Compounding the heterogeneous and thin market problems is the limited and asymmetric information.
When buying a used car, one could look in the paper for the prices of similar cars. There are publications summarizing the price of used cars. Both buyers and sellers know the prices of similar cars.
In contrast, a domain name speculator is comparing your offer with that he thinks someone may offer him in the future. This is often optimistic, wishful thinking. A speculator may have read that a domain name sold for $100,000. But this is like a beginning novelist hearing that another novelist earned $100,000 and expecting the same, when cost novelists get a tenth of that if anything.
Buyers have no knowledge of what other opportunities the seller has, if any. The seller doesn’t know what the name is worth to the buyer. A speculator does not know if a buyer is willing to pay $2,000 or $10,000 for a name. Likewise, the buyer does not know if a speculator is willing to sell for $2,000 or $5,000. Therefore, the percentage of unsuccessful negotiations is high.
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