Welcome to Part Two of my post on buying and selling expired domain names. If you haven’t read part one, put on the brakes and go back and read it now.
Now back to “The Truth About Buying And Selling Expired Domains.” The truth is that many expired domain auctions are driven by the emotion of being in an auction and the mentality that comes with that rather than real metrics that would lead to a successful flip in the future. It only takes one persistent newbie to drive the price of a domain through the roof and with it, take a number of other bidders for a ride as they falsely identify this activity as relating to the real value of the domain.
I can’t tell you the number of times I’ve heard someone say, “I paid more than I had originally wanted but there were 20 bidders in the auction so I already know there are lots of people interested in buying the name.” While this may sound good at the time, trying to find those people and sell them the name is probably more of a challenge than you would think.
The truth about buying and selling expired domains is that most of what you’re bidding on is junk that you probably won’t ever be able to sell, or if you do, you’ll sell for a very small profit, or loss. It is those few names, those needles in the haystack so to speak that you really should be looking for. They won’t necessarily be the names with the most bids (although sometimes they are), and they won’t necessarily be in one of the hottest niches out there like insurance or debt.
At the end of the day you need to put your blinders up and ignore what other people are doing, because everyone is different. The person bidding high on a specific domain may be doing so because they have a buyer who wants names in that niche, or maybe they themselves develop in the niche, the point is – you don’t know. As I’ve said above it could also be a brand new investor that has no idea what they are doing and is just driving up the price. The point is, you should know for yourself why you are buying the name, and why you specifically would be able to sell it.
Since I really like examples I thought I would give one. A couple of years ago I sold a diamond-related domain to a major diamond importer. After selling the name they asked me if I had any others. I told them that I didn’t but that I would be on the lookout. Over the next year every time I would find a diamond domain that was expiring I would run it by them, if they were interested I would buy it and since I knew what range they would be buying in, I could make sure I would turn a profit.
When I was bidding on expired names in this niche I was in a different position than other bidders and in many cases would fight until the bitter end to get a name. However, as it goes with auctions, there were some names that I bowed out of once they exceeded a price point that I knew would allow me to turn a profit. I then had to wonder if the auction winner had a buyer in mind like I did, or if they thought the name was worth more because there was so much bidding interest (from me in this case). Sure it was worth more to me, but without a buyer in mind the price could be completely unreasonable.
This is where the rubber hits the road with expired auctions. While it can be fun to stay up late at night putting in bids and doing keyword research on the “hottest” names, at the end of the day you have to ask yourself if you have a clear path to turning your purchase into a profit. If you are buying expired domains based on bidding activity you could be buying names that you can’t sell, or to put it a different way, you could be building a collection, rather than making real investments.
And there you have it, the truth about buying and selling expired domains, from my point of view. Of course there are many different viewpoints here and that’s where you come in. What do you think? Comment and let your voice be heard!