Everybody has heard the stories of a few domains selling for over $1 million and some people getting in trouble for using the domain names of celebrities. For a recent example, there were several Janet Jackson domains registered a minute after her breast was exposed at the Super Bowl. Thus, a fair number of people outside of the industry feel that domains are either sleazy and a playground for cyber squatters or can make you rich overnight. As a domain dealer for over a year, I have learned that neither of these perceptions are true. Yes, there are still cyber squatters and domains that sell for extremely large sums, but these are the exceptions not the rule.
If you want to start out in the domain industry, be prepared to make several mistakes when you first start. Very rarely if ever will you be able to register a domain for $8 to $35 and then sell it for $1000 or more the next day. Instead, you will more than likely register domains that nobody else really wants. I don’t know how many times I have seen people ask for appraisals of their domains on forums and be personally offended when a price like $25 is quoted. Some people have taken their anger so far as to blast the forums themselves at Alexa.com! These are the type of people who don’t “get” the domain industry and will usually not last. Did I get my feelings hurt by appraisals when I first started? You bet I did. However, it made me want to find better names that much more until I finally did.
The first thing that you need to do is learn more about the domain industry in general, minus the myths. Go to a major forum and just absorb as much info as you can BEFORE you buy your first name. Trust me, it will save you a lot of time and money. After that, develop a strategy and stick to it for a while.
Ask yourself questions like: Do I want to only go after expiring names? Do I only want to buy domains with traffic? Do I only want to register new domains? Do I only want to buy domains from other people on forums?
To help you answer yourself, here are a few things to remember about each strategy: Usually, expiring domains are the most valuable because they go straight from the hands of one owner to another the second the domain expires. Nobody has the chance to stumble across these domains and register them when they feel like it. Buying solely traffic names is also a sound strategy because you can just earn income from the domain without trying to find a buyer for it. Registering only new names, on the other hand, should really not be done by a newbie because that is a fast way to spend a lot of money and get nothing in return. You would be better off buying names you like from other people on forums at wholesale prices because you have a better chance of buying solid names. If one of these buying strategies is not working out, then try another one after a week or two.
While building your domain portfolio, put a few domains up to be appraised to help get your feet wet in accepting the opinions of others. Try to learn from any negative comments you receive. You will also more than likely get a few helpful tips. Use these tips as well to improve your buying skills. Eventually, you will start buying significantly better names.