Achieving Financial Independence with Domains

Chapter 9: Best Practices when Buying and Selling

By October 13, 2019 January 2nd, 2020 No Comments

There are different types of rules to follow when you buy or sell a domain on the Internet. First, you want to make sure that if you are selling, you’re getting the best price and making a healthy profit. Likewise, if you are buying, you want to make sure not to overpay and also to be able to make the best deal. In this section I will tell you how to setup a good deal.

Usually, the domain forums (dnforum.com, namepros.com) are FULL of sellers, people looking to make a quick buck and they will try to sell you anything and everything. However, you need to be astute enough to know what is a good deal, what is a fair deal, along with what is a bad deal.

There are usually far fewer buyers than there are sellers. When you are in the position of buying you have a lot of room for negotiation, so you need to use that to your advantage. One tactic I always use is to wait until near the end of the month to buy. People run out of cash, they need to pay for different things such as utilities, house payment, etc. I usually wait from around the 20th to the 24th of the month and then start my wanted ads. I like getting a great deal and I don’t want something unless it is packed with value and the price reflects it. I get the very best deal possible and if the person selling does not like my offer price then I walk away.

More than likely, when I make an offer, it’s a lower-end offer. I let them talk me up a little bit, and then maybe I will add a bit more if needed.  However, I only go as high as I want. You can always offer more, but you can rarely offer less. If they don’t like the offer that I’m willing to pay, I tell them goodbye and then move on to the next deal. Remember, there are far more sellers than buyers, and there are ALWAYS more domains. You will always have another chance at getting another domain because there will be a lot of people willing to sell. There is ALWAYS a shortage of buyers.

Remember when we talked about the three different types of traffic? That thinking applies to this section as well.

Say you have a typo domain that is receiving traffic and is earning you money. If the domain is not a TM (trademark) you can usually get anywhere from 15 to 30, maybe even 40 or more months revenue out of it. It would definitely depend on the type of typo it is and what field it relates to (for example insurance traffic has some of the best payouts in the industry and people usually pay more for insurance traffic then others) but, 24 to 60 months revenue is a normal price for a good traffic/revenue producing domain.

If something is a TM (Trademark infringing domain) you will not get nearly that many months’ revenue. I have seen blatant TM domains sell for as little as 6 months revenue before because the owner was scared of the possibility of legal action from the company that they were infringing on.

But back to buying….

So now you’re in a forum and you have found a domain for sale that you want that is supposed to have established traffic and established monthly parking revenue. You need some way to verify this…how? Well, the industry standard is with screenshots of the domain name, the parking account traffic, and the revenue.

Essentially, we count on the seller of the domain to provide a screenshot of the account that shows the domain name itself in the screenshot, the number of daily visits or per month visits and also how much money it has made in this time frame.

Now, faking a screenshot can be easy, but that is why most forums have some sort of “verified” seller system setup or a trader rating. I usually only deal with people who have a good trader rating. A trader rating is much like eBay’s feedback system. It lets us know how many people have dealt with that person and what type of experience they have had. Be cautious of people who are new and have no feedback. If you start corresponding with someone who has 2 or 3 bad feedback ratings, then run for the hills. One bad feedback can be a misunderstanding, but two or three times usually is not. If someone has two or three bad feedback ratings, I will not deal with them, period. If they are new and have zero feedback, then I will not enter into a large agreement unless it is through Epik.com’s escrow service or some other 3rd party escrow service such as Escrow.com. If it is a smaller transaction then I will deal with them directly and forgo third-party escrow services, but I usually make them transfer the name to me first before I send them payment.

If all goes well I will leave them a good trader rating to help them start their domaining career. In normal buying processes, the buyer pays first and then the seller transfers the domain after they have received funds.

Generic Domains

Generics are usually one or two word and used in everyday common language.

Domains that are “generic” may or may not have significant traffic. Normally these are the names with intrinsic value. They are just good names, plain and simple. “HardDrives.com,” “ashes.com,” or “webhosting.com,” would be domains that are considered to have intrinsic value. Emerald.com would be another example of a generic domain.

The prices for these types of names can fluctuate like crazy. Emerald.com could be worth 50K to someone and 500K to someone else. Usually, someone who buys a generic domain would be doing so because their business depends on it or they believe it to be a good investment. There could be a multitude of reasons a person would need or want domains such as these. However, they will all command a premium. True generics, such as those listed above, will rarely if ever be sold based on traffic multiples.

Names to Avoid: Buying on “Brandability”

Ok, so you are browsing the forums and see someone on there who is pitching domains. Their sales pitch is something like this: “Excellent brandability power,” “Excellent keywords!” “Super easy to remember!” These are the type of things people say in order to sell off their domain. The long and short of it? It’s a sales pitch! Brandable names like Google.com only became branded because the owners put a TON of work and advertising into it. Google.com did not jump out of the gate as being a “super brandable” domain, there was a lot of work put into it. The same goes for Apple’s iPod player, or any other household name of a product.

Most of the time if a domain name needs a sales pitch to go with it then it is probably not worth a whole heck of a lot. To be fair, I am not saying that posting a flashy ad means a domain is worthless, but if a long drawn out description of the domain name is needed in order to understand what the domain actually means, then it’s probably NOT something you want to put your money into.

I would love to use direct examples here of the types of domains I see advertised in the forums/message boards every day, but then all you would have to do is use a WHOIS lookup service to find up the registrant of the domains that I describe and then you would know who owned them; all attempts to keep people anonymous in this writing are being made. But I will give you a couple examples of domains that I had registered in the past (and that I let expire) so you can see a little bit of what I mean.

icrashedtheinternet.com

I thought this one was hilarious, so I grabbed it. It could be a cool domain, but in order for it to be profitable I would have to develop a web site on it. No one goes around typing in this domain name. It is also somewhat long therefore there would need to be some sort of incentive for someone to visit this site if they are going to do so. (Like humor, news, something exciting, etc.) By itself, the domain name is not worth much.

commandohost.com

This would be an EXCELLENT game hosting site; however, in order for that to happen I would need to actually be a gaming service provider, which this author is not. This name may certainly have value to someone out of the box, but again, it is not something people go around typing in. It could be brandable, but I have not branded it, therefore there is nothing about this domain that makes it any better than some other names that I, or anyone else for that matter, could go out and register for $10.

coolcasino.info

This domain could be a great casino directory site, but again, I would need to actually go out and do the work to build it. Instead of building a site I am sitting here writing this book so you can understand that just because I have a domain with the term “casino” in it, it does not automatically mean it is worth a bunch of money. Now, it’s true that casino keywords can pay pretty decently in the PPC (Pay Per Click) industry. However, you actually need traffic going to the site in order to generate money and the only way anyone in the world is going to go to this domain is if I spend time, or money, or both in building and advertising it.

The Myth of Buying on “Potential”

Now, this is one of my pet peeves. I see it all the time in the forums and you will see it yourself. Someone tells me that I should pay a lot of money based on the potential of that name. What they are really saying is something to the effect of: This name could be great, but it’s not because I have not done any work. “Potential” is all relative, as stated in the above chapter any name can have potential, but you must work at it.

Explore this example. I sent an inquiry to the owner of a domain that I possibly wanted to purchase. It was a typo of a generic non-TM name (a typo of a country) and he wanted $70 for it. $70 is fine but it needs some justification as to why I should spend $70 on it. I asked him how much the typo made him last month. This is the reply:

“The revenue was very small, I was thinking of making an Adsense page to increase traffic and make a lot per click. My current parking company is garbage for me, I only use it to keep track of stats and for their attractive templates. Name is for sale based on views/CTR/potential. Thanks!”

Haha, so I am going to buy a generic TYPO domain based on potential? No, you cannot do that…there is no such thing…it does NOT exist! You don’t buy typo domains because there is potential in developing them. Well, technically you could as it is humanly possible to do so, but the main reason people buy typo domains is to just park them and let them earn money and forget about them. Potential does not exist for most typos because typos are misspellings. They will never be more than just a WRONG name.

Sometimes typos can be made into something funny or be a play on words. But would you really try to establish a huge, well-known site based on a name of a country that is spelled wrong? Most of the time, it just would not make a whole lot of sense.

As this was a typo of a country, I know the traffic is going to stay for a while (probably forever.) But if this domain only earned a few cents last month it does not make any sense to just buy it without knowing the exact amount of revenue it is making. He did not want to tell me revenue information which leads me to believe the revenue is extremely low or non-existant. If he is not willing to reveal how much money the domain made, then there is little reason to pursue this domain further.

And the part about people selling the name based on potential just means that they want to charge you for the work that you will be doing on the name that they themselves don’t want to do. Don’t buy a name based on what could be done with it.  It’s always better to buy the domain on what can be done with it. If you KNOW you can do a quick flip with a name, then buy it. Don’t buy on what someone else tells you could be. If you do, then you will be in the same situation as the person you bought it from and never had time to get around to doing whatever it is, or was, that is supposed to make that domain so great.

Where to Buy and Sell:

Here is a list of some of the most common places that to buy and sell. They are listed here in the order of the most time I spend using them.

1.) AfterNic.com

2.) Epik.com

3.) GoDaddy Auctions

4.) NamePros.com

5.) Sedo.com

6.) Snapnames.com

 

AfterNic.com

Afternic.com, although smaller than Sedo.com, has done some different things in order to differentiate itself from its competition. AfterNic.com has different types of auctions and, like Sedo.com, you can park your names with their parking company in order to monetize any traffic it may receive.

Epik.com

Epik.com has a very unique marketplace. While you can list your domains on their general marketplace that allows for your domains to be searched and scanned through like the traditional marketplaces that currently exist, Epik.com also allows for you to create your own individual marketplace so you can have your own individual domain shop.  This domain shop allows you to list and sell your domain on your own branded marketplace which runs on your own custom domain.  This is great because your domains won’t compete with inventory from other sellers.  When someone purchases domain from your marketplace, Epik.com handles the processing of payment along with transfer.  You can even create a newsletter inside of your marketplace to allow interested parties to sign up and be notified of when new domains are listed.

GoDaddy Auctions

GoDaddy Auctions is also a great place to pick up domains. For the most part, I just look in the ending soon section and then filter the domain names down to just those with traffic. Those with traffic are old sites, typos, or semi-generic type-in domain names. I scan the domains until I find one that catches my eye and then I evaluate how much it may be worth and what is the probability of turning a profit on it. When not dealing in the “ending soon” section, you can also browse the “close outs” section which I also take part in. There is usually a large inventory to pick from at GoDaddy Auctions because these are the domains that are expiring at GoDaddy.com.

NamePros.com

NamePros is a great place to pick up deals on domain names. I go there every day and scour the forums looking for something to buy. I don’t buy every day and, as I stated before, I rarely sell. However, there are some people who get on NamePros and sell because they need money to fund other projects and want to do a little profit taking.  Sometimes, I can get lucky and the person just doesn’t understand the value of the domain that they have. By keeping a keen eye, I have picked up a lot of nice names for $100 or less. However, I spend a little time each day just looking over the forum, if I don’t see something that is a good deal then I just log off until the next day. I repeat this process almost every day. You should too.

Sedo.com

This is one of the most popular, and biggest, domain selling marketplaces on the Internet. People can search for over 6+ million domain names to find the one that is perfect for their company. You can search for traffic domains, high value domains, value priced domains, domains/web site combinations (web estates) and more. Plus, the great thing about Sedo.com is that not only can you buy/sell domains there, but you can do so while monetizing the traffic that is coming to your domains through Sedo.com’s parking program. The stats can be shared at the Seller’s choice and the more traffic your name receives; the more inclined browsers may be to purchase it.

Even if you have a domain that only gets a small bit of traffic, Sedo still puts a “for sale” sign on it. This lets those who visit it know it’s for sale. At one point in time I had a domain listed at Sedo.com that only got about 20 unique hits a month, but someone ended up buying it. Regardless if you get a few unique hits a month, you only need one of those visitors to actually buy the domain.

SnapNames.com

SnapNames is a company that honed the art of acquiring domain names that were expiring at many of the top name registrars and is the place that many sophisticated Domainers go to acquire top tier domains.

They have historically had their sources of names come from the expiring inventory of registrars, which put them in a distinctive market position. Additionally, their process of “Transfer Fulfillment” means that the creation date of a domain name is retained, which means that the age of the domain was not reset. Some search engine indexing algorithms use the domains age as part of their secret sauce, so it means preserving the value of names.

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