Avoiding the common pitfalls of new domain buyers

Intro

My name is Kevin Ohashi, and I have only recently entered into the domain industry. I bought my first domain name far back in about 2000 but never thought of it as a business. In the first few months I had a crisis with my webhosting company and my domain name was taken hostage. It was due to expire soon anyways, so I figured I would re-register it. Upon searching further about how domains expire I found a market hidden from most of the public’s eyes. There was an entire industry based on the buying and selling of domain names. Mine seemed to be on a hit list for a few domainers, as we are often called. This caused me to look a bit more thoroughly at the process of domain registration and expiration. I ended up at a popular forum named DomainState.com. And from there my journey into becoming a domain buyer begins….

Buying Domain Names

Domain names are very easy to buy; they are as expensive as $35/year at places such as Register.com and as cheap as $5.41 at rackshack.net. To you this might seem like an obvious choice, go with the cheapest. Wrong. Price is not everything, before you ever buy a domain name, try emailing the support and asking a few questions. A simple task such as this can often speak volumes about a Registrar/Reseller. If they cannot answer simple pre-sales queries quickly and accurately, be very wary of their services. There is no perfect registrar or reseller. EVERY LAST ONE HAS PROBLEMS. Just remember this, how they deal with those problems and how fast/hard the work to fix those problems are very important. There are many registrars out there; a good place to start researching again is www.DomainState.com and WebHostingTalk.com .

What names should I buy?

Many people think they can buy a ‘cool’ or ‘elite’ domain name and sell it off for large sums of money. This simply is not true. Value is based on how much others are willing to pay. If you think your domain is worth $10,000 and everyone else would not even register it, you can safely conclude it is a worthless domain on a reseller market. You can always develop it and turn it into a successful website, but as a name alone, it is worthless without development. Some things to remember when trying to resell domain names are:

What makes a good domain name?

1. Value is based on the opinions of others.
   

   The potential of a domain name means little to almost all resellers.
   There is development potential in every name; this means yours is no more special than the next.
   

   People value domains that are concise, get traffic, are easy to spell and are memorable.
   

   The .com namespace is still king. .net, .org, and others are, and most likely always will be,
   second to com in terms of business. This is not to discredit local Country Code Top Level Domains such as .co.uk, and .de.
   

   Numbers and hyphens take away value from a domain in *almost* all cases.

The list above is by no means a definitive list of the factors that determine value, in fact, they don’t cover anywhere near the breadth of factors that play into value. These basic guidelines are devised to help you eliminate lots of names you might have wasted money on and regretted it.

Selling Domain Names

This is where the actual earning of money occurs, so you are probably most interested in this. There are two major categories you can target when you sell domain names. There is an end user and a reseller. The end user market is described as someone who will buy the domain name to develop it and turn it into a website. This is the category that will pay high amounts of money for domain names. In most cases they will approach you about purchasing a domain name. You can also write letters, email and call them offering them your domain name (be careful of trademark infringement - trademarks can be checked at USPTO.gov). There are also some large broker sites for domain names such as AfterNic.com and Sedo.co.uk. These brokerage sites often take a commission off the final sale price, but domains get actively bought here at much higher prices than they would receive on the reseller market. The reseller market consists of people such as webmasters and others who buy and sell domain names. These people tend to be quite experienced with the market in which you deal and pay significantly lower prices for names. This is a good market if you are looking to just make a small amount back. The margins will be very low in this market, but the effort required to sell is considerably less in this market. You can post advertisements with your prices in many forums and find buyers within minutes sometimes.

All the good names are taken

All the top tier names are taken, and have been for ages. But this does not mean there are no domains left for you to buy that are worthwhile. There is an entire market of ‘expiring domain names.’ Domain names that are not renewed often heavily competed for within the milliseconds after they get deleted. There are many places that offer lists of names due to expire, one such site is http://www.exody.com and http://www.deleteddomains.com offers free lists for you to search of names that have already expired as well as those on hold. A comprehensive list of drop catching services can be found at Ohashi.US Tools-->Domain Names-->Expired Domain Grabbers. The prices start at as low as $8.75 per name and have gone up to over $100,000 on the bidding sites for some names. The spectrum is large, so be careful and do not bid more than you can afford or can sell them name off for.

The Deletion Process

The deletion process is rather simple: On-Hold, Redemption Grace Period and Pending Delete.

1. On Hold means the domain has been renewed by the registrar for up to 45 days in case the customer wants to buy the domain again and forgot to renew.
   
2. Redemption Grace Period (RGP) is a period where the domain is deleted from the zone file and can be restored for a fee of over $200 depending on the registrar. This period lasts 30 days.
   
3. Pending Delete is the cycle a domain enters after the RGP. This means a domain is scheduled for deletion. For com/net domains this period is 6 days long. For .org it lasts 5 days.

How do I figure out when it will expire? There is a handy tool located at freewho.com/checker. This tool will display the estimated expiration date and can display the WHOIS output directly from internic as well. This is an essential tool for looking up domain names.

	-Kevin Ohashi

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Published on: 2003-10-18 (250 reads)