What's a Domainer?
A domainer is somebody who buys and sells domain names for a profit. A domain name is a website's unique web address. As an example, the domain name for this website is Menttes.com.
As the Internet continues to envelop the world, every successful business either has a website or is in the process of building one. Think about it—some of the wealthiest companies in the world such as Amazon, Yelp and Ebay are only online. Similarly, every new company—start-ups for example—needs to establish an online presence in order to make money. A domain name is very important for building a company's brand and helping that company earn name recognition. Name recognition translates into sales and advertising bids which translates into money. For this reason, domain names can be quite valuable.
How To Buy Domain Names
There are three main ways to buy domain names. First, you can hand register a domain name. What this means is that you go to a registrar such as Godaddy.com or Namecheap.com, type in your desired name, see if it's available and if it is you can purchase it. At Namecheap, a hand registered .com domain name will cost around $11 per year. Right now, Namecheap.com probably has the best standard rates but Godaddy often runs promotional discounts which are smart to take advantage of. When Godaddy runs a promotion, you can get a domain name for as little as 99 cents! The trouble with hand registering domain names is that most desirable names are taken, which takes us to our second method for purchasing domain names.
You can buy a domain name from its current owner. Let's say I want to buy the domain name 'domainsherpa.com' but it's already owned. I can go to whois.com, look up the owner's contact info and then contact the owner through email or by phone and ask the owner if he or she is interested in selling. Often a good indicator is how the domain name is being used. For example, when I go to domainsherpa.com, I see that the website is being used. The owner (a domainer named Michael Cyger) posts a video every week about domains and regularly updates the site. Based on the site's usage, domainsherpa.com probably isn't for sale, although you never know for certain until you contact the owner. If a domain name is being used and garnering lots of traffic, however, you're going to have to dish out a lot of money to purchase it.
If when you go to a website you see that it's not being used or hasn't been updated since 2005, there's a good chance that the domain name is for sale. Many owners will even 'park' their domain names which often entails setting up a 'For Sale' page with a contact form. There are also websites on which owners list their domain names for sale such as Sedo.com, Flippa.com, Afternic.com, Cax.com and TDNAM.com which is run by GoDaddy.
The third and most economical way to acquire domain names is to buy ones that are expired. In order to maintain ownership of a domain name, the owner must pay the renewal fee (around $12 normally) every year. If the owner doesn't pay the renewal fee, the domain name expires. When a domain name expires, it's normally sent to auction.
ExpiredDomains.net is a great site that lists expired domains up for auction on many different sites including Godaddy, HuntingMoon, NameJet and SnapNames. NameJet and SnapNames generally offer more expensive names with higher retail value. NameJet and SnapNames work off a backorder system. What that means is that before the domain names go to auction, you must place a backorder (normally $69 to $79) on that domain. If you're the only person who places a backorder, then you'll get the domain name for the price of the backorder. If more than one person places a backorder, then that domain name will go to auction and only those who placed a backorder will be able to participate in the auction.
How To Sell Domain Names
There are many different sites on which you can list your domain names for sale. Some of them, as noted above, are Sedo.com, Flippa.com, Afternic.com, Cax.com (they charge a $20 lifetime listing fee), TDNAM.com (they charge a $5 yearly fee), Ebay.com, GunBroker.com—there are too many to list. Most of these sites will take around a 20% commission on the sale although they have in-house escrow systems which makes a transaction more efficient. If you can finagle a private sale either by contacting prospective buyers directly or if a buyer approaches you, then you won't have to pay a commission and you can use escrow.com which will charge a small fee, but their service is well worth it.
Put aside those nuts and bolts, before you start buying up every domain name and listing them for sale, you need to know what makes a domain name valuable. Value is determined by how much somebody is wiling to pay you for that domain name. There's a website called Namebio.com that lists over one hundred domain name sales per day including the sale price and venue at which the name sold. Study these lists. You need to understand the current state of the market in order to buy a domain name that's actually in demand.
You can sell a domain name based on the value of the name itself. For example, clothes.com sold for millions of dollars a few years ago because 'clothes' is such a generic, commonly searched for term. There are some online value estimator tools such as Estibot.com and DomainIndex.com, although Estibot is more widely used.
You can also sell a domain name based on certain metrics such as Domain Authority, Page Authority, Past Page Rank, Trust Flow, Citation Flow, Backlinks and Referring Domains. If a domain name has strong metrics, you might consider developing a website on that domain name and building up a traffic stream. If a domain name has a traffic stream, it will sell for more money. You can also earn advertising money if the domain name performs well. These metrics already in place will help a domain name gain traffic quickly because these metrics take years and years to build. These metrics are why some expired domains are so valuable. If your domain name has 100,000 backlinks, for example, naturally every day some people will click on those links and come to your site.
