Strategies for Reselling Domain Names: A Beginner’s Guide

Domain name reselling is the process of purchasing domain names with the intent to later resell them for a profit. Many domain names sell for thousands or even millions of dollars, so there is a huge opportunity to make money in this market. However, domain name reselling also comes with risks and requires knowledge of valuation principles, marketing tactics, negotiation strategies, and more. This comprehensive beginner’s guide will provide you with all the information you need to start reselling domain names successfully.

Why Resell Domain Names?

There are several key reasons why reselling domain names can be a lucrative business:

Scarcity – There is a finite number of good .com domain names available. The best are already taken. But new businesses are created every day that need a domain. This creates demand.
Branding Power – A premium domain name can enhance a brand. Short, memorable domains are highly valued. This creates a lucrative aftermarket for domains.
Passive Income – After acquiring a domain, no further work is required to earn money from holding or reselling it. Domains are assets that require no ongoing labor.
Low Barrier to Entry – It takes little capital to get started reselling domains compared to other businesses. Domains can be purchased for $10-$15 and resold for much higher.
Liquidity – There is always demand from buyers, so domains can be flipped relatively quickly.Domains are global assets that can be sold to anyone in the world.

With the right knowledge and strategy, domain reselling offers an attractive business model for earning significant income even with limited startup funds. The key is understanding valuation and trends in the domain market.

How to Value Domain Names

When getting started in domain name reselling, the most important skill is learning how to accurately value domain names. The value is primarily based on the following criteria:

Length – Shorter domains with fewer characters are more valuable. One-word domains are premium assets.
Extensions – .com domains have the most value by far. Other popular extensions are .net, .org, .io, and new domain endings.
Memorability – Easy to remember, spell, and speak domains have higher value. Made up words or complex strings reduce value.
Brandability – Domains that describe products, services, companies, etc. are brandable assets that command higher prices.
Traffic Potential – Generic word domains that could generate traffic on their own tend to have higher valuations.
Current Market Trends – Some words and domain extensions are “hot” and in demand driving up prices.

There are domain name appraisal tools like Estibot that provide an algorithmic estimate of worth. But valuations take experience. Compare to sales of similar quality domains to determine true market value.

The Best Place to Buy Domains

The best marketplace to purchase domains for reselling is GoDaddy Auctions. This is where you’ll find domains with the highest profit margin potential.

Advantages of GoDaddy Auctions:

Huge inventory – Over 35,000 domains for sale through auction at any time.
Hidden gems – You can uncover high value domains that have never been marketed before.
Motivated sellers – Owners auction domains they no longer want. This creates opportunities to get deals.
Low start prices – Most auctions start at just $1, though prices jump with bidding wars.
High demand – These auctions attract buyers from around the world looking for domains.
NameBio value checks – You can instantly compare auction prices to NameBio appraisals.
No reserves – Domains sell to the highest bidder regardless of price met.
Flexible payment plans – GoDaddy provides payment plans to buyers over 12 months for domains over $2,500.

The auction model creates a dynamic secondary market. With expertise, you can acquire domains for thousands less than their true market value.

How to Find Valuable Domains on GoDaddy

GoDaddy hosts thousands of domain auctions. Here are tips for filtering through the inventory to discover the most valuable domains:

Keyword search – Search keywords related to your interests or niche markets to uncover relevant domains.
Keyword value check – Research keyword difficulty and traffic data on domains of interest to gauge value.
Look for short, brandable names – Length and brand potential greatly impact prices.
Review auction history – See how high bidding has historically gone to estimate final prices.
Search by category – GoDaddy organizes auctions by category like finance, tech, services etc.
Check competing extensions – If the .com is unavailable, look for .net, .org, .info versions.
Filter by time remaining – Focus on newly listed auctions ending soonest to get best deals.
Watch expiring/dropping domains – Valuable domains may not sell and get dropped, letting you buy for base fees.
Follow GoDaddy’s featured auctions – These are domains GoDaddy believes have high demand.

Looking for short, brandable domains, deal opportunities, and hidden gems will help you secure domains at below market value pricing.

