Make Money Online by Buying and Selling Domain Names

Guest Post by The Old VIC

There are many ways you can make money online, one way which you may not have considered, but where big money is possible, is by buying and selling domain names.

The idea is simple, you buy a domain name e.g. ZitBusters.com, you list it for sale, at the industry auction sites such as Sedo or Afternic (or possibly even eBay) someone offers you a vast amount of money for it and you sell it. Well, that’s the idea, the reality is somewhat more prosaic.

To sell the domain names you buy, you will probably need to actively market them i.e. find the e-mail addresses of people that you think may be interested in your name and fire off an e-mail. If you’re lucky or the name you have is an obviously excellent name then you will get an answer saying something along the lines of “How much do you want for your name?”, which is when negotiations begin.

So what is an ‘excellent domain name’. Generally, they are dot coms (dot coms are worth around ten times as much as dot nets) and they are generic e.g. shoes.com, beer.com, business.com.

How much are generic dot coms worth? Well, the highest sale so far in 2008 is Fund.com which sold for the tidy sum of $9.9 million, Invest.com came in at number 5 and sold for $1.015 million, NewlyWeds.com on the other hand was number 53 and sold for $130,000. Sales are reported every week over at DNJournal.com where you can also see a list of the highest selling names of the year.

You may have seen the iReport channel on CNN. Where did they get the name iReport from? They bought it from self-styled ‘Domain King’ Rick Schwartz for $750,000. Rick Schwartz is one of the most successful and well-known of the domainers in the domain name industry. Other big names to look for are Kevin Ham, who has a portfolio of domain names worth around $300 million, Frank Schilling, Sahar, Rick Latona, Yun Ye who sold his portfolio of domain names for $164 million and many more. All these guys have interesting tales of how they got to be where they are by simply buying domain names, hanging on to them for a while then selling them on for a profit.

So what sort of names should you buy? As mentioned above, generic names are the best but of course most of the dot coms are already gone. So if you want a good generic name you may have to buy it off the person who already owns it. Alternatively you can wade through long lists of names that are dropping (i.e. not being renewed) at places like TDNam and Snapnames. Or of course you can try and discover a gem that no-one else has registered (very difficult as all dictionary word dot coms were registered long ago).

A word of warning, some registrars are unscrupulous and if they see you have looked for a name but not registered it, they will then ‘reserve’ it for you, by which they really mean block it and sell it to you for an inflated price. Do a search on network solution front running. Godaddy are the biggest for registering domains and they seem to be OK, but if you do find a good name that isn’t registered you would be well-advised to register it quickly as there are very few secrets on the Internet. The price for registering a dot com is around $10, but do a search for ‘discount codes’ and you will probably find coupons that will give you a 20% discount. If you use the code 199TEST with Godaddy you should be able to register a domain name for 99 cents, but it only works once. Bear in mind also that there is a 5 day ‘grace period’ and if you change your mind registrars will often cancel your domain name and refund the fee if you ask nicely.

More words of warning, steer clear of trademarked names i.e. stuff like Google, Microsoft, Armani etc... you will only cause yourself a lot of trouble.

While waiting for your names to sell you can either develop the name into a blog or a site or you can ‘park’ them . Parking them is a simple way of creating a page with some ads. on which may or may not bring in some money while you wait to sell your domain. You need to sign up with a ‘parking’ company. The easiest one to sign up with is Namedrive. In an interesting development Google has decided to set up its own parking service. This after previously criticizing parking companies as offering no value and being of no use etc.... Now that Google has set up its own parked pages it appears that parking domain names is cool. Go figure. (From what I hear though, most domainers are not recommending Google’s parked service due to the many complications involved.)

For more information about the whole domain name business you can visit forums like NamePros. To see what sort of prices domain names have been selling for check out DNSalePrice.

This is only an introduction to domain name trading but it gives the basic ideas. There are people who have made millions from domains, and in my opinion successful domainers make lots of money but it does take a lot of work, particularly if you are just starting out.

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