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February 3, 2011

Workshop: Tips and Strategies for Buying and Selling Domains

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Welcome to DomainFest! Jessica and I are bringing you coverage all day from Santa Monica, right here on the beach.  Peter Celeste welcomes us all to the third day of the conference and runs down the agenda.

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Domain Experts Michael Berkens, Larry Fischer, Tessa Holcomb, Jason Miner, Kathy Nielsen will be talking about buying and selling domains and handing out tips right and left. Our moderator Lisa Box will keep the conversation moving.  J and I know nothing about being a domainer so we’re excited to jump right in.

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Lisa: How do you price domains to sell? Is it forumaliac? do you price by traffic, revenue?

Michael: Look first at comparable sales that have been reported. Try to recall sales that are similar to the categories you have in your portfolio. Visit[something] could be justified by the sale he just completed with VisitStockholm.com.  Look at tourism, geography, etc and compare it.

Larry: In the past few years what has become more of a norm is looking at visits and revenue to determine value within a name. Five years ago, there was an x-factor, a multiple based on revenue. Some people just want to own a market and for those people stats don’t exist.

Lisa: do you use Alexa or anything of that sort?

Larry: If it helps your cause, use it, if not, don’t use it. We also look at the company that we’re dealing with. If we thinking they’re going to get value, we’ll hold out until they realize it.

Jason: We use a lot of the comparables – sales we’ve had over the last 10 years to give us an idea. Ron Jackson’s site is a good way to get an estimate.

Kathy: We look at TLDs, prices, comparisons, etc. This is all on our website – Sedo.com.  Don’t use just one source, look up a couple of sources. There’s also appraisal services that you can look at.

Larry: Talk to a number of brokers, get advice that you may not have considered.

Lisa: How do you set expectations?

Tessa:  It’s pretty common that owners come in with prices that are too high and it’s really true that it comes back to comparables. You have to look at the search, the existing traffic, the current value for that keyword, etc.  Walk the owner through those points and educate them about what their domain is realistically worth.

Michael: You really need to use Google. See what the other extensions are doing. If you have a .com but the .net is already built out and ranked, you need to know that so that you can value it properly.  If the .net gets 100k visitor, then that changes the value.

Lisa: What is the real difference between a make offer or a set price?

Kathy: We all want to sell to end users and end users don’t like to see ‘just make an offer’.  End users are much more likely to start negotiations. 25% of our sales came from Buy it Now fixed price sales last year.

Jason: We sell to small to medium size business owners. 10x philosophy of the sale of the domain. Business owners definitely want to see that fixed or starting price. They feel a trust when there’s a price. They might not inquire when it’s a make offer. Having a price gets them interested.

What’s the best way to get the offer name out?

Michael: we have a button on every domain out there that we own and it’s a clearly stated 2500 minimum.  We don’t do any outbound sales, everything is incoming.

Larry: I make a lot of outgoing calls but we also get whois queries as well. There can be huge price disparities between names. Singular vs plural can be a big difference. The plural owners wanted 10 mil but we were able to do the singular for under 7 figures.

Kathy: We definitely feed the aftermarket services and a lot of people are still going to the registrars as well. A lot of people don’t know who sedo and afternick are yet.

Lisa: Do you recommend brokerage services?

Tessa: Definitely.  Exposure is key for the lower price names and when you’re getting the higher priced names you really need a broker who understands your goals and someone who can keep tabs on who is interested and what’s going on with that name.

[Missed a question here about big name sales.]

Larry: There’s also a gut check.  You have to know it feels right.

Lisa: For people starting out in domaining, trying to build investments, what do they do?

Michael: Some people just want to do $8 buys and then sell it for $59 on Snapnames or something like that. There are still good names coming up on drop.

Lisa: Describe the drop market?

Michael: some registrars drop to specific locations, some are just open. Some are picked up by scripts, some are picked up by hand reg. If you’re just getting involved and you don’t have a lot of cash, that’s a good place to start.

Kathy: Auctions are mostly investors. End users aren’t comfortable not having a price upfront.

Tessa: Go to a broker and have them walk you through and advise you on your portfolio.