How to Buy Domains from GoDaddy Auctions

Purchasing from GoDaddy Auctions follows a straight-forward process:

Search domains and identify promising auctions
Sign up for a GoDaddy account to access the auction system
Max bid your highest price before the auction ends
Optionally enable auto-bidding to outbid competitors
Check auction status until it closes
Receive notification if you won and instructions to checkout
Choose payment option: full payment or 12 month financing plan
Follow steps to transfer the domain name into your account

Do not wait until the last minutes of an auction as sniping bidders could outbid you. Bid your max early. Auto-bidding lets you set it and forget it.

If financing, you’ll pay 10% down payment upfront, then remainder over 12 months. Make sure your GoDaddy account is in good standing to enable financing options.

The Best Places to Resell Domains

Once you’ve acquired high potential domains from auctions, there are several excellent marketplaces to relist them for resale and profit. Top options include:

GoDaddy Auctions – The most popular domain auction marketplace. Huge buyer demand.
Sedo – Leading domain aftermarket platform. Uses credentialed brokerage network.
DomainNameSales – Specializes in high value, ultra premium domain names.
Flippa – Popular digital asset marketplace. Domains sold through set price or auction model.
Afternic – Uses exclusive brokerage partners. Targets end-user buyers not investors.
NameJet – Popular domain auction site owned by GoDaddy. Primarily investor buyers.

Evaluate the type of domain, expected sale price, target buyers, and speed of sale to determine the optimal marketplace.

For quick flips, GoDaddy, Flippa, NameJet are good choices. For high ticket sales above $10K, Sedo, DomainNameSales, or Afternic offer qualified buyers.

How to List & Price Domains for Sale

Listing domains for resale takes preparation and pricing strategy:

Research comparables – Find recent sales of similar quality domains to establish fair market value pricing. Refer to NameBio.
Set a competitive price – Price just below comparable domains that have recently sold.
Highlight the best attributes – Emphasize keywords, brandability, length, and commercial viability.
Write an effective description – Share details on the opportunity the domain offers to buyers.
Outline value props – List all the reasons why the domain commands the asking price.
Offer flexible payments – Provide payment plan options to improve likeliness of selling.
Select a preferred marketplace – Choose venue based on domain type, value, and target buyers.
Aim for a quick flip – Most platforms allow short listing durations of 30-60 days.

The goal is generating excitement and urgency to motivate buyers. Optimal pricing and messaging are key to maximizing sale prices.

Negotiation Strategies to Increase Sales Prices

Top negotiators can often increase the sale price of domains. Strategies include:

Get multiple buyers bidding – Create demand from several potential buyers. They’ll bid each other up.
Establish deadlines – State the domain will go to highest bidder by a set date to pressure buyers.
Offer add-ons – Suggest additional assets like logos, brands, websites to raise perceived value.
Upsell financing – Provide payment plans for higher prices that the buyer can pay over time.
Let buyers make the first offer – Ask buyers their budget to anchor higher. Counter above it.
Find motivation triggers – Discover why the domain is especially valuable to each buyer.
Calibrate prices to budgets – Gauge financial ability then price based on maximum willingness to pay.
Avoid taking initial lowball offers – Politely reject and emphasize why the domain merits a higher valuation.
Sweeten the deal – Offer a few months free hosting or email forwarding to close buyers who are on the fence.

Expert negotiation tactic allow experienced sellers to consistently gain 10-20% higher selling prices. Mastering this skill greatly boosts revenues.

Building Relationships With Domain Buyers

Successful domain investors nurture relationships with frequent, big spending buyers. This provides repeat business. Tactics include:

Send new domain opportunities – If a buyer purchased a domain, pitch additional domains you feel match their criteria.
Offer first dibs before listings go live – Let VIP buyers get early access to preview upcoming domain listings.
Provide exceptional service – Be highly responsive and go above and beyond on support to impress them.
Share insights into the market – Supply data, analysis, or advice that helps their investing strategy.
Request referrals to their network – Ask satisfied repeat buyers to connect you with colleagues who may also buy.
Negotiate referral fees – Compensate those who send new buyers your way with a finders fee on resulting sales.
Follow up consistently over time – Check in periodically and nurture the relationship for long term perpetual revenue.
Send relevant deals and discounts – Offer special pricing or bundle discounts when new buying opportunities arise.

