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How to Profit Through Expired Domain Names

Discussion in 'Domain Names & Parking' started by zombieshucks, Aug 14, 2009.

  1. zombieshucks

    zombieshucks Registered Member

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    This is my first tutorial style post on Black Hat World. Hope you guys enjoy it


    I've been a domainer for the past two years, flipping some really high quality domain names in this time. Some of my domains have sold for more than $20,000, and this can be publicly verified as some of the sales were listed at DNJournal.com - the domain industry journal which tracks prices - while with others, I had to sign a DNA agreement.

    I've turned to IM and black hat in the past one month because of certain future projects that call for a strong background in marketing. And also to make tons of more money :D

    Now, on the main substance of this post:

    The best domains, of course, are the generic, one or two word .coms, .nets, and .orgs. Cars.com, Hotels.com, Porn.com are all domains that would fetch $5,000,000+ at any domain auction. These domains were all, unfortunately, registered several years back.

    Some of the other profitable domains include two and three letter words with a large number of searches per month. I remember seeing OnlineForexTrading.com (or something similar) selling for $38k in 2007.

    A big indicator of domain value is rarity: how many domains of that kind in that extension exist? There can be only 26 L.coms (i.e., A.com, B.com, etc. - btw, most of these don't exist except X.com), 26x26 LL.com (i.e., AB.com, GE.com), and only 26x26x26 LLL.coms (i.e, ABC.com, XYZ.com). There can also be only one car.com, one hotels.com - you can own variations like TopCar.com, but its just not the same thing.

    This rarity lends these domains value. A typical LL.com (eg. AB.com) for instance, would sell for at least $75,000 in the reseller market today (resellers are domain name speculators), while LLL.com would sell for a minimum of $3500 (down from $6000+ before the recession).

    Of course, domain name valuations would be the part of another course.

    How to profit through expired domain names

    Before we proceed, let me clear two technical terms:

    Reseller - Resellers are domain name speculators who buy domain names to sell to either other resellers or end users for a profit (called flipping)

    End User - End users are businesses/individuals who have no interest in domain name speculation and buy a domain name for a specific purpose. You can bet that Microsoft must have paid a lot for Bing.com from its previous owner.


    Expired domain names are previously owned domain names. Domains expire because their owners sometimes forget to renew them, or they don't have the spare cash, or the owners die (really, this happens a lot), or simply, they don't have any more use of the domain name.

    The majority of domains expiring everyday are crap, bought either by newbie speculators hoping to make a quick buck, or bought by marketers for spamming :)

    But there are also a ton of high quality domains expiring every day. Many of these are 10+ years old, have high PRs, or a large number of incoming links. These domains can be easily flipped for a quick profit.


    Selling to Previous Owners

    For the purpose of this post, we'll focus on an entirely different class of domain names: domains that their owners forgot to renew.

    You won't believe it, but everyday, thousands of domain owners with legitimate businesses forget to renew their primary domain. Because of branding purposes, these domains are very very valuable to their owners. Imagine Apple's plight if it someday forgot to renew Apple.com!

    In this technique, we will attempt to backorder these expired domain names and sell them back to the owner for $1000 - yes, $1000.

    First off, go get yourself an account at SnapNames.com. This is my favorite domain backordering service. Other major services include NameJet.com and Pool.com, but I've never taken a liking to them because of their horrendous customer service. You are free to make an account at either sites; I just like sticking to my one niche at Snapnames.

    Then, go get an account at SnapCheck.com. This is a domain monitoring service that checks the domains that are dropping at SnapNames (paid service; monthly subscription). There are other such services out there, like TasteDrop.com and PremiumDomains.com. I personally prefer SnapCheck.com because of their sorting metrics.

    Now log in to SnapCheck (or whatever tools you are using to sort domains), and click the "SnapNames" tab. In other services, you should check the expired/soon to expire tab.

    Sort by Page Rank.

    Now go through the list. Look for domains with a little bit of history, at least 2+ years, that also have some PR (at least PR2). Look for domains that sound business like - domains that would be used as the main website of a legitimate business. Obviously, we are looking for brandable domain names here (for eg: BlueMoonDesigns.com, GenesisArchitects.com, or NorthSquareMotors.com).

    Check their records at Archive.org. Does it look like a legitimate website? (you might find that a few sites have been blocked out by robots.txt. In that case, move on). Make sure that the Archive results are recent - if there are no results since 2006, then move on.