Larry: Don’t be scared if you’re just starting out. Thomas Edison was told by the patent office that almost everything that could be patented had been. There’s always room for growth. It’s still possible to get hand regs and make money off them.

Lisa: Are there any categories that will make a better impact?

Larry: Follow the money. If it has a high CPC, there’s probably a lot of buyers for names in that industry.

Lisa: What about cc TLDs?

Kathy: .de is still the first best selling cc TLD. Germany is a very very strong market. 46% of all the cc domain market. .eu is the second one.  She hears .co.uk and .tv are 3rd and 4th.  People are buying .tv for media purposes, not country purposes.

Jason: Look into fast transfer or instant transfer. People like speed and the market is just realizing that that speed is possible. It makes business owners feel comfortable.

Lisa: You mentioned escrow, can you explain about that a bit?

Larry: I recommend escrow. It protects the buyer and the seller. You transfer the domain only after the escrow company receives the money.

Jason: Fast transfer is also guaranteed. It works the same way. Larger sales definitely need escrow but smaller can use fast transfer.

Lisa: What do you think of the new generic TLDs?

Michael: I think there’s a lot of opportunity.  Not only from the domainer side but from the registrar side of it. It’ll be an oipen process where people can play from the other side of the field. With possibly more than 500 new TLDs. There are 21 TLDs right now and I don’t think there’s any way we can predict the effect of going to 521 over the next year.

Larry: I don’t think it’ll affect the .com, .org, .net sales. Also we don’t know how Google will rank the new TLDs. Will they rank .insurance as high as .com? Who knows?

Lisa: How can people increase the value of their domains?

Tessa: it goes back to that assessment of what the domain is worth. We have to look at keywords and traffic. Monetizing the domains used to be PPC and now it’s CPA and we’re seeing domains that sell for CPA for a lot more.  What’s making money now: Health and fitness, finance, dating, gaming. Development: if you can develop a name enough that you can get it ranked, that’s going to sell better.

Jason: Most people have 80/20 domains. 20 percent of the domains are making almost 100 percent of the revenue. SEO the long tail and bring it up. Make sure you put a link right at the top of “this domain is available for sale.”

Is development key?

Larry: My personal experience is that it’s the brand value of the domain, not the development on the domain. IT’s more for the name than for the site.  For the long tail, finished sites benefit from development. However, from what Matt Cutts said, Google is looking to eliminate sites that don’t have any added value, so you can’t just build something that ranks for nothing.

Kathy: I think overall the international market is very strong and they’re investing all across the board. There’s interesting new extensions across the market. After Sunday, it’ll be really interesting to see if the Superbowl has any effect on .co sales. It’s only been around since July.

Lisa: Would you recommend .co buys now?

Kathy: Yes, that’s the beauty, you can still register a lot of them.

Michael: Definitely, there’s only 600k out there already. Go out and get some of them and diversify your holdings. Get cc TLDs and some of these new extensions to diversify.

Lisa: Major predictions? What’s the most important thing to know today in negotiating a sale?

Jason: Have that domain priced up front, have that link on the top of the page, have an educated sales force. Follow up on leads fast, be available all the time. Speed to the market is very important. Predictions: Growth, very positive trends – find a vertical you’re interested in and invest there. If you’re interested you’ll sell it better.

Kathy: They also saw growth last year and she doesn’t see an end to growth. There’s opportunities popping up every day. Invest in what you know.

Tessa: There will be a lot more newbies coming into the market. Lots more education needs to happen on all sides.

Larry: Predicts the Largest domain sale ever in the coming year. 20-30 mil for just the domain.

Michael: We get inquiries daily from the whois. Don’t use privacy and have accurate whois information. has seen a rise in knowledge from buyers. People are giving back reasonable counter offers and they understand better how much domains are worth.

Resources:

Domaining.com

TheDomains.com

DNJournal

DomainNameWire

Eliot’s Blog

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One response to “Workshop: Tips and Strategies for Buying and Selling Domains”

  1. MicroSourcing writes:

    So there’s still hope for .co domains. It still remains to be seen exactly how many websites Google will be eliminating for lack of value.



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