Buying Domain Names

When you have secured a deal to purchase a domain name, especially one that has significant value, you need to do your due diligence. The most important research you need to do is to ensure the domain name is owned by the party that you think owns it, and the second is to make sure traffic/PR/directory listings and all other promises can be met.

In my opinion, ensuring a domain name is owned by the person/company you believe owns it is the most important thing. Having a Domaintools account allows me to search the Whois history for a domain name. If you are ever unsure of whether a domain name is rightfully owned, you should contact the previous owner to confirm that the name was sold. Phone calls are generally the best way to confirm it, although having an email record is also important.

You can sometimes use the Whois information to make sure a domain name is able to be sold by the contact person. Because some companies use their web developer or tech support company (or person) as the contact, even though you are dealing with the contact email, that person may not have rights to sell the domain name. If you are unsure or have questions, visit the website and contact the company directly (by phone). You can also Google the registered owner and contact the company c-suite offices or the executive listed.

Verifying other things like stated traffic, page rank, inbound links, or other promises is also important. You can ask to test traffic on your servers for a week to try and confirm that it’s “real” traffic and not bot traffic. You can also use free traffic check services like Alexa or Compete. There are a variety of ways to check page rank (like the Google tool bar or   many websites that can be found by searching “page rank checker” in Google). Finally, inbound links can be checked on Yahoo’s Site Explorer.

Do your due diligence before buying a domain name. A few extra minutes of research can save you a lot of money.

It’s always important to get a great deal when trying to buy a domain name to flip, but if you like a name at a rough price range enough to consider buying it, don’t fret over a few percentage points. From experience, I hesitated on a deal that I now regret not making.

I recently tried to buy a domain name for several hundred dollars, and the negotiation came down to the owner wanting $100 more than I wanted to pay.   With escrow fees, it would have been less than a couple hundred dollars more, but I thought (and still think) the name is worth between $2-3,000 on a quick flip. I ended up walking away from the deal because I thought the seller would figure that having my cash would be better than keeping the domain name he hasn’t sold in 8+ years of ownership.

It’s needless to say, but I checked the Whois today (several weeks later) and the domain name has changed hands. Perhaps someone else saw that the price was lowered or maybe the owner became motivated to sell it. Whatever the case is, I am sure I couldn’t buy the name today without greatly overpaying. It’s my loss, but an important lesson for people who are privately buying domain names.

If you see value in a domain name, get the best price you can, but don’t fret over a couple of percentage points. If the domain name is worth what you think it’s worth, and you are fairly close to buying it but just can’t hammer out the exact deal you want, think about what happens if the owner sells it to someone else. If you’d regret it, you should probably jump on the name.

Domain names are one of a kind, unique assets. When they are sold to a developer, end user, or unmotivated seller, you will lose your chance to get a deal. If your gut says to buy it, don’t hesitate to pull the trigger, even if the deal isn’t perfect.

One of the most favorable things I look for when acquiring a domain name is a note on the homepage that says the company is no longer in business – or a default hosting page after knowing there was previously a company’s website on it. Businesses go under all the time, but the underlying domain name could still be a valuable asset the former owners don’t even realize has significant value.

I was looking at a domain name that I would like to acquire this morning, and it has all of the signs that it could be available for the right price. There is a note that says the company, which had been in business for 75 years, had closed 6 months ago. The email addresses were bouncing, and the phone numbers weren’t working. This got me excited, as I love tracking down a domain owner. This is similar to how I was able to buy Customs.com a couple of years ago… good research to find a former partner in the firm.

While concurrently doing due diligence on the domain name of interest and doing some research to find contact information for the former President of the company, I came across a website that had consumer complaints about the company. Some of the complaints were pretty harsh:

• “This place is a disaster”
• “their behavior has been totally unprofessional”
• “my advice is to stay away.”
• “Won’t be visiting… or ordering from their website again”

Although the company was in business for 75 years and these comments may be accumulated over time, it’s still good to be aware of these comments that can easily be seen by anyone who does a Google search for the domain name. The domain name has a dual meaning, so it wouldn’t be used in the same way as it was before, but there are still a few websites with negative comments, and people might infer that they are about a new website that would be built down the road once the site launches.

Although most people would recognize the difference between what was there and what would be built there, some potential advertisers could see the complaints and simply pass on advertising. Domain investors need to keep in mind that comments about a business on a domain name could have a detrimental impact on the domain name’s value.