An Introduction to Buying and Selling Domain Names

The domain name industry is extremely active and competitive, which makes it no surprise that so many people are becoming involved in buying and selling domain names on a daily basis. Unfortunately, there is a lot of misinformation online concerning the value and selling process of domain names.

If you're interested in profiting from one of the fastest growing industries in the world, then it's important to have the facts on domaineering.

Types of Domain Speculation

Domain speculation is the art of judging the value of buying and selling domain names. For many individuals and businesses, this practice has become a full-time profitable job.

There are currently two main types of domain speculators: those that buy domains, build sites around them, and then flip the domain and accompanying website, and then there are those that buy and sell domain names without web sites attached. While both can be very lucrative businesses, the second type is much easier for novices to learn, and as such, shall be the topic of discussion for this article.

How to Obtain Valuable Domain Names

Buying a domain name is simple, however, finding one that will actually yield a profit is much more difficult. There are a myriad of factors that determine the value of a domain name, but the major factors are memorability and keyword/SEO optimization.

One of the best ways to obtain a valuable domain that is already search engine optimized is to purchase existing domains via auction sites. This strategy can be beneficial mainly in two ways. Firstly, any domain that has already been purchased was probably already researched for potential benefits. Secondly and more importantly, the second benefit is that many recently expired domains still retain some of the search engine optimization attributes that were built up by the previous owner. For example, a recently expired domain name may still have active backlinks on the web, and the page rank of the domain could still be high, giving the purchaser instant SEO gratification with minimal effort.

Using keyword research tools is another great way to find out which domains could prove to be valuable, as many webmasters use such tools when deciding which domains to buy. If you can obtain a domain name that contains a popular keyword, then you can easily find a buyer in most cases.

Selling the Domain Name

Acquiring what you believe may be a valuable domain name is the easiest part of the equation. Finding the right buyer is much more difficult. Using auction sites and forums is perhaps the best way to find qualified buyers that are interested in your domain, and using auctions will take some of the stress away from establishing the value of a domain name yourself.

If your domain name is related to a particular niche, then you may find success by advertising in forums that are related to that niche. Simply placing a link in the signature of your posts can tremendously speed up the selling process. While it may be possible to find prospective webmasters on niche-specific forums, it is generally better to advertise on webmaster forums, where there is a high volume of potential customers.

Most auction sites will be heavy with competition, and many of the domains for sale also include a full pre-constructed web site that may already be generating a profit. Before listing your domain for sale, it is important to ensure that you're not stepping into a market that is saturated with full website and domain packages.

Domain Name Squatting and Volume Selling

Unfortunately, most domain names take at least a couple of months to sell, especially without an attached website. Thus, there is no need to become discouraged if your domain name does not sell immediately. Most people make the mistake of quitting their domain speculation endeavor after waiting for several months to sell without success. In reality, domain name squatting can be just as profitable, and it is a valid form of long term investing.

Consider, for example, the domain name hammocks.com. How much was this domain name worth in 1995 vs. 2010? For the domaineer with patience, hammocks.com sold in 2010 for $700,000, surely a significantly higher amount than it would have secured in the 1990s.

Instead of focusing on one domain name to sell quickly, try selling large volumes of domain names over longer periods of time. While this may require a more substantial investment, it will also return a greater profit in the long term. Remember, if you follow the basic principles of domain name speculation, there is good chance that your domain names will sell eventually.