Hello, happy Monday and welcome to another Domaining MBA Monday here on MorganLinton.com. Today I wanted to talk about a topic that I feel really can’t be talked about enough, buying expired domains. There are great opportunities out there when you’re browsing drop lists, but it’s important to remember that what you’re looking at, in most cases, is someone else’s garbage. Of course one man’s garbage is another’s treasure however knowing the difference between the two can sometimes be a bit of an art.
When I first started in the Domaining world I was hand-registering lots of domains junk and not selling any of them. I didn’t get it, what was I missing? That’s when I realized that staying up until 2AM coming-up with the next great domain name that I can’t believe isn’t registered yet wasn’t a great way to make money. Like most new investors I thought all the good domains were taken, until I discovered expired domains.
It was like finding the holy grail, or so I thought. I started bidding on domains that other people were bidding on, my logic was, if so many other people were interested in buying the domain I could sell it to any of them for a profit. Heck, the price the domain sold for in an expired domain auction had to be the wholesale price so as long as I was the high bidder I was buying much better names at an incredibly low price. This leads me to my first lesson and like most lessons in this industry, more money wasted.
Lesson #1: Just because a domain has lots of bids doesn’t mean you’re getting it at a wholesale price
This can be a painful lesson to learn but better to learn it now rather than later. In an auction with ten bidders it only takes one bidder who just wants to keep on bidding to bring the price of a domain up far above what you’ll likely ever sell it for. It can be easy to think that a domain with lots of bids is being validated by the community. Dig deeper. You might just find that one or two bidders are driving up the price, and for all you know these could be completely clueless new Domainers just learning the ropes themselves. You should have a price in your head of what you’re willing to pay and what you think represents wholesale before getting-into a bidding war.
Lesson #2: Some of the best deals are names that never get any bids
Some of the best flips I’ve ever had are domains that had absolutely no bids on them. It can be easy to think that if nobody is bidding then the domain must have no value. Remember, you want to focus on what you think the wholesale prices and ignore the bidding activity. Only you know your business and what domains you can sell. I bought a domain last year for $12 that I sold a month later for $12,000 and yes, I was the only bidder. This was in a market I knew with a specific buyer in mind and some very clear comparable sales to reinforce the price. I’m not saying every expired domain I buy for $12 I sell for $12,000 but I am saying that just because a domain doesn’t get bids, doesn’t mean it’s not valuable.
Lesson #3: Use an automated tool
It can be easy to find yourself spending hours going through endless lists of expired domains. It is significantly more efficient to use an automated tool to sort the lists for you based on the criteria that matters to you. Two of the best tools out there to do that are Dropping.com and FreshDrop.com.
Lesson #4: Do the right thing if you buy an expired name that someone accidentally dropped
Every once and a while I get an email from a terrified website owner who accidentally let their domain drop. I always give it back to them for the price I paid and not a penny more. These things can happen and it’s easy to forget that most people on this planet don’t know anything about domains. They may have a website but they didn’t do any of the domain setup, their website developer, son, nephew, etc. did all of that. Just like you trust people in your life to keep track of other things for you, people do this with domains and they don’t think of them expiring. Profiting off of this is bad karma in my opinion and given that it only happens 1-2% of the time (at least for me) I think it’s a good move.
Lesson #5: Avoid trademarks like the plague
Many new investors don’t realize that they can get into serious legal trouble when buying an expired domain. Companies that sell expired domains don’t make any warranties about the legal repercussions that could come from buying a domain name with a trademark in it. Just because other people are bidding on it, and a company you know and trust is selling it, doesn’t mean you wouldn’t lose it in a UDRP and/or get sued. Facebook has a solid track-record of going after trademark owners as is Google and many other companies with a very large budget for making your life hard.
These are some of the most important lessons I’ve learned so far, as always I’d love to hear from you. Feel free to share any lessons you’ve learned about buying expired domains or comment on any of mine. Comment and let your voice be heard!