Buying Domain Names

Importance of Maintaining Liquidity

In difficult financial times and tough market conditions, it is very important to maintain a portfolio of liquid domain assets that could be sold very quickly if necessary. Two and three letter .com (LL.com & LLL.com) names, strong dictionary .com terms, city/geographic terms and some numeric domain names are considered liquid domain assets.
There are reasons for maintaining solid liquidity, other than having bills to pay. For one, other people may need to start selling their liquid assets, and if you are in the right place at the right time – and you have the capital to make the purchase, you could benefit. Additionally, it costs quite a bit of money to develop and maintain a website. If you need to finance a web project, you may need the cash in short order.
When you evaluate whether your portfolio has enough liquidity, think about

Domain Psychology

If others are like me, they probably find themselves searching for domain names based on events going on in their life. Lately, I’ve been spending quite a bit of time searching for wedding, pet, and real estate domain names. I do some keyword research via Keyword Discovery in addition to the “real world” research that I am constantly doing. I also look-up category killer names on iWhois.com.
Exploring new areas can

TreatmentCenters.com – $100k Domain to $1Million Website

TreatmentCenters.com is a great example of a company buying the domain name they needed and building it into a million dollar website. TreatmentCenters.com was sold for $100,000 by Afternic/BuyDomains as reported in DNJournal. This domain name informs visitors about exactly what they will find when they type it in to their browser, and it doesn’t disappoint upon arrival. For this business model, there probably aren’t any better domain names out there.
Using a directory model, TreatmentCenters.com provides paid and unpaid listings for various health and mental treatment centers and counselors throughout the country. Visitors can search by condition, by state or by provider name to find what they need. When a website like this is able to provide names, addresses, contact information, and data on the topic of interest to the searcher, it builds stickiness, and the searcher will probably return. This provides a positive experience for the visitor, and it also provides an ROI for the advertiser.
Kudos to the people behind TreatmentCenters.com! This is an aesthetically pleasing, well-functioning website, and it looks like a million bucks! I hope to emulate it with some of my entries down the road – including Lowell.com.

Keyword Search Tool to find Domain Names

I’ve been using a great keyword search tool to help me target domain acquisitions. Using KeywordDiscovery.com, a tool created by Trellian, I am able to find popular search terms related to specific keywords. I can then target specific domain names by putting the popular terms together. While I presume the main intent of this tool is to find keywords for developed website content, this tool helps me target potential domain acquisitions.
Oftentimes, the names that I find aren’t the obvious $100,000 domain names that many people target. These names are usually the strong second tier names that could sell for anywhere between $10,000 – $50,000 at auction or private sale. The advantage for me is that most of these names are less mined, meaning that the owners receive less solicitations. As a result, the owners are more inclined to discuss the sale of their domain names, and I am more likely to complete a sale.
As a rough example, using the keyword “cheap,” the most common searches are for “cheap tickets,” “cheap flights,” and “cheap airfare.” I would imagine the owners of CheapTickets.com, CheapFlights.com, and CheapAirfare.com receive hundreds of domain inquiries a week for these particular names, even though two of those are developed and one is parked.
Using the KeywordDiscovery.com search tool, I can see that “cheap bridesmaid dresses,” “cheap textbooks,” and “cheap lingerie” are all fairly popular search terms, indicating that the corresponding domain names would have some value. If I was looking for a name in this genre, I would probably hone in on these names.
Now that the Overture Search Tool isn’t work much (if at all), KeywordDiscovery.com is a great tool for domain investors to find potential domain names. Although this doesn’t necessarily mean that corresponding domain names receive traffic, it is indicative of the search term being desirable.
Also, I am not being compensated to write this. I am using the free trial.

Jump the Domain Market

In the investment world, once a story hits the press, the price of the affected company’s stock is impacted almost immediately. In the domain industry, news travels less quickly, and because of that, you could possibly get a jump on news before price increases are made. Timing is everything.

One way to get a jump on the news is to review the list of domain names that are scheduled to be auctioned in an upcoming live auction. Do your best to determine the value for each live auction domain name based on the venue, comps, current market value…etc, and compare your calculations to the reserve prices. Should your valuation be significantly higher than the reserve price, there may be a strong chance the domain name will sell at auction.

When a domain name sells at auction for a significant price, the demand for similar names may increase as a result. In the week or so before the auction, if you are confident that a particular name is going to make a big splash in the auction, attempt to acquire similar domain names using Whois searches or via domain marketplace. If you don’t have the opportunity to do this quickly enough, you can do the same thing immediately after the auction. I recommend this strategy if you have a strong feel for the domain market and are willing to take a financial risk.

Of course, the caveat is that not all domain names are similar, even if they look the same. You need to know the market well enough to feel comfortable going out on these types of limbs. Also, the demand for similar names may be short lived, so this is a short term strategy.

Disconnect Between Buyers & Sellers

“This domain name can be developed into a great website!” This popular phrase amongst sellers is laughable to many buyers and developers who would argue that ANY domain name can be used for a great website. What some sellers don’t realize is the actual time and cost of building a profitable website. This can cause a disconnect between domain sellers and buyers.

For many buyers who plan to develop their domain purchases, the right domain name is essential, but contingent upon the price. When buying a domain name for a specific project, the buyer knows his overall budget (based on expected returns). In the budget, he allocates funds based on the approximate cost of the project, the cost of marketing, the cost of technical management, hosting, and other incremental costs. He also knows what he can afford to spend on the domain name. Most of the time, a buyer is willing to spend a bit more than he really wants on the right domain name, but there is a limit to the overage.

Developers typically think differently than domain investors. Developers believe that if they build a great website, visitors will find it no matter what the domain name is. Domain investors believe visitors will find the website more easily (and more quickly), and they will be able to recall the website much quicker if it has a memorable generic domain name. Both lines of thought are accurate, which can make bridging the gap more difficult.

In my opinion, the time to spend the money on a generic domain name is if you have a “category killer” product or service, and owning the domain name of that category will instantly make you the industry leader. If you are building a city directory for example, you want to spend the extra money and buy the city .com name rather than a “brandable” domain name. It gives you instant credibility when speaking with potential advertisers, and Google loves targeted domain names!

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