Domain names are one of the most important parts of the Internet. They have value in the same way as property does in the real estate industry. Unlike the real estate industry it is less obvious why a particular domain has a value, however, the principles of “Location Location Location” remain broadly the same.

In this case, one can liken the inherent value of a property’s location with the constituent words or characters, being close to an exact match, to a high volume of search queries. In other words, how close or accurate a match is a set of keywords to this large number of search queries?

Let’s put it another way, if a group of people approached a real estate agent with an idea of what their dream house would be (where it was located; what features and characteristics the house would have; how easy it is to find; its unique qualities), the perfect domain name would be the equivalent of the property that best suits all of these requirements. Then the basic law of supply and demand kicks in – the more perfect a property or location is to a larger pool of people, the more these people will barter and fight to make it their own.

The value of a domain is therefore directly correlated with the price a potential buyer is prepared to pay for that domain – the higher the bid, the more valuable the domain.

The harsh reality is that most people hang onto the domains they have purchased for years and never actually achieve any value from them as nobody makes them an offer. As an online real estate owner, it sometimes takes a lot of luck for a buyer to come along and make you an offer.  And so your investment in these domains continues to wait for a decent return.