,600
FijiVacation.com $9,200
BahamaVacations.com $8,188
GlobalVacations.com $7,750
SurfVacations.com $7,522
SwitzerlandVacation.com $7,500

Rick Latona makes some good points about why domain owners should consider selling some of their domain names:

“I think that many domainers out there have only paper wealth. I’m not speaking of Frank who has both. A good deal of domainers are sitting on names that are worth a pretty penny but generate little income and they refuse to sell the name. I just don’t see the sense in that.“

When I was in college, I opted to not apply for financial aid, as my father’s business inventory would have been counted as assets, and we probably would have been denied. Unfortunately, we couldn’t pay for my college education with curtains, just like you can’t pay for a home or a car with a domain name. Sure, he could sell the curtains and pay for college with the proceeds, but if nobody is buying a particular type of curtain, it’s just worth its value on paper.

I am not telling you to go out and sell your domain names, but I have said before, the importance of having cash on hand is immeasurable. Check Rick’s Blog out when you get a chance.