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Via The Domains:
"A simple question but one I have never heard asked.
Has anyone ever lost money on a domain??
Specifically what I am asking has anyone ever bought a name for a premium at a drop auction, private purchase, or industry auction and then resold the domain for less?
In my experience I have never heard of it."
Seems to be a lively discussion there and I did put my two cents in the Comments area, but will elaborate more here.
First, the answer is clearly YES. Many have, many will. If we look at the question above I know we’ve spent considerable amounts buying domains we would never get equivalent return on, simply because we were not converting on a per-domain basis, we were converting on invested capital.
For example, it is much easier to invest in domains X dollars and get X+20% than investing in domains on a per-domain basis and convert ALL bought domains to an increase of 20% ROI. This is, as far as I know, how majority of the big portfolio owners operate. Trying to make a positive return on each domain is a losing proposition*, and by that I mean you simply cannot scale it to tens or hundreds of thousands of domains, mainly because the time it takes to look and evaluate each domain is time consuming.
In addition, as Gordon said so well on the link above, many have not found out yet they lost because they have not yet tried to sell.
The domain market is still very young, not many yet looked into liquidating their assets. There really is nothing wrong with selling for less than you bought, it is all depends on your strategy, on your personal and/or business circumstances. You may want to cut your losses and move on, may want to liquidate to get funds for something which is time-sensitive, or maybe you are facing an emergency situation. Whatever the reason may be, the whole picture is ALWAYS bigger than what meets the eye.
*unless your exit is selling the whole portfolio as a whole
Source: Posted on TheConceptualist by Sahar Sahid -- Reprinted with permission -- May 1, 2008