Flipping domains involves buying a domain name for the cheapest price possible and then reselling it to someone for more than you initially paid for it.
Domains are a valuable piece of online real estate, and just like a realtor, you can identify undervalued domains with the potential to appreciate in value and buy them. You can then later sell it for way more than you originally paid.
So if you’re looking to earn extra income on the side, or maybe turn this into a full-time career, keep reading the rest of this piece as I show you how this business runs and the basics to get you started. Let’s dig deep!
Key Highlights
- Selling flipped domains can be done by reaching out to potential buyers directly, using online marketplaces like Flippa and Sedo, and listing the domains on auction sites
- Domain flipping can be a profitable business, but it also comes with risks such as legal disputes over domain ownership, domain theft, changes in search engine algorithms, and competition from other domain flippers
- To find valuable domains, keyword research, monitoring expired domains, and searching for domains that are about to expire are common methods
- To ensure success, you need to learn how to protect your domains, price them appropriately, and stay up-to-date with the latest industry trends and emerging technologies
What is Flipping Domains?
Flipping domains is the act of purchasing a domain for cheap, and without doing anything with it, you sell it to an interested party for a profit. With brands and businesses fighting to have a strong online presence, domains have become a key component in all their efforts and organizations are willing to pay top dollar for a domain that gives them an edge over the competition.
This has now given birth to a market where people identify domains with potential, buy them, and then sell them for monetary gains.
The Potential Profitability of Domain Flipping
Securing space on the internet is not easy, it’s like going to a crowded market trying to get the best space possible to sell your products. Domain names that are short, to the point, and show their intent in seconds get you that valuable space and that’s why big corporations and businesses are willing to pay millions of dollars for them.
So with the right strategy or by being at the right place at the right time, you can buy an undervalued domain that could fetch you huge profits. Who knows, your domain might enter the list of the top 10 most valuable domains ever sold.
The Rise of Domain Flipping as a Business
The first commercial domain name was registered on 15th March 1985, that is a long time ago which means for over 3 decades, brands and businesses have registered every short and keyword-relevant domain name you could possibly think of. Since you cannot register the domain name you want, you have to make an offer to someone who already owns it, this situation gave birth to domain flipping as a business.
Having a strong online presence is an important part of any digital marketing strategy which in recent years has taken over as the go-to marketing strategy of every business or brand. This has made the demand for valuable domain names very high thereby making flipping domains a lucrative and popular business.
Finding Valuable Domains to Flip
Despite the fact that flipping domains can be a lucrative business, you can’t just go about buying every domain out there. You need to find the domains that are valuable and can be sold for a profit. Let me show you how!
Identifying Keywords and Phrases With Commercial Value
Before you go about buying domains, do research about a specific topic, and find out which keywords and phrases related to this topic are searched the most.
When you include an actively searched word or phrase into a domain name, it gives it more value because that keyword or phrase may be in high demand among businesses and marketers thereby giving the domain name a commercial intent.
Analyzing Search Engine Rankings and Traffic
This is the point you skip the guesswork and get into facts. Before integrating a keyword or phrase into your domain name, you need to consider how search friendly it is. You can use tools like Google AdWords Keyword Planner, Google Trends, and SEMrush to check monthly search volume, competition, and how much people are willing to pay for the keyword or phrase.
The more popular and highly searched a keyword or phrase is, the more valuable a domain name that incorporates it will be. You need to be aware that competition for these keywords is usually stiff and other domain flippers are on the lookout for them, so you need to find keywords with low competition but still relevant to your topic.
Utilizing Tools Like Domain Appraisal Services and Auction Sites
Another way to know the value of a domain name is by using domain name appraisal services to know the current value of the domain you intend to buy.
There are several online services that offer domain appraisal like GoDaddy Domain Appraisal. By simply imputing the domain name, it gives you an estimate based on the current market in seconds thereby making your decision-making process easier.
You can also check domain auction sites to see how much people are willing to pay for certain types of domains, study the trend and see what type of domain to invest in.
Look for Expired Domains
Expired domains are like a treasure house waiting to be explored. These are domains that were not renewed with their current registrars before the subscription period expired. Competition is low and you’re not buying from a private holder.
Because they already have a history of use, some of them come with traffic and search engine rankings and if you purchase the right one, they can sell for a very high price. Take note that expired domains with high traffic and SEO rankings may still be in high demand
Buying and Selling Domains
Now that you’ve understood how to find valuable domains to flip, it is time to get down to business by buying and selling them for a profit. But before you do that, there are a few things you need to understand first.
