Take it for what it's worth, but here is my experience.
(I'm new to the board, so I'll just give you some general background on my experience.)
I've sold about 200 domains since 1999. Cheapest, $100, most expensive, $6000. Average, $550. Only sold one on ebay, won't do it again. I've bought about 20 domains on the secondary market. Cheapest $20, most expensive, $1500, average, $350.
Now, to the question at hand. I had a radio domain, a dot com, general radio type domain. An example might be 990music.com; something similar to that.
It was a previously owned domain of a station that went off the air. It had about 20 hits a day. I got a call from a nice young lady from a large radio station company. You can probably figure out who. She discussed this name with me on 3 phone calls over 2 months. I had it about "locked up" ($1500) when I thought I'd try to close the deal by stating, "and you already have traffic!" This was the 3rd call and I was getting a little impatient. So I thought this would be the little extra bonus that sealed the deal.
Big mistake. I could tell the moment I said it by her reaction, "Oh. How is that possible?" So I explained that it used to be owned... etc.
Lost the deal. I got a call from her a week later, explaining they were afraid of a lawsuit from the previous owners. I tried to explain to her I had owned the domain for a year and never heard from anyone, but it didn't matter.
Now, as for developing your own name, and traffic, I think that's a very good thing to do. I make it very casual. I always tell them I was just using the name for some traffic and the search engines picked it up and now we traffic on that domain. (Of course don't do this with true SE/Link domains, just generic domain that have never been used before.) But they usually appreciate the effort to promote the name and it helps a little. But be cool about it, play it down.
Hope this helps.
