Buying Domain Names

Due Diligence with a Phone Call

I noticed a domain name in auction recently that looked funky to me. The domain name was very old, had been unlocked and relocked without transfer, and it had an active website on it. Put simply, I found it peculiar that the domain name was listed for sale in an auction. Before I placed a bid, I needed to get confirmation that the listing was legitimate.

There have been plenty of times where something about an auction looked off, but it turned out to be legitimate. There have probably been more times where something looked off and it was either a fake listing, a case of theft, or something else that made the auction problematic. If I can prevent it, I would rather hold off on placing a binding bid than have to deal with a problem later.

10 Recent Minimum Bid Purchases This Year

Yesterday I wrote about why I think expiry auction prices have grown inflated over the past few years. This has made it more challenging for me to buy good inventory quality domain names at reasonable prices. It seems like the days of buying a good name under $100 are pretty much long gone.

It’s not impossible to find good domain names in expiry auctions that have no competition, but it is quite a bit harder. In fact, in years past, I would stay up to the NameJet bid deadline when I found what appeared to be undetected gems that I might be able to poach without other bidders if I waited until the last minute. I can’t even remember the last time I did that (although the bid deadline is an hour later –  midnight – for me).

Doing the Legwork to Check Investment Viability

Hedge funds and private investors that invest serious amounts of money in publicly traded companies have many tactics to understand how a company is performing before financial reports are given. People are hired to count cars in parking lots, check inventory on retail sales floors, ask employees of suppliers for production details, and a variety of other means to ascertain non-public information. Domain investors should consider a similar strategy using different tactics.

I am not an investor in non .com domain names. That should be pretty obvious. Despite this, I am emailed regularly asking me for thoughts on buying new gTLD domain names. I believe investors would benefit from doing end user market analysis to check their investment viability. This is important for non-.com domain names, but it could also be done for the non-blue chip .coms (one word, 3/4 letter…etc), too. People should understand the market before investing thousands of dollars in speculative domain names.

Here’s what I would do if I was going to the legwork to evaluate investment viability for a type of domain name I was unsure about:

$18 Purchase to $4,999 Sale to $150 Million Startup

Late last Summer, I placed a $18 Discount Club backorder on a domain name at DropCatch.com. Once it became eligible to transfer, I spent under $10 to transfer it to my account at GoDaddy. I listed it for sale on Afternic for $4,999, and it sold within the last several weeks at the BIN price without any negotiation. After the 20% commission and acquisition + transfer costs, the total profit is somewhere north of $3,950.

Since the domain name sold, I have been periodically checking the domain name to see who bought it and why. Recently, I noticed a new website on the domain name, and it turns out a stealth startup with around $150 million in funding was the company that acquired the domain name. It’s the perfect brand match .com domain name for their business, and it suits them well.

Impress Them With Your Domain Names

As he often does, Peter Askew shared a nugget of wisdom about domain name development I can appreciate:

Besides operating this website and Embrace.com, I have pretty much resigned from web development projects. Peter’s comment still resonated to me because I share his sentiment when buying domain names in the aftermarket. When I tell someone I own a particular domain name – be it at a social gathering or professional event – I want the other person to be impressed. I want them to think to themselves – or ask me – how the heck did he get that domain name?!

Jason Calacanis Looking for a Premium Domain Name

Angel investor and entrepreneur Jason Calacanis is apparently looking to purchase a domain name. He put out a request on Twitter asking people to DM them if they have premium .com domain names for sale:

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