Developing trusted relationships leads to more deals, higher sales prices, and invaluable word of mouth referrals.

Minimizing Risks and Downsides

Reselling domains also comes with certain risks to be aware of:

Market fluctuations – Domain values can quickly rise and fall based on trends and events.
Stiff competition – Popular domains get bid up by many investors competing against you.
High premiums on ideal names – Best short .coms are only affordable to the wealthiest buyers.
Holding costs – Annual registrar renewal fees need to be factored in on unsold names.
Policy changes – Registries like Verisign can impose new pricing or restrictions.
Cybersquatting violations – Holding trademarked names risks legal disputes and UDRP proceedings.
Making bad buys – Overpaying for unsalable domains can lead to losses.

Mitigate these by diversifying holdings, managing cash flow carefully, tracking registration and legal policies, and focusing on quality that end-users want.

Getting Started With Minimal Capital

The barrier to entry in domain reselling is low. You can start profiting with minimal startup capital:

Start small – Look for bargain domains under $100 to test the waters risk-free.
Explore auctions – Bid on expiring names that may get no bids and win them for just $10.
Buy speakable/misspellings – Odd spellings of premium words can get overlooked and sell cheap.
Find numeric/hyphenated bargains – Domain hacks like 123hello.com can offer cheap alternatives to premiums.
Target dropping domains – Quality names sometimes fail to sell at auction and get dropped, letting you register for base fee.
Broker for others – Sell domains on consignment without owning them to profit from the sales.
Flip names quickly – Acquire domains one week, sell the next after a quick profit polish.
Monetize parked names – Park unused domains to earn affiliate revenue to help offset ownership costs.

With the right strategy, it’s very feasible to get started in domain reselling with just a few hundred dollars and see your first profits in weeks.

Transitioning to Full-Time Domain Reselling

Once you have achieved success reselling part-time, consider going full-time for much higher earning potential:

Higher volume – Spend all day sourcing, buying, selling, and brokering domains instead of just nights and weekends.
Focus and specialization – Target a niche like geographic+service domains rather than a scattershot approach.
Develop unique sourcing channels – Figure out creative ways to find on-market domains others are not seeing.
Double down on what works – Refine your successful strategies rather than getting distracted constantly testing new tactics.
Build a brand – Create a company identity, website, collateral that establishes you as an authority.
Establish vendor relationships – Get better pricing and support from companies like registries, escrows, parking services.
Hire help – Outsource parts of the business like domain acquisition, content writing, or marketing.

The more time and energy invested, the greater your domain portfolio and earnings will become. But focus on activities with the best ROI for maximum efficiency.

Getting to the Next Level as an Elite Domainer

For the ultra-ambitious, it is possible to reach elite status and become one of the top domainers in the world:

Focus exclusively on ultra premium names – Target 5 and 6 figure domains for highest profit potential.
Develop deep buyer networks – Get connections to celebrity buyers, VC funds, public companies with big budgets.
Broker million dollar sales – Participate in large private sales and represent either the buyer or seller. Significant commissions can be earned from high ticket deals.
Travel to live domain conferences – Network in-person with fellow domainers and investors at events like NamesCon.
Purchase expiring premiums for big resale profits – Identify high value drops coming up and acquire them to flip.
Participate in domain disputes – Assist clients as an expert witness or consultant during UDRP cases and negotiations.
Speculate on emerging extensions – Buy new TLDs like .crypto, .nft, .web3 before prices exponentially rise.
Buy and sell entire portfolios – Purchase entire domain collections from other investors for resale. Or sell your own portfolio.

Playing at the highest level requires developing skills and reputation over many years. But the potential rewards are tremendous for those dedicated to reaching the top.

Conclusion

Reselling domain names represents an intriguing opportunity to generate significant income and profits. With the right domain expertise, sourcing skills, negotiation tactics, and sales and marketing abilities, the possibilities are endless in this field. This guide provided actionable strategies for successfully getting started buying low and selling high in the domain aftermarket, even with minimal startup funds. Master these best practices, avoid common mistakes, and work towards making domain reselling a full-time endeavor, and you too could join the ranks of elite domain investors.