Buying and selling domain names is a fascinating business venture that has been around since the internet's infancy in the 1990s. We often hear the stories of domains bought for cheap 15 years ago, selling for millions today. A recent example is the MLB's acquisition of Twins.com from two brothers out in California who had been the owners of the site since 1995. While the purchase price remains undisclosed, Rangers.com cost the MLB $375,000 in 2015 and past offers of $750,000 for Twins.com were turned down.
While the likelihood of cashing in that big on your own domain investments is low, you can still make a profit if navigating the terrain correctly.
Here's five tips mapping out domain investing.
5 Tips for Buying and Selling Domain Names
When trying to buy or sell a domain name for profit...
1. Narrow Your Focus
If you plan on buying a domain to resell it, start by narrowing your focus.
There are millions of domains and even more domain combinations registered by somebody else. Especially when considering the new domain extensions like .ai and .digital.
What topics do you already know about that can make choosing / buying a domain easier?
- Passionate about home décor and furnishings? Try getting a .design or .furniture domain.
- Know a lot about outdoor recreational activities? Some domain options include .fishing, .garden, and .rocks.
- Have a recipes worth sharing with the world? .kitchen, .recipes, and .cooking will work!
Avoid targeting prospective buyers based on perceived economic status. Think about what you know well and start your domain name search based on related keywords. It is much easier to sell a domain you know would be valuable to someone in a specific industry.
2. Find Domain Names that Offer Real Value
Think of ways that the domains you buy would be a valuable asset to the buyer.
Who benefits from buying the domain in the space you are familiar with? How would you benefit from this domain if roles were reversed? How would you not?
The answers to those questions will help refine your search. To see this in action, take this real estate investment example:
Let's say you’re familiar with the real estate market in Hopkins, MN and have the opportunity to purchase hopkinsapartments.com for $300. This might be a good deal. Hopkins has a growing rental property market that competes against neighboring cities with more expensive rent costs. Ask yourself:
- How much does one month or even one year's worth of rent profit a landlord, property manager or other prospective domain buyer?
- Would you buy this name if you were in the space? If so, why?
- What kind of domains are real estate investors and owners using?
- How much do they spend on marketing / advertising?
- How much would this domain help them to sound authoritative in their space?
Answer these and you will have a good idea of who to contact and how to make a compelling case for domain sale.
3. Check Domain Availability
Now that you've narrowed down the domain names you should probably be buying, you start the search to find them.
First check to see if the domain names are available to purchase as new registrations. If yes, they can be bought immediately. If no, head over to the aftermarket to buy from people who either currently own the names or let them expire because they no longer use them.
Where to look for domain availability?
GoDaddy Auctions
Sort through millions of domains and filter by price, domain level, type of names, keyword, and more.
WHOIS Lookup
Helps you find the current registration information of a domain you are looking to buy.
Afternic
Promotes domain names to the largest audience of qualified buyers and resellers.
4. Evaluate the Price
Finding a domain name is half the battle. Knowing whether you are getting a fair price is the other.
The best way to evaluate domain name price is by comparing to what you are looking to buy with similar domains that have sold.
In addition to checking the above search tools, you can use the following to compare as well:
Use advanced search features to find similar domain names, see what they sold for, and when they were sold.
Ron Jackson issues a weekly report on this domain industry news magazine that covers top public sales of the week.
Another thing to keep in mind for domain pricing is auction vs. offers.
As a buyer, finding a domain that perfectly aligns with your business might mean making an offer rather than going into a drawn out bidding war. Assuming that is an option from the seller, you can still get a price within your budget.
Related Reading: What Business Sellers are Looking for in a Buyer
As a seller, you'll want to stay firm on a price but open your auction up for offers above a certain threshold. Look for businesses with similar domains and businesses that would likely be interested in a domain acquisition. Additional tip: Holders of .org, .net, and .info tend to be interested in .com domain opportunities.
5. Market Your Domains
When putting your domain out into the marketplace, it is important to choose a trusted brand. You want to feel confident that you will get paid and that the buyer will get the domain name they paid for. Pick a listing site with good ratings and licensing from a trusted government source / business bureau. Any of the previously mentioned sites are a good avenue for listing your domain. Putting together a value proposition for potential buyers within your personal and professional network is another good way to market your domain. Avoid sending spam emails. Have conversations with people you know would be interested and appreciate the ability to own the domain.
Investing in digital real estate makes an exciting business venture for entrepreneurs in the acquisition space. If you are looking to learn more about what financing would look like for buying and selling domains, contact one of our lending experts today.
