How to NOT get stuck Overpaying for your Decentraland Parcel
Posted On August 7, 2018
I frequently navigate Decentraland Marketplace and often see completely overvalued lands that should never sell.
But lo and behold every now and then they get bought up and re-listed for a much higher price. When I check the address of the buyer I notice it’s their only parcel, usually indicating it’s their first parcel and they’re a new investor.
In this post I wanted to cover some tips on how to make sure you’re not overpaying for your parcel.
Why it’s Double BAD to buy an Overpriced Land
An obvious reason is the fact you double payed so it’s likely to not be able to sell it for a profit but another reason is that if you really need to cash out, say you have some urgent bills to pay and your virtual decentraland parcel just has to go, you’ll need to price it way under what you purchase it to make that sale!
Meaning, you’ll probably lose a lot more money then you thought.
It’s not easy to cash out assets like these as it’s not just a token on an exchange you can sell for the price people have their buy orders set at.
With lands on the marketplace, we don’t know what people are willing to pay for your specific parcel so if you need to cash out on a specific day, you have no choice but to keep lowering the price till it sells.
I notice land owners doing this and eventually lands sell for way under what they bought for it.
Always Remember this When Buying Land
When you buy land, don’t just buy it because it’s the ‘cheapest in the area’, in fact the whole area might be completely over priced.
Always buy land that you know that in worst case scenario you can sell for the same price you bought it AND you bought it at a bargain price.
I ALWAYS buy my lands at a bargain price. A price people would jump on the deal. Rarely do I buy on the marketplace. Most of my deals are done privately.
A Simple Formula to Protect Yourself
A simple rule I use to make sure I’m not overpaying is to never pay more than 10x the auction price. In fact, I personally would never pay more than 7x any land because I want a good deal and want to be able to resell it. 10 is a better number to remember as the complete UPPER limit. The lower than 10x you can get obviously the better.
The auction price is the first value you see in the historical sales section of that specific land.
The price right at the bottom was the price the first owner picked it up for in the first Genesis City auction way back in December.
Sometimes lands are still worth it if it’s more than 10x but very VERY rarely.
Let’s go through a few examples,
This land is in a decent location, it has 2 sides connected to roads, is at the end of another road and is fairly close to a Genesis Plaza.
A pretty good road parcel definitely worth more than the going rate for an average road parcel, (~10 MANA), but how much more? Definitely not 149,000 MANA.
The Auction price was 1,563 so using my formula of 10x, the MAX anyone should pay for this is 15,630.
I personally would pick it up for less than 10k MANA because I know i can relist it for about 14k MANA and it will sell pretty fast.
This one was bought for 1,250 MANA. Pretty close to Genesis plaza but still very far from even a road.
Using the 10x formula this one would be 12,500 MANA. Again, this is the absolute max I would pay and I’m looking at it from the eyes of both an investor and a developer.
Does that mean seeing it listed at 12,500 MANA is a good deal? Not necessarily.
Using the 7x formula we get around 8,000 MANA which is when I start watching it. 1 or 2k under this I buy it.
The cheapest Genesis City parcel, selling for 54,000 MANA. It also happens to be mine.
This one was bought for 2,443 MANA only so 10x this would be 24,443 MANA. Whoa! In this scenario 10x is a damn good deal.
In fact I bought this for 30,000 MANA so about 13x the original price. I think if I list it at 45k+ it will sell real quick.
There are plenty genesis city lands that were sold at a pretty low price during the auction. But not many people that bought them wanted to sell them when the market place opened so there’s only a handful on the market which is why the price is a lot more than 10x.
This land is pretty wicked.
Double road and single road T intersection. It’s also opposite Fashion Street and pretty close to a Genesis Plaza so should get more traffic then the average double road connected to districts.
This one was bought for 4,773 MANA so 10x of this is 47,773.
7x this would be around ~30,000 MANA which is a pretty good price considering the uniqueness of it.
The 10x is just a guide and should be generally used as an upper limit, meaning not to pay more than this when buying a land. It doesn’t mean that at 10x, you’re picking up a bargain!
Usually bargain lands sell for between 5-7x, that’s where I grab them to resell them at around 8-10x.