    If yes, then go do a google search for that domain name, plus the name of the company. For instance, if the domain was BlueMoonDesigns.com, I would google - "Blue Moon Designs", "BlueMoonDesigns", and "BlueMoonDesigns.com" (both with and without quotes).

    If there's any search result that talks anything about the company shutting shop, merging, etc., then move on; such a domain won't be of any use.

    If, however, there are no such search results that might set an alarm bell ringing, then this domain is good to go.

    Add it to your SnapNames backorder list. Usually you'll find yourself as the only bidder and get the domain for $59. You can also try placing a backorder at GoDaddy for $18.99, but remember - if the domain is caught by SnapNames, there is no guarantee Godaddy will be able to catch it later.

    Now once you get the domain, point it to a parking page, or a one page sales template (something like "This Domain is For Sale. Please Contact xyz@xyz.com).

    Then wait.

    Within a week you should get a frantic/angry/apologetic email from the previous owner/IT guy. Tell them that you bought this domain for a client, and that you paid $800 for it, and that you can sell it to them only for $1000 - $800 for the cost, $200 for the time and the trouble. If they sound particularly desperate, then you can even say that you bought it for one of their competitors and jack up the price a little bit.

    Most likely they'll try and haggle. Go down a little bit if you want to, but stick to the above $700 range. Remember that these people built their entire businesses on these domains - losing it could mean a serious blow to their entire branding efforts, and they'll be more than likely to pay whatever you ask them. You're essentially keeping them hostage.

    Do the transaction via Escrow.com to ensure your safety. Transfer the domain name, and enjoy your $900+ in profits.


    How often can you do this?
    Everyday. I know people making upwards of $50,000 per month through this method. The number of dropping domains are simply too many for this market to be cornered by a few guys.

    Obviously this is a capital intensive technique. You won't go far if you have just a few dozen dollars sitting in your bank account. Try and start small with just one (or two) domains, and expand as the domains start making you those obscene profits.


    Any questions, comments, or a vote of thanks will be much appreciated!

    Now to just compile this into an ebook and sell it at WF for $19 :D
     
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    Last edited: Aug 14, 2009
  2. realedazed

    realedazed BANNED BANNED

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    I spent some time working at godaddy and I got calls from people all the freaking time talking about how someone got their domain name and they don't want to pay hundreds of dollars for them.

    Your scheme made me a lot of money as a rep. I could then sell them on 5-10 years of domain + hosting, so that won't happen again - which would result in a nice bit of commission for me. :D

    Anyway, great share!
     
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    Last edited: Aug 14, 2009
  3. zombieshucks

    zombieshucks Registered Member

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    I got a call from this frantic guy one morning when I was on a vacation. He made up a sob story that he is an immigrant in the US and has a wife and a newborn kid, and that he works part time as the IT guy of the design firm whose domain I'd got...wanted me to sell it to him cheap, virtually crying on the phone.

    I took pity on him and sold it to him for a 100 bucks - just a $41 profit.

    Then one day, I called up the owner as listed on the website...guess what, the supposed "immigrant IT guy" himself was the owner, with more than 40 people working under him.

    Made a promise then to not listen to sob stories. Damn people in real world businesses are more black hat than people on the internet ;)
     
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  4. shafty

    shafty Junior Member

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    Its a good idea, but what about the non company domains that just have a good PR/Backlinks/traffic??

    Dont you go after them or is there too much competition?
     
  5. zombieshucks

    zombieshucks Registered Member

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    I go after them too, but for the purpose of this post, I concentrated only on the company domains.

    The real gold mine is when you can find a high PR, keyword domain name that is ALSO a company's website. In that case, even if the company doesn't want to buy it (changed their name, merged with another company, went out of business, blah blah), you still have a domain that'll make you $50+ per month through parking.


    This week, for instance, I have in my backorder queue a domain that belongs to a large UAE real estate developer. You can be sure I'll milk them a good deal when the come asking for it :)
     
  6. Evotion

    Evotion Newbie

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    Is this completely clear of any legal comeback as they let the domains expire?

    Can they get you on TM and bad faith?
     
  7. lucky13

    lucky13 Regular Member

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    The internet is used world wide. Any name is generally allowed to be baught because you can't have a TM on domain names i believe.

