We just sold our home and it made me think a lot about the domain name market.

House sign with "sold" notice

We recently sold our home in Austin. I can’t help but compare the residential real estate sales process to domain names.

Let’s start with observations about the Multiple Listing Service (MLS). The idea is that there is a central repository for home data — both for sale and actual sales prices.

There’s a parallel between MLS and what Afternic and Sedo offer. If you list your home in MLS it is instantly searchable to all MLS subscribers in the area and is cross-posted to many real estate websites like Zillow and Trulia. (I realize that syndication is negotiated by each local MLS and is not done in all areas.)

Afternic created DLS and Sedo created MLS modeled off of this. The LS in both of these names — and the full MLS in Sedo’s! — are not by accident. If you list your domains with these services they will be promoted across dozens of websites. It gets the domain in front of more domain searchers.

These syndicated systems have done wonders for sell-through rates in the domain name industry.

My second thought about MLS is what it says about data. People who have access to MLS data have an advantage. It depends on where you live, but in Austin, the actual sales prices are not public. Only MLS subscribers (licensed real estate agents) have access to this data. They want to keep it this way because it gives them an advantage and a reason for people to hire them.

Imagine if only domain brokers got access to sales data!

In some ways, this is already the case in the domain business. While Sedo releases most of its data, GoDaddy’s Afternic doesn’t. This means GoDaddy has an advantage when it comes to acquiring domain portfolios and understanding their value.

(Side note: GoDaddy provides some of this sales data when you use its appraisal tool. Rather than just griping about GoDaddy’s appraisal values, domainers should understand how they can leverage this tool.)

In Austin, the county appraisers don’t get access to MLS sales data, which is part of the reason their appraisals for property tax rarely align with reality. They’re working from a limited set of data.

In the case of Afternic, even it sees only a small slice of data. So much happens “off market” in the domain industry. Most deals are private.

In the case of our home, we never went on MLS. This means the sales price won’t make it to MLS and agents won’t know how much it sold for. It turns out that a fairly large percentage of home sales in certain segments are done “off-market”.

This draws another parallel: access to deal flow. You need to network in order to get access to a lot of domain inventory, just like you need to do to get access to pre-market home inventory.

Now, on to a controversial part of residential real estate: the 6% commission. I cringed when I saw how much we paid in commissions on our closing statement.

But I’m a firm believer that you hire an expert. Just like how Carrot founder Trevor Mauch said he would have saved hundreds of thousands of dollars plus time by hiring an expert earlier, there’s value in professional real estate agents. (Of course, you need to hire a good one. There are a lot of bad ones out there.)

That said, a big advantage that agents have is data. This is eroding and many companies are stepping in to try to break up this model. Some are just lower fee providers such as RedFin. But OpenDoor is upending the entire model in lower price ranges.

Finally, saving the best parallel for last: did you know there’s “house sniping” in real estate? Much like how we grab domains the moment they expire based on our own metrics, some of the large private equity home buyers have systems set up to make offers on homes the moment they hit the MLS if they meet their requirements.

Crazy stuff.

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