Basic Tips for Trading Domains

It seems that the Web has been around forever, but in fact, it’s only been around for about 20 years. Because there are no strike rules yet, and consider that the Internet itself is still in its infancy, out of all online industries, the domain name industry is definitely resembling the wild west the most. Some domains are being sold for hundreds of thousands of dollars today, and the next day a similar domain is being sold for 4 figures. Do you want to trade in domain-names?

Here are 7 tips which might just help:

1. Quality over Quantity

Most domains are rather cheap, so if you want to, you can hand-register over 1,000 domains for less than $10,000. Would that make you happy? Would you consider yourself a successful “Domain Trader”? if you were to own 1,000 domains? Well, you shouldn’t!

Most people who are just starting out as domain-name investors make the mistake of hand registering worthless domains. People think they would make it big by hand registering as many five letter domains as they can afford. They will end up learning an expensive lesson. If you want to invest $10,000, buy a handful of domains which are really worth it for a couple of simple reasons:

  • A domain with inherent value will always be popular in demand
  • If you own about 1,000 domains, you’ll end up having to pay around $10,000 yearly in registration fees , but if you own 10, you’ll only have to pay roughly 100 bucks per year just to keep them all.

2. Stay Away from Over-Hyped Extensions

Do your research, and you’ll understand why. Dot mobi domains are one of the best examples: at first, people have paid a lot of money for them, but as time went by, these domains started losing a lot off their value for one reason: because the fundamentals were only a buzz with nothing to really support that promise that dot mobi is an extension which has been over-hyped and nothing more. Invest safe, .com is king.

3. Avoid 4 Letter Dot Coms, 5 Letter Dot Coms etc.

There were times 4 letter dot coms were available for registration, and a lot of people started to register domains which were very easily pronounceable, a fact that gave them some inherent value, nobody can deny that.

After a while, most of the 4 letter dot coms which are actually worth it have already been registered but there were still a lot of people who wanted in on the action. Once the good domains were all taken, they started to register the remaining 4 letter dot coms, domains which are nothing but pronounceable. Seriously, try to pronounce, now try a few times ‘till it sounds right. People who owned the terrible 4 letter dot coms started to become desperate. Some people sold them in bulk for like a dollar or two per domain, some have simply let them expire and it’s the same principle is valid when it comes to five letter domains.

4. Always Go with Reputable Registrars

You want to avoid situations when a small registration company is out of business, or just out- dated. Work with companies that have proven themselves, and understand that if something seems too good to be true, it probably is. If you own a lot of valuable domains, try to stick with the safest domain name registration company you can find, a well-known that you are sure to back you up. Even if it means to pay a bit more, make sure your valuable domains are in good hands and it’s definitely more than worth it.

5. Sell to End Users

You can find a lot of amazing domains rather cheap through domain-name auctions and sell them for 10-20 times more to end users. Buying domains through auctions, and selling them to end users is a strategy that works for a lot of people. You need to understand that being patient is extremely important. While some of the questions end users usually ask are ridiculous, don’t lose your temper, and calmly guide them through the process. Eventually, an end user who does initially not understand why you ask for so much will end up paying for it right after your explanation why the domain name is valuable.

6. Take Advantage of Type-In Traffic

OK, now you own some very cool domain names, why not profiting as they wait for a buyer? Like most decent domains, take advantage of the type-in traffic, so don’t just let your domains stand there and do nothing for you. Place your domains, park them, make sure to also include a “this domain name is for sale” message on the parking page. Parking companies offer a service that is definitely worth it. Domains will vary in generating clicks, some more than others via parking, but they all bring in money.

7. Develop A Strong Position to Negotiate

If you rely on domain sales to make a living, you’ll never be in a position to negotiate price. Rick Schwartz sold to CNN their domain for $750,000. He managed to obtain $750,000 for the domain because he was in a great position to negotiate, he already had a lot of money, so “making a living” was definitely not something he had to worry about. Most domain traders would have accepted $15,000, or even less for that domain with two hands and a smile.

Develop some websites, or offer some services online first. Don’t quit your day job at first just yet. If you have to worry about paying off the mortgage and things like that, you are not in a good position to negotiate.