Strategies for Negotiating Prices With Sellers
Agreeing a price with a seller for a domain is the first hurdle you’ll have to scale, this is critical because it could be the difference between making a profit or loss.
To avoid being low-balled, you need to get familiar with these common negotiation tactics and practices:
- Gather enough information about the domain and its market value by conducting thorough research on recent domain sales, industry trends, and comparable domains to establish a fair price range
- Start off on a positive note with the seller by being respectful and professional in the way you communicate. Doing so creates a more collaborative atmosphere and increases the chances of reaching a mutually beneficial agreement.
- Try to understand the seller’s motivations for selling the domain. Are they in urgent need of money? Is the domain underperforming in search engine rankings? This helps you identify potential areas for compromise
- Start the negotiation with an offer that you believe is fair and reasonable based on your research. Your initial offer should demonstrate that you have done your homework and are serious about buying the domain.
- Present data on recent domain sales or market trends that support your pricing strategy. This will help eliminate any unrealistic expectations they may have about the domain’s value.
- Be patient and flexible: Negotiations can sometimes take time, especially if there’s a significant price gap. Remain patient and open to compromises. Maintain a constructive attitude throughout the process and be willing to adjust your offer within reasonable limits.
- Determine your maximum budget or the point at which the negotiation is no longer financially viable for you
Creating a Portfolio of Domains for Flipping
Because you’re just starting, you might be tempted to buy one domain and try flipping it, that really isn’t a good idea because you may end up owning a domain for months or even years before eventually selling it.
Experts advise you to build a portfolio of domains because it gives you a wider reach and a higher probability of making a sale. Not all your domains will make you money but flipping one of them for a decent price can make your entire operation a success.
Finding Buyers for Flipped Domains and Negotiating Prices
Now comes the difficult part, finding someone willing to pay more for the domain than you did. This is easier said than done but there are several ways to find buyers for flipped domains which are:
- You can buy and hold on to the domain until interest in it and its value increases. By making your registry public, those who are interested will be able to reach out with an offer privately.
- Another way to find buyers is by creating a ‘domain for sale landing page’ by using a URL redirect so it shows the domain is for sale when anyone tries to visit the website
- You could be more aggressive and reach out to potential buyers by listing your domains on online marketplaces like Flippa and Sedo
- The fastest way to flip a domain is through domain auction sites where people bid live for your domain
Establishing a Transfer Process
When you and the buyer of your domain agree on a price, it is important that a transfer process that ensures the buyer receives the domain and the seller receives payment is established. Usually, it is at this stage that trust becomes an issue.
You get torn between transferring the domain and trusting that the buyer will send you the money, or the buyer paying you first and trusting that you’ll transfer the domain.
To avoid any unpleasantness, it is advised you secure the transaction using an escrow service. An escrow service keeps hold of the payment until the domain name is transferred.
Finally, make sure the escrow service you’re using is licensed and legit to avoid any escrow scam.
Challenges and Risks
Now that you have a good understanding of how the business works, you also need to know that it’s not all smooth sailing. Flipping domains can be profitable, but it also comes with several challenges and risks you should consider before getting involved in this industry. Let’s see what they are!
Legal Issues and Disputes Over Domain Ownership
Domain names are now considered valuable intellectual property assets so when two parties are claiming ownership of the same domain, it leads to a dispute. Conflict usually arises in relation to trademarks and other IP rights being used in domain names. The most common domain name dispute scenarios are:
- Larger companies use their resources to force the legitimate owner of a domain they are interested in to give up their rights in a process known as reverse domain hijacking
- A party registering a domain name similar to a business and then trying to either rent or sell the domain name to them or a competitor at an inflated price. This is known as cybersquatting.
- When two entirely different businesses with similar names have an interest in the same domain name because it best captures their brand
Situations like this can lead to long legal battles, which will take up your time and rack up lawyer fees. To avoid getting into disputes over domain names, always check and make sure your domain is not infringing on any registered trademarks.
Domain Theft and Hijacking
Domains have become valuable online assets with some selling for millions of dollars. This has attracted cyber criminals who look for ways to either steal or hijack domains and then sell them for a profit.
Domain hijacking is the act of changing the registration of a domain name without the permission of the original owner. This occurs when the vulnerability in a domain name registrar is exploited and unauthorized access is gained through social engineering or by gaining access to the email address of the domain’s owner and then resetting the password to the domain name registrar.
Domains can also be stolen through phishing attacks, email vulnerability, and exposure at the domain registration level. To have a deeper understanding of how it works, read more on domain hijacking.
