Buying and selling domain names can be a very lucrative side-hustle, or even a full time business, with few barriers to entry, low start-up costs and a short learning curve before you start making sales.
One of the great aspects of domain flipping is that the efforts required are minimal. All you need to do is find memorable, appealing domain names in niche markets and sell them to buyers who are eager to create their own website on that domain (also called end-users), or sell to a wholesaler (for a profit) who will then look to onset to an enduser.
Introduction To Domain Flipping
Despite rumours of the contrary, domain name flipping is alive and well! Here’s the basic concept – buy a domain name that you think is under-valued, list it at one or more domain name marketplaces (for example Flippa.com or Sedo.com) and sell it for a profit. Then rinse and repeat by re-investing at least some of your profits into buying more domain names and repeating the process over and over.
What is a domain name?
A domain name is a small piece of virtual real estate on the Internet. In some ways it is the equivalent of a physical address – it is unique, a way for people (and search engines) to find you, and gives you the chance to build something on it (in this case a website rather than a house).
However, it’s important to remember that a domain name is NOT a website – it’s more like buying an undeveloped block of land than buying a house. It also only remains yours while you keep your domain registration current – if you forget to pay on time, you could find that your domain name expires – this is the source of good-quality, valuable, expired (or dropped) domains that I’ll discuss in detail below.
This all means that you never OWN a domain name, rather, you own the right to keep it registered for as long as you want. And for some domains (especially the high-value ones), this could mean that they will NEVER be available for sale again!
So, one interesting thing about the domain market is that, as each domain name is unique, and given that once sold it could be gone for good, there is built-in scarcity that favours domain sellers – which is why domain auctions are one popular way of selling.
Domain name terminology
Once you get involved in domain buying and selling you will see the abbreviation “TLD” used a lot. TLD stands for Top Level Domain – the letters that come after the last dot in a domain name. Here’s an example – in this site’s domain name (mazedomains.com), the TLD is “.com”. There are several types of TLDs; the most important are gTLDs, sTLDs and ccTLDS:
- gTLDS – Generic TLDs including .com, .net, .org, .edu, .info and .biz.
- sTLDS – Sponsored TLDs are specialised TLDs that have a sponsor representing a specific community served by that domain. Examples include .asia and .dev.
- ccTLDs – Country Code TLDS. These are two-letter domains that specify a country or territory. I live in Australia, so my country code is .au. Other examples are .us (USA) and .tv (Tuvalu). You can find a full list of ccTLDS at Wikipedia.
The type of TLD plays a crucial role in determining website value – .com is the 800-pound gorilla, and all the rest are a distant second.
Domain character patterns
There is a shorthand that has developed in the domain name industry to signify the pattern of characters in short domain names. The system uses capitals to denote letters, numbers, consonants and vowels:
L = Letter (Any Letter)
C = Consonant (BCDFGHJKLMNPQRSTVWXYZ)
V = Vowel (AEIOU)
N = Number (0123456789)
So a two-letter domain name would be written as LL, a three-letter as LLL, a four-letter as LLLL and so on. If you wanted to be more granular, a domain name like Bob.com could be specified as CVC, and a word like Bobo.com would be CVCV. CVCV names are often VERY valuable (think six- or seven-figures) as they are usually pronounceable, memorable and brandable – eg Vevo.com, Dada.com, Mama.com and Papa.com. Short number domains (NN up to NNNNN) are also very valuable, and are particularly popular with Chinese investors.
How do I find under-valued domain names?
While the hottest niches may change (for example crypto domain names were hot until Bitcoin crashed; medicinal cannabis domains are hot at the moment), the game remains the same – stay focussed on locating and purchasing lower cost domains and flipping them for a higher price.
There are many domain name marketplaces on the internet, and many ways to find cheap domain names. The main idea is that you make money when you find an under-valued domain name that you can later flip for a profit, rather than holding out for a high price that you may never get. In other words, you make your money when you buy, rather than when you sell – just like in real estate or used cars.
Why are expired domain names such good value?
When it comes to finding the best domain names, the easiest and cheapest route for beginners is to find undervalued, recently-expired domain listings – names that have previously been registered and left to expire, and are now available for purchase by the general public. The way I like to find these is at ExpiredDomains.net. These domain have several benefits:
They may be ‘aged’ – Registered some years previously, but left to expire. This is one of the factors determining value, as you’ll see below.
They could have valuable backlinks – If a previous owner built some SEO backlinks then they could still be valid. While there are several ways to check how many backlinks a domain name has, I really like the MANGOOLS suite of tools – it has a number of different functions, including a backlink checker, keyword tool and SERP monitor.
They might be getting traffic – One way to figure that out is to check the domain name’s Alexa rank.
They’re cheap – You can register a chosen name at your Domain Registrar of choice (I like GoDaddy); sometimes for as little as $1 if you have the right coupon.
What makes a domain name valuable?
