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The basics of Domaining

I have been investing in domains for quite some time now. I will outline some of the guidelines that I have learned over the years and through internet research.

Before I go ahead, here is the TL;DR version:

The buyer is king. He/She decides the inherent value of a domain. The guidelines act as a north star that helps you buy a domain name with a good chance of multiplying (10x-100x) your initial investment.

With that out of the way, let's begin.

The lifecycle of a domain

Domains are bought on lease from domain name registrars such as GoDaddy, Namecheap, etc.

The lease period ranges from 1 to 3 years depending on your level of comfort. Let's imagine you have bought a domain for a period of 1 year. At the end of the year, you can either renew the lease for another year or let it go.

If you let it go, the domain registrar gives you a grace period of 30 days to re-register and take the domain on lease. At the end of the 30 days, the status of the domain changes to "pending delete."

During that time, the previous owner (you) won't be able to buy the domain, but is available for "backorder". It stays in that status for 5 days after which it is available for registration. The domain is purchased through backorder websites such as Namedrop or Dropcatch.

If more than one person is interested in purchasing the domain, it goes into a public auction. If nobody is interested, the domain stays in the "expired" status.

I have focused on these expired domains throughout these years. You can register good domains (and find some hidden gems) for $10 or less.

Step1: Domain research

Step 1 is to register on expireddomains.net or expired-domains.co and go through the list of deleted domains. Bear in mind that these lists get updated once or twice per day. And the number of domains that are updated is staggering - close to 100,000. Expireddomains give you some filters to play with. Go ahead and set those filters as you wish.

Aim for a domain name of 15 characters or less, with no numbers or hyphens. It would be better if you go after domains that use words that are present in the English language. Check for good quality backlinks and SEO authority. A quick google search will give you tools for it. The leading one is Moz. Also, analyze if the domain name makes sense. For example, facebookinfluencers.com. Makes sense, right?

I hope you got the point. Before you jump and buy domains with brand/company names in them, realize that 90% of these names (such as Facebook and Amazon) are trademarked. That doesn't mean you can't buy a domain with that name in them. It means that you MIGHT have a difficult time finding a suitable buyer to sell your domain. Not all buyers are equal, and there are lots of buyers who will buy such domains.

You could also check out the "most active" auctions in Godaddy, Flippa, Sedo, and others to get an idea about the kind of domains people are bidding on.

Always try to get a valuable .com domain. .io, .co and .so, .xyz are all the rage now. But, if you are buying a .io domain under the hope that a startup founder eventually asks you for it, you are mistaken. The startup can always go with any one of the numerous TLDs out there. Buy a .io, .so, etc if the length of the domain name is low, say below 6 characters.

Step 2: Shortlisting and appraisal

Go ahead and shortlist some domains. Now, it's time for you to appraise them. A word of caution though. Appraisals don't mean anything if the buyer isn't interested. Appraisals are based on past sales and some algorithms that these websites implement. There are quite a few sites that do domain appraisals. The most famous of them are GoDaddy appraisals, Estibot and DomainIndex.

Godaddy appraisals are free and unlimited. Estibot restricts you to 2 domains per IP address. Domain Index gives you 7 per IP address. (I hope you got the unspoken idea).

From my experience, Godaddy inflates your appraisal quite a bit. Estibot is the opposite. DomainIndex lies somewhere in the middle, leaning towards Estibot's valuation method. If your domain is okay, Godaddy will rate it above $1300, whereas Estibot will value it anywhere between 0 and $15000 (with a greater tendency towards "less than $100"). Domainindex also follows suit.

Bear in mind that these are the appraisal sites that I have personally found useful. There are lots of other appraisal sites which you can use.

If you have obtained a domain that ticks at least 2 appraisal sites (especially Estibot and Domainindex), you might have got a decent one in your hands.

The final step is to go to Namebio.com and check the historical data of domains with similar keywords. If everything checks out, go ahead and buy it. I would suggest staying clear of GoDaddy while buying domains as they have a lot of hidden fees and tries to upsell you every step of the way. Namecheap is a good option to buy.

Or, you could just subscribe to my newsletter, DomainScout that does all this and more and gives you 10 domains, every day.

Now that you have your domain,

Step 3 is Selling

You have to wait for 60 days before you are allowed to list them for sale. This is a mandatory period imposed by ICANN for all newly purchased domains. At the end of 60 days, go ahead and list them in any one of the domain selling sites - GoDaddy auctions, Sedo, Dan.com. You could also try relevant Facebook groups, subreddits, or forums such as DNForums.

Avoid Flippa, if possible. It's a wasteland. But hey, no harm in listing there. It's your choice. Bear in mind that using any website will mean, giving a commission to the website on sale. In some cases, you can contact people (who you think) might be interested in purchasing these domains.

Note that, there is a whole separate category of dropped domains. I have left them, as this is meant to be a more basic "lesson" on buying and selling domains.

Also, note that you always have the option of building a landing page or a business based on your domain. You could later sell it for a profit. Again it's up to you.

But the key takeaway is this:

The buyer decides the value of the domain in the end. No matter the appraisal value thrown at you, the buyer is king. If the buyer decides that your domain with an appraisal value of $2000, is only worth $300, that's that. You can either sell it to him or hold out for another seller. There are some pleasant surprises when the reverse happens.

Anyway, happy domaining, and I wish you luck in your journey :)

  1. 2

    Great article, Thejas! I’m not sure that point about waiting 60 days before you can list your domains is correct though.

    You can list the domain on marketplaces but can’t transfer it away from the registrar for 60 days if you sell it. However if a buyer comes along, you can always “push” the domain to their account within the same registrar.

    On your point about appraisal sites, I’d like to throw my own into the ring: PeerIdeas.com. It’s the world’s first crowd sourced domain appraisal service. Would love for you to give it a try.

    1. 2

      Hey John, thank you for correcting my mistake! And hey, I know about peerideas.com. I don't remember where I had seen it, but I have already appraised 7 domains there.

      It opened my eyes actually! The domains I thought were valuable were appraised with a low value and a couple was appraised beyond my expectations. I loved your idea of crowdsourcing the appraisals and the execution is really good! Thank you for that.

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