5 tried-and-true tips for buying and selling domain names for profit

Find your treasure

Buying and selling domain names is an exciting adventure that for some seems to conjure up images of finding hidden pirate treasure or guessing the winning combination on the next Powerball. Stories abound of domains that were purchased for $8 dollars 15 years ago being sold today for millions. Of course, that leads the more adventurous of us to wonder, “How can I do that?”

Well, the ocean is big. Your likelihood of cashing in on the motherlode is low, and you’re liable to waste a lot of time and money chasing after the wrong ships. You need a map or some other advantage to guide you toward that elusive booty.

Here are some tips to get you pointed in the right direction when trying to buy or sell a domain name for profit.

Narrow your focus

There are millions of domains already registered by someone and endless combinations of available domains to register, especially when you consider the hundreds of new domain name extensions like .xzy and .club. If you plan on buying a domain to resell it, you should start by narrowing your focus.

What do you know about already that can make this easier? Do you know about pets, are you in car or home sales? Do you know about education or healthcare? Think about some of the spaces you are most familiar with and start there.

It is much easier to sell a domain you know would be valuable to someone in a particular industry.

 

Here’s what you DON’T want to do: Target prospective buyers based on their perceived economic status, without any insight into the industry you’re targeting. “Lawyers seem to do well,” you think, “maybe I should start selling names to them.” So you rush out and buy a bunch of domain names you think would appeal to the law firms you’ve identified as potential buyers. Without knowledge of the space, you may not know that the American Bar Association and other industry-specific organizations set rules that govern some aspects of legal advertising. You’re not going to strike gold selling names your target buyers can’t use.

Understand your audience, and the sales will follow.

Find names that offer real value

Think of ways that the domains you buy would be a valuable asset to the buyer. Picture someone who would benefit from buying the domain in a space you are very familiar with. If this was you and someone was trying to sell you this name, would it be beneficial for you to own? Be honest. If so, why? If not, why? Use those answers to refine your search for names.

Let’s play this out with a real example. Say you’re familiar with the real estate market in Tempe, Ariz., and you have the opportunity to purchase tempeapartments.com for $200. This might be a good deal. Tempe has a lot of rental property; it’s  a competitive market; and there’s ample turnover in the apartment space because the city is home to a major university. Ask yourself:

  • How much does one month of rent profit a landlord, property manager or other prospective domain buyer? How about a year’s worth of rental profit?
  • Would you buy this name if you were in the space? If so, why?
  • What kind of domains are landlords, property managers, etc., using?
  • How much do they spend on advertising?
  • How much would this domain help them to sound authoritative in their space?

If you can answer these questions with confidence and know this niche well, you probably already have an idea of who to contact and how to make a compelling case for how this domain could help their business grow.

Finding valuable domains

Now that you have narrowed down what names you should probably be buying, how do you find them? First, check to see if the names are available to purchase as new registrations.

Check your domains

 

If the names are taken (as many probably will be), head over to the aftermarket to buy from people who already own the names or who let them expire because they no longer plan on using them.

A great place to look is auctions.godaddy.com.

Use the advanced search option to quickly hone in on the type of names you are interested in. You can narrow the results by price, top-level domain (i.e, .com, .net, .org, .club, etc.), keyword, and many more filters. Using this feature will help you quickly sort through the millions of domains on the aftermarket and find the domain names that best fit your end goals.

Evaluating the price

Once you have a name in mind, how do you know if the price is fair? I like to use namebio.com to compare the domain I’m thinking about buying with similar domains that have sold. You can enter the keyword and also use some advanced search features to see a list of names similar to yours, what they actually sold for, and when they sold. You can also research current domain sales on venues like GoDaddy Auctions and Afternic. Finally, Ron Jackson issues a weekly report on DN Journal that covers the top public sales of the week. You can use all these resources to help you price your domains correctly.

Editor’s note: Price your domains with confidence. With GoDaddy Domain Appraisals, you can get the most accurate and comprehensive domain pricing estimates available. We use an exclusive algorithm that relies on both machine learning and real market sales data to estimate domain values. Best of all? It’s free.

Getting your domains front and center

There are many venues to get your domains out in front of the buying public. You want to consider a few things:

Is the venue trusted and well known? It’s important to feel confident that you will get paid and that the buyer will get the domain name they paid for. Pick a place that has good ratings with recognized bodies such as the Better Business Bureau or licensing from a trusted government source.

A trusted brand is vital when selling a domain.

 

Is the distribution network strong? The potential to get your domain name in front of the right buyer is key. Listing in a distribution network such as Afternic can get your domain name in front of millions of potential buyers each month.

Letting a great name you purchased at a fair price to make a profit sit in your account, instead of getting it in front of the right buyer, is like finally finding that pirate treasure map but framing it to admire in your living room instead of following it to the booty.

Resources to learn more

There is always a learning curve in buying domains with the purpose of reselling them. Don’t hesitate to ask a lot of questions to those who went before you, participate in forums such as namepros.com and dnforum.com, keep abreast of industry trends via resources like domaining.com, and reach out to the Afternic and GoDaddy Aftermarket support teams.

To get the lowdown on how Afternic works, domain listing best practices and more great info for domain sellers, check out our recent Aftermarket Google Hangout.

Image by: Evil Cheese Scientist via Compfight cc

Joe Styler
Joe Styler serves as product manager for the aftermarket at GoDaddy. He’s responsible for marketplace products including any purchase, sale, or monetization of a domain name. During his nine-year tenure at GoDaddy Joe has served in a variety of directorial and supervisory roles. His passion is seeing his customers become successful in their business goals when using the aftermarket. He has been interested helping people with transactions on the Internet for more than 20 years. Joe received his B.A. from Moody Bible Institute in Chicago, and his Masters in Divinity from Gordon Conwell in Massachusetts.