While the true value of a domain name can only really be known when sold – like physical property or collectable art – there are some factors that make a domain name more valuable:
Age – Many buyers (and reportedly the search engines) like aged domains; mainly because they seem to carry some weight in the SERPs. The number to look for is “ABY” (which stands for Archive.org Birth Year – the first year that there is an archive for a given domain name).
Length – Buyers much prefer shorter domain names – partly because they are rarer, and partly because they are easier to remember, spell and type. Consider this – there are only 676 LL.coms, 17,576 LLL.coms and 456,976 LLLL.coms. This in turn drives prices – all LL.coms are over USD$1,000,000, with some LL.coms that are also dictionary words (eg By.com) valued at over USD$3,000,000 by Estibot!
Extension – By far the most valuable domain name extension (TLD) is .com, GENERALLY followed by .net and .org. My suggestion is to stick to .coms unless you have a good reason to buy a .net or .org. Be aware that many of the newer extensions cost more to register than a .com – for example .tv costs around USD$63, while .auto is as over USD$5,600 annually!
Backlinks – Domains that come with pre-built quality backlinks are often more attractive (and hence valuable) to potential buyers, because they have a head-start in the SERPs. Be careful of domains with thousands of backlinks (or even more) – these are often low-quality, spammy, automated backlinks that Google will penalise or ignore.
Other SEO metrics – There are many other SEO metrics – like Domain Authority, Page Authority, Trust Flow and Citation Flow – if a domain has a score for any of these, they are often more attractive to prospective buyers. Consider this domain (which is for sale at the time of writing here):
Traffic – Domains with pre-existing traffic are often more valuable than those without – especially if it is of the good-quality, buyer-intention type. You can get an idea of the type and amount of traffic by looking at the type of backlinks and Alexa rank.
Keywords / Dictionary words / Exact match terms – Keyword-rich, exact-match domains are usually easier to sell, and more valuable, because they will hopefully receive some free traffic in the form of direct type-ins (eg SydneyWeekend.com would be an example).
Pronounceable / Brandable / Memorable – Domain names that have these characteristics are more valuable. If you’re not sure, try the radio test – if you can say the domain name on the radio without spelling it, you’re probably on a winner!
Correctly spelled – While some domainers like to invest in misspelled words, many others advise you to stay away from these (as they have little commercial value) – especially when you’re a beginner.
Avoids numbers and hyphens – Domain names containing words and numbers (eg Sydney-B0om6.com) are generally less-valuable – partly because they fail the radio test.
How do I check possible domain value?
There are several possible ways to get an estimate of a domain names potential value: the GoDaddy Domain Valuation tool, and Estibot. Both tools use comparable sales to estimate domain value. As they use different algorithms and comparisons, however, there can be a significant variation in estimate (see images). Also remember that these estimates are just guides, and may not be what you can get if you need to sell tomorrow!
How do I buy a domain?
Once you’ve found a domain name you like, go to your favourite Domain Name Registrar (I like GoDaddy) and registrar your domain name. You don’t need any of the extras (like email, hosting, SSL certificates or website builders) that many registrars offer you. You should also decline private registration – one way you’ll get some domain name sales enquiries is through Whois lookups (https://au.godaddy.com/whois) – if you have privacy protection on, potential buyers won’t be able to find you. Many registrars have coupons for cheap regos – find them by searching “REGISTRAR + coupon” at Google (substitute REGISTRAR for GoDaddy or another registrar). Another way is to install the Honey chrome extension (joinhoney.com/ref/l65bwax) – an app that finds and tries multiple coupons for you automatically.
How do I sell a domain?
There are many ways to sell your domain names – domain marketplaces like Sedo.com, domain parking sites like Efty.com, domain auction sites like Flippa.com, or via direct outreach to end-users (perhaps using a service like Escrow.com to handle payment) . I’m going to cover marketplaces in depth in another article, so let’s skip to the best part – transferring your domain to a new buyer.
So once you sell a domain, you need to transfer ownership to the new buyer. The easiest way to do that is to “push” it to the new owner’s account at the domain name’s existing registrar. There are a couple of major benefits doing it this way – it avoids transfer and extra registration fees (new registrars usually require you to pay for an extra year’s registration, which can eat into your profit margin – especially if your domain has a premium TLD), and you can avoid transfer lock.
Transfer lock is a restriction placed on newly-registered domains, preventing you from transferring them to another registrar within 60 days of purchase. Luckily, this restriction does not apply to a domain push at the current registrar – all you need is the buyer’s account details and you’re good to go.
You can also create a free account for them (you’ll need name, email and address) and then send them the details. Once pushed to them, the new buyer is usually free to transfer to another registrar, build a website, or point or redirect the domain name to a new set of name-servers.
Buying and selling domain names can be both fun and profitable, but does take some effort on your part to find under-valued domain names, list them for sale, and transfer them to the buyer. There is a short learning curve and a low-cost of entry that makes it easy to get started. Learn more about domaining here.