Buying Domain Names

With as much uncertainty as there is in the domain market these days, I am being more selective about domain names that I buy. As PPC is dwindling, there is less money being reinvested into the domain market by domain investors. Since much of the domain sales market has been fueled by domain investors reinvesting their PPC income, that area of the market seems to be stagnant.   End users are still buying domain names, but as most people know, it’s a tougher sell.
In that vein, I am being more selective about the names I am buying. When I think about buying a domain name, on top of the standard research I do, I ask myself how the name could be developed into a website. If there is no obvious way that a business could be established on that domain name, there isn’t much of a chance I am buying.
I like geodomain names for this reason.   It’s fairly easy to imagine how a city names (in the .com) can be developed into a business.   While it’s not easy to generate sustainable revenue to make a living, knowing what the site should feature is a no-brainer.   Cities, regions, and countries are like brands with which people are familiar.   If you asked a random person on the street in California what Burbank.com would be without prior knowledge, he would probably say, “a site with information about Burbank, California.”
I also like category defining product related domain names like TruckRims.com (which will be auctioned off by Rick Latona at Traffic) or ComputerSpeakers.com (which I once owned).   If you know what to expect on a website before you’ve ever seen the site, the name is probably a good name. It’s important, however, that a business can be built around that concept – otherwise, how will you make money?
One problem I am having is that many end user companies also know how strong these product and service related domain names are.   I have seen quite a few Whois lookups lately where names are owned by CSN Stores or Net Shops.   These companies get it and they own some fantastic product-related domain names that probably won’t ever be on the market.
If you have great .com product related domain names, drop me a note in the comment ection.   I had once offered up to $100,000 for a city .com domain name, but that didn’t yield a single viable city .com name unfortunately.   I am not looking for anything other than .com right now, nor am I looking for brandable type names.   I am looking for names like WindowTreatments.com, Dehumidifiers.com, WashingMachines.com… etc.   If you have a fantastic name like this, I am looking – and if I can’t afford it, I know several friends who have much larger budgets for these types of names. The problem is that end users own most of these names.   Some are starting to understand the value – which ultimately is a very good thing for domain investors.

I’ve been asked how I go out and attempt to acquire a domain name in private, and I am happy to share how I do it – although I don’t think there is anything special to it. There are a couple of ways to go about it, with the most common being via email, and the lesser used phone call. I believe the best way to acquire a domain name in private (that may not even be for sale) is to make a phone call to the owner.
With a phone conversation, you can hear the owner’s tone and gauge whether he is actually interested in speaking with you about selling his domain name. For most sellers, it’s much easier to negotiate a sales price via email because there’s more of an opportunity to craft the email. Because of this, you may be able to have a “real” conversation on the phone rather than a contrived email about how the guy has spent the last 10 years owning the name but hasn’t had the chance to develop his multi-million dollar plan. Sure, he might want to develop it, but chances are good that he would rather sell it. You can get a feel for that over the phone, rather than an email.
Phone conversations are also good because most people will pick up their phone when someone calls, whereas emails can be easily ignored. Phone calls are much more personal, and they show the buyer’s sincerity. Emails are impersonal, and they are much more easily ignored. The main obstacle I’ve found is that many phone numbers in the Whois database are either intentionally incorrect 555-1212 or they’ve been changed. If you can’t get in touch with the owner, you can’t try to buy it. This is where emails can be valuable.
While there really isn’t a special method to my efforts, I thought I would share an email that I typically send if a phone call didn’t go through:

Subject: Offer for XYZ.com  
Dear (personalized if possible),
I am interested in purchasing XYZ.com from you. I would like to offer you $xx,xxx (always a reasonable offer) for the domain name. If you would consider selling XYZ.com, please let me know and we can discuss the terms and payment details. Please give me a call if you have any questions. I can be reached at (xxx) xxx-xxxx.
Regards,
Elliot Silver (always my real name)

By addressing the person by name (when possible), he can tell that I didn’t send a bulk email, and that the offer is sincere – this is important because of the amount of Whois spamming to huge lists of similar names. I also make an offer that is reasonable. If I offer $100 for a $100,000 domain name, it’s probably going into the garbage, or I will get a “f-off” response.
How do I figure out what’s reasonable? I do my research on the name and make an offer based on my gut and research. No, I don’t think it’s wise to offer $100,000 for a $100,000 domain name, but maybe $60,000 if I want it. Trust me, if you make a reasonable offer, you will usually get a response. Before I sent emails with offers (when I first started), I simply asked if the domain was for sale. If I received a response, it usually said it might be for the right price. Well, instead of responding with an offer on the second effort, I figured I might as well just make an offer and grab attention. Just like a 1-click lander is usually more profitable than 2-click, I found that starting with an email is a better bet.
I’ve heard all the stories about people making those $100 offers and getting lucky. Yes, it happens on occasion (just like the jackpot slots), but with all the spamming, it’s happening less and less these days – although maybe on some non-.com extensions it could be more fruitful. I would rather make reasonable offers and negotiate than rather than wasting my time trying to get lucky.
When it comes to making offers, you usually get one chance to make an offer before the owner sends your email to the trash – or worse – his spam folder. Once you’re in his spam folder, it’s game over since he won’t even see any follow-up emails. With all due respect, if you don’t know how much you’d pay for a domain name, you probably shouldn’t be buying it 🙂