Inman

Real estate domain-name auction fizzles

An auction of 2,600 real estate-related Web site domain names was called off before it could begin Thursday, after auctioneers determined that the few bidders who showed up weren’t prepared to open bidding at the reserve price.

"They knew from the bidders in the room, they wouldn’t start at the reserve, and that’s when they decided to move to the next step" — private negotiations, said Craig Harrison, the Colorado-based real estate broker who registered the domains more than 10 years.

Harrison declined to reveal the reserve price. But he said the auction generated considerable interest in the domains. Negotiations will continue with potential buyers, and Harrison said he also has the option of pursuing "a multitude of joint venture" offers.

The setting for the auction was the ritzy Fairmont hotel in San Francisco, with the venerable Alabama-based J.P. King Auction Co. handling the bidding.

Harrison said publicity for the auction generated 300,000 e-mails and 5,000 visits each to two Web sites where information about the auction was posted.

"I have never met such a professional crew of people — if anyone could have done it, they could have," Harrison said of J.P. King. But the real estate industry, he said, "is not a group that’s used to purchasing (domain names) through an auction."

Scott King, executive vice president and principal of J.P. King, said the auctioneer continues to serve as the broker for the domains, and is in private negotiations with potential buyers.

"There’s not going to be another round of bidding, or sealed envelopes — it will be first-come, first-served basis," King said. "The first group to come in with an acceptable offer will get the deal."

Harrison and J.P. King are touting the collection of "geotargeted" real estate domain names as an opportunity for a company or companies to build a network of Web sites that would be highly visible to Internet search engines.

Most of the domain names for sale included geographic location, such as a city, followed by "RealEstateListings.com." The collection included more than 2,300 domains incorporating the names of all major U.S. cities and nearly every city with a population of more than 35,000.

Harrison and others say domains that incorporate keywords consumers use when searching for homes for sale are becoming scarce. But some skeptics say it’s still possible to build a network of geotargeted domains from scratch, and that the content that’s posted to Web sites is the key to achieving high search-engine rankings (see story).

Victor Lund, a partner in the consulting firm WAV Group, is among those who think that coupled with the right content, there’s considerable potential in the network of domains Harrison has assembled. The auction was an opportunity to test the market, he said. …CONTINUED

"You never really know the value of something like that until somebody tells you," Lund said. "If you have a domain like Toys.com, its value for retail is obvious. This almost needs a business plan around it."

Harrison or the eventual buyer of the domains might form a joint venture with a partner that could provide content to drive traffic to the sites, for instance.

Lund, who has performed consulting work for Harrison but had no vested interest in the auction, has written a paper on the subject, "Geo-Domain Targeting Trending to Assist Real Estate Marketing" (see story).

One factor complicating the auction was that the domains were offered in 61 separate lots, to allow bidders to buy domain names in a state or group of states. The complexity of the process required that bidders attend the auction in person, rather than submit bids online, organizers said.

That strategy — intended to not only give bidders more flexibility, but to drive up the price of the domains as a whole — apparently backfired. Before the auction even began, it became apparent that the bidders who did show up were interested in buying all or nearly all of the domains, not individual lots.

"The bottom line, from an auctioneer’s perspective, is we had too much supply, and not enough demand" for the individual lots, King said.

So Harrison and J.P. King decided to reveal to bidders what the reserve price of the domains would be as a package. When none would tender a bid at the reserve price, Harrison decided not to proceed to an "absolute auction" that would have obligated him to sell the domains to the highest bidder.

With the auction called off, King said the domains remain on the market, much as if they were a home for sale.

"We are the listing agent, if you will, and we’ve identified parties with interest (in the domains) and are bringing them to the table," King said.

Although J.P. King’s first foray into domain-name auctions didn’t go entirely according to plan, King said the firm plans to do more.

"During the 60 days we were aggressively marketing this (auction), I was surprised at the number of domain-name owners who contacted us" about conducting auctions on their behalf, King said. "We viewed this as a test … we will be doing more domain names. There is a need for that." 

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