You can make a very nice looking website for as little as $4 per month with Wordpress through Hostgator.com. Squarespace is another good platform although it's more expensive. With some practice, making a website is pretty simple, and there are many different types of sites you can make. You could buy what's called a geo-domain (for example, carolinaelectric.com or newjerseygolfcourse.com) or start a directory on which you charge people to get listed. You can start a niche blog, let's say shrimpandgritsrecipe.com, that has an affiliate agreement with Amazon through which you sell packaged grits. There are many ways to make money by creating websites—you just need to put the time in, perhaps years of work if you're staring from scratch, which is where most people stall out.
BrandBucket.com is a great marketplace that sells made up brand names. Most names on the site are priced between $2,000 to $4,000. In order to get your name listed on Brand Bucket, you need to submit it for approval; the vast majority are rejected. The real advantage of having a domain name listed on Brand Bucket is that they market the name for you. Thousands of buyers go to Brand Bucket every day looking for domain names. Your name will get tons of exposure on Brand Bucket. The only catch is that there's a 30% commission. In essence, they charge 30% of your sale for helping you find a buyer. The hard part in mostly every domain sale is finding the right buyer.
Think of it this way: let's say I find a diamond in a garbage can. My wife likes diamonds. My wife tells me she thinks that the diamond is worth $20,000. I say, "oh man, great. I'm going to go sell this thing!" So I go to Times Square, put up a billboard that says 'Diamond For Sale!' and field offers. Somebody offers me $10,000 cash on the spot. I accept. Diamond sold.
In this scenario, did I do a good job of selling the diamond? The answer depends on my motivations. If I wanted to make quick money with little effort, then yeah, I did a good job. BUT if I wanted to get the best price for the diamond, then no, I did a terrible job. If I wanted to get the best price possible, I would have got the diamond professionally appraised then researched networks through which diamonds are sold. Depending on the appraisal value, I would have perhaps approached buyers to gauge interest and market my diamond. So basically, before you sell a domain name/website, have your own notion of what the domain name is worth. At least then you'll know if you undersell it or oversell it. If you want the best price, a quick flip will not be the answer. Nine times out of ten, you'll have to be patient and work many different angles to find the buyer who's salivating at the thought of owning your domain name.
At times though, a quick flip can be wise. If a domain name will take 10,000 hours of work to monetize when I can flip it instantly for a $1,000 profit, the flip might be the better option. It depends how I value my time.
One thing to be careful of when you're first starting out is trademark infringement. There's a law called the cyber squatting law that in part deals with this issue. You should read up on "cyber squatting" so that you understanding the risk that comes with purchasing certain domain names, most notably a $100,000 fine. But basically, just use common sense and do fifteen minutes of research before every purchase.
Let's say I purchase buycocacola.com. That domain name would be worth nothing if not for the prevalence of coca cola's established brand name. If I were to monetize that domain in any way or sell that domain, I would be profiting off of Coca Cola's established brand name. Coca Cola's brand name is its intellectual property which has been trademarked. Coca Cola could rightfully sue me for trademark infringement, or at the very least forcibly request that I cede ownership of that domain name to them.
Now, here's where the line gets blurred. Let's say I buy canonballz.com. Canon the camera company has trademarked the phrase 'Canon' so they send me a cease and desist letter that demands that I cede control of my domain name to them. Do they have a case? They might. This particular type of case would have to be litigated in court. Canon is a major corporation that can afford to pay huge legal bills. I may not be able to afford huge legal bills, and even if I could, I may end up paying those bills when ultimately I have to hand over my domain name. Intellectual property legal cases are relatively new in the legal spectrum. Many legal precedents pertaining to online intellectual property have yet to be set, so it's best to avoid a situation like this altogether. The website Trademark247.com is a great resource that tells you all the registered trademarks for a given phrase.
Basically, stay away from phrases that are trademarked by well known companies or organizations. A lot of people have portfolios filled with domain names like myseattleseahawks.com, and those types of domain names are bad news.
Domain name valuation and sales are very complex. Books have been written on the topic, and if you're serious about domaining, you should read those books. Some great ones are 'The Secrets of Expired Domain Names and Website Flipping' by Ryan Andes as well as 'Website Flipping For Profits' by Shane Farrel. There are too many books to list. Do a search on Amazon.
Another great resource is DomainSherpa.com run by Michael Cyger. Simply put, Michael Cyger is the man. He's made a lot of money online, and he sincerely wants to help other investors succeed, a generosity that's rare in today's marketplace.
Shane Cultra is another good domainer to learn from. His website DomainShane.com includes daily blog posts on the industry. He also runs and promotes NameJet auctions for which you can submit your own domain names. This is a great set up because if your domain name is accepted to one of Shane's auctions, he'll market the name for you. One major challenge in auctioning domain names is the marketing as noted above in the Brand Bucket snippet. There are so many auctions every day--every minute--that if your domain name isn't marketed correctly, it'll likely slip through the cracks.
Most importantly, don't wait! Get started!