    Great post btw.
     
    Last edited: Aug 15, 2009
  8. blackhit

    blackhit Super Moderator Staff Member Jr. VIP Premium Member

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    Not on domain names but on brand names you can.

    So if the brand name makes part of the domain name they have a legal point.

    But this is only a problem with companies who have a large budget for legal fees.

    I doubt the little webshop or freelance designer has the means to go after you....
     
  9. manolo12399

    manolo12399 Senior Member

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    I read somewhere, that is important to don't to contact the previous owner of the domain, but you have to wait to be contacted.
    Otherwais If I remember, on legal ground, they would win.
     
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  10. zombieshucks

    zombieshucks Registered Member

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    See, one they let the domain expire, and you bought it, legitimately, then there are no legal obligations on your part. It's a domain name. You bought it for some client/for the backlinks, PR, whatever. They let the domain expire, it's their fault.

    You might have some previous owner threaten you with legal action. Just remind him politely that a) the legal cost would eclipse the cost of the domain itself, and b) they would lose the case anyway.


    If you contact them first (instead of them contacting you), the trick is to talk as if you did them a favor by getting the domain. Say how you found this domain dropping, and after checking out it's history (point to Archive.org), you realized that the company is still in business, and that you paid for the domain out of your own pocket to keep it from shady domain speculators. Just tell them that you were forced to go into an auction for it, and that you paid $xxx for it (whip up a fake receipt if you have to), and you would sell it back to them if they cover your original cost.


    The best part about this technique is that more often than not, the expiring domain will have decent PR/backlinks and even some traffic. Even if the previous owner doesn't show any interest in the domain, you can still milk the domain either through parking or through development. A PR5 domain I acquired 2 years ago (a former law magazine's domain) has made me over $300 so far through parking and adsense. Not bad for a $59 backorder - it's not gigantic, overnight profits. But it's a profit nonetheless.


    One more thing: please, don't go for this method if you have a low budget and if you know virtually nothing about the domain market. I suggest you head over to NamePros.com or DNF.com and read a bit about domaining.

    And please, don't jump into this if you have just a $100 sitting in your account with no development skills, or parking accounts.
     
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  11. charvak

    charvak Registered Member

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    First of all thank you for your detail tutorial. I am interested in this business and doing some research before wetting my feet.

    Excuse my noob question but I come across a site where they are selling hundreds of domains at say $5- $10. I found one good .com domain with only 5 characters and 4 years old with pr 0. However, when I search it on whois, I found that the domain expired on 27 Jul 2009.

    I am puzzled, now what to do? If I buy it then I am wasting my $5? or the site owner is capable of transferring it to me? (there are 16 hrs. left according to the site) You are in this business for long and you must know the procedures.

    I know this is different then what you have mentioned in your tutorial. But tell me is it possible to buy a domain from his previous owner after it expired? ( I learned that previous owner has 40 days gracing period to renew it without any penalty).
     
  12. voidale

    voidale Jr. VIP Jr. VIP Premium Member

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    there is such thing auto renew >.<
     
  13. shadowpwner

    shadowpwner Regular Member

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    There is this thing called forgefulness after renewing for 5 years:D

    OP: Wonderful tutorial mate. Completely understandable and clear. I hope to be seeing more quality posts from you in the future.
     
  14. zombieshucks

    zombieshucks Registered Member

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    The renewal period varies from extension to extension. If the domain has only expired, the owner can renew it for the regular renewal fee, and transfer it to you.

    If the domain has entered the Pending Deletion stage (check the Whois, it'll tell you), then it takes $70 to renew it.

    Once the domain is deleted, of course, there is no way to get it back other than backordering it.

    As per the length of the domain, I'll be making a price guide soon and post it here.
     
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  15. zombieshucks

    zombieshucks Registered Member

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    Thanks.

    I've personally forgotten to renew pretty valuable domains, and I do domains for a living!

    I know very, very experienced (and filthy rich) domainers who lose domains worth at least a 100k because they were vacationing and didn't get the domain expiring emails.
     
  16. playercool

    playercool Junior Member

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    Can you go into the entire process.

    You say with snapnames you can buy the domain for $59. Does it do this before it goes to the auction style on freshdrop.net?

    On freshdrop it has from what I can see 3 periods.

    Period 1: Bidding starts at $10 and goