Buy & Sell Domain Names: As Profitable As Some Suggest?

You’ve probably all heard a story or two where someone foresaw the popularity of a particular term or name that would be associated with a specific subject matter. They then proceeded to purchase it as a .com or other extension domain name, and before long they flipped it off to a very qualified and desperate buyer who absolutely HAD to have it for their business.

While not the most well known such transaction, the biggest one was when someone made $35,000,000 for VacationRentals.com. Here at 4GoodHosting, we are a top web hosting provider in Canada, but our ‘worth’ is nowhere near such a lofty sum. With that understood, however, we do know quite a bit about buying domain names and how it’s rarely the windfall some people expect it to be.

However, when the domain trade is done right and you have a little bit of luck, it is an enterprise where particularly lucrative deals are certainly not unheard of. The tactic is straightforward: domain names are purchased with the prospect of reselling them at a significant profit. The trick, of course, lies in securing domains that may be valuable to deep-pocketed buyers, like a large company, somewhere down the line.

Today we’re going to discuss all the important facts and terms on the topic of selling domain names for a profit, as well as taking a look at some impressive examples of crazy high sale prices for publicly traded .com domains.

Selling a domain

Domains are nonmaterial goods. Accordingly, when they are sold the only transaction taking place is the actual transfer of the domain rights between users. With the exception of any instance where there is a copyright or trademark violation, pretty much any domain name can be bought or sold. However, generic domain names, such as car.com or computer.com, are not legally protected and as such can be reserved by anyone.

The value of a domain is determined via a specific evaluation process. The obvious part of that would be in understanding that traders will find domains that are indexed on Google and highly ranked to be particularly attractive. (Here is a very useful free Google Index Checker Tool) From there, specific SEO qualifications come into play, with backlink profiles or the search volume of the keywords in domain names also contributing significantly to the appraised value.

Further, design can also make a positive contribution to the price of a domain. Short and succinct domain names are preferable, and as such more valuable. Endings also factor in; top-level domains (TLDs) such as .com or .org are by far the most in demand.

Here’s a list of the most relevant criteria for determining a domain’s value:
-structure of the domain name
-relevance for the search engine
-market potential and usability
-bargaining power and legal situation

As the domain trade will always be dictated by market-driven principles, a particular domain will never be worth more than the buyer is willing to pay. Accordingly, criteria like market potential and usability will always be very integral to determining prices. Values can change in an instant and drastically, and the price of a domain that was once of little interest to anyone in years past can skyrocket seemingly overnight for one or more of many different reasons.

So, if you have one that you foresee being desirable in the future, you next need to know how to check if a domain name is available for registry?

Checking for a Domains Availability

You’ll find that those trading domains for commercial purposes are generally more focused on ones that feature those in-demand and thus valuable domain endings. For all intents and purposes, there are two different ways you can proceed to make money from the purchase and sale of domain names.

The first is in purchasing already established names for a low price, and then selling them for a profit later once their value has increased. The second involves buying and registering a domain that you believe will be desirable in the future and one that prospective buyers will compete over, thus making it worth more. Many domain traders use backorder services. These services automatically register a domain when one becomes available, or is deleted (A deleted domain is more typically one that has become an expired domain, meaning it hasn’t been renewed and paid for by the owner).

How are Domains Sold?

Domain trades can be conducted by many different means. The individual who’s registered a particular domain name generally is not anonymous and if you’d like to be in touch regarding the purchase of one it’s usually not difficult to do so. The domain holder has fully autonomy to sell his or her owned domains as they like, as well as promote them by whatever means they like.

Domains are most commonly sold in one of three ways:

The buyer directly approaches the holder
Prospective buyers are able to directly contact domain holders in cases where the desired domain is either available or not. Most registries will make the names and contact data of domain holders available publicly. You’re free to domain holders and make an offer for the name at any time, but obviously quite often you won’t even receive a reply if they’re not interested in selling it or they find your offer to be insufficient. Another point to keep in mind is that sales do occur more frequently in instances where the original domain owner did not have any existing commercial ambitions for the domain name.

The holder directly offers to sell the domain
It’s common for domain traders to inform website visitors that the page they are on is for sale by providing their contact data on the page. The more ambitious and profit-minded of them will actively seek out potential buyers.

Market platforms for domain trade
Domain marketplaces like Sedo, GoDaddy.com, or BuyDomains.com serve to link potential buyers with domain holders who are keen to move their virtual property. In a sense these platforms are functioning as a domain real estate agency of sorts, and accordingly they can be pricey for their services.

Examples of Lucrative Domain Sales

Dot com domains are still the extension of choice for prospective websites. According to domain marketplace Sedo, desirable .com domain names routinely command upwards of 4,000 dollars, and the most expensive publicly traded domain names have been known to fetch eight-figures. While that can be reason to get excited, sales of these sorts don’t occur regularly and you shouldn’t expect them for yourself.

Earlier we mentioned the example of the windfall that came from the sale of VacationRentals.com. Here is a list of another nine domains that were similarly big-time profitable when sold:

PrivateJets.com sold for $30,180,000
Insure.com sold for $16,000,000
Internet.com sold for $18,000,000
Fund.com sold for $9,000,000
FB.com sold to Facebook for $8,500,000
Diamond.com sold for $7,500,000
Beer.com sold for $7,000,000
Cloths.com sold to zappos.com for $4,900,000
Icloud.com sold to Apple for $4,500,000

Is It Genuinely Possible to Make Money in the Domain Business?

The sales highlighted above are definitely impressive, but again – most domains sell for significantly less extravagant prices and are generally in the two or three-digit range. It wasn’t that long ago that early birds who were able to secure general terms (like pancakes.com or bookmarks.com) that had yet to be protected by trademark rights often found themselves holding onto a very valuable piece of Web real estate. Those glory days are long gone, however, and those looking to make profits in today’s market must have a keen sense for upcoming trends if they want similar success.

That’s not to say you shouldn’t try, however. If you have the foresight to think of a domain name that might come to be in demand sometime in the future, definitely get in touch with us and if it’s available we’ll snap it up for you!

Good luck in your domain name prospecting efforts.

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