Changes to Search Engine Algorithms Affecting Domain Value
Search engines normally implement algorithm changes to improve their search functions with different technologies and processes. In 2022 alone, Google reportedly made 10 changes to its search engine, while typically this is a good thing for the user, that might not be the case for all domains.
Because these changes are unpredictable, a domain you’re trying to flip with high traffic and good search engine rankings might lose its performance because of an algorithm change, sending the value of this domain crashing down.
Read more about Google entering the domain business.
Competition
The domain flipping business is becoming more and more popular, since there’s potential for serious money to be made, you’ll naturally find a lot of people are into it.
As the competition for finding valuable domains becomes more intense, finding one will be like finding a needle in a haystack making it harder to find profitable opportunities. Now that you’re aware of the challenges that await you, it’s only fair if I share with you some tips for success. Keep reading!
Tips for Success
As profitable as domain flipping can be, you need to understand that achieving success is not easy. It requires hard work, patience, a willingness to adapt to changes in the industry, and the ability to see and take an opportunity when it comes up. But asides from that, there are some basics you need to know:
Protect Your Domains
When you buy and register a car, it is legally yours but it doesn’t stop thieves from trying to steal it. The same rule applies to domains, despite it being legally yours, thieves and hijackers will always try to take it away from you. To protect yourself against that, here are a few things you need to do:
- Use unique, strong email passwords and enable two-step verification: create a different password for every account you have, the passwords should be a mix of capital letters, lowercase letters, numbers, and symbols which should be changed regularly. Enabling a two-step authentication prevents a hacker from accessing your account even if they know your password.
- Renew your domain registration promptly: anyone can easily re-register your domain if the registration expires, so not paying for your domain on time will be you offering it on a plate.
- Never share your domain details and register new ones in your name: keep the details of all your domains as a closely guarded secret, sharing such information with someone could be setting yourself up for theft. Delete all emails containing such details and make sure your domains are registered in your name so you can prove they are yours in case of any eventualities.
- Be wary of phishing attacks: do not respond to or click on any link from a suspicious email requesting for registrar data. If in doubt, contact your domain registrar and seek clarification.
- Make sure your domain registrar is approved by ICANN(internet corporation for assigned names and numbers): approved registrars by ICANN come with enhanced protection, two-factor authentication, DNS management, and good technical support. Domain locking should come as standard with all registrars, make sure to enable it to prevent unauthorized domain name transfers to another registrar.
- Hide personal data with WHOIS protection: ICANN requires that every domain registrar maintains a publicly viewable WHOIS database. This means for every registered domain, the database must have the personal contact information of the owner. Make sure to choose a registrar that offers WHOIS protection to prevent people from getting your personal details.
Staying Up-To-Date With Industry Trends and Technology
The domain flipping business is a fast-paced world and you need to stay ahead to keep up with it. With search engine algorithms constantly changing and new technologies matching them stride for stride, the need to always be in the know of the latest trends cannot be overemphasized.
Luckily, there are a few ways to make sure of that:
- Subscribe to relevant journals, blogs, and newsletters that publish the latest news, opinions, and trends in the industry
- Attend industry events such as seminars, webinars, and conferences so you can keep up-to-date and network with like minds
- Follow the leading voices in the domain industry on social media, they usually get first-hand information on the latest happenings and technologies which they often share with their followers
- Reach out and collaborate with other domain flippers, together you can map out strategies on how to achieve success
Price Domains Appropriately
When setting the price for your domains, make sure you do so based on their value. During negotiations, emphasize the unique qualities and potential value of the domain. Discuss its branding potential, search engine optimization benefits, or any specific market advantages it offers.
This paints a clear picture of why you’ve set the price for your domain and improves your chances of closing a deal fast.
Conclusion
Flipping domains can be a lucrative business if you’re willing to put in the hard work, be patient, and just be able to sense a good opportunity when you see one.
By following the guidelines on how to find valuable domains, and taking note of the challenges and risks involved with the business, you can create a winning strategy on how to buy and sell domains.
Digital marketing and a solid online presence have taken over every organization’s marketing strategy, so the value of domains can only go higher. Now is actually the right time to invest, so get started with the knowledge that you have a trusted companion here at HostAdvice to help you every step of the way as you build your online real estate empire.
Next Steps: What Now?
- Understand what flipping domains are all about and how it could be a great opportunity to make a decent profit.
- Master the art of finding valuable domains to flip
- Follow the guidelines on how to buy and sell domains
- Embrace the challenges and risks involved with the business, and use it to create a winning strategy
- Follow the tips for success and you’re well on your way
- Learn more about the best website builders
- Read about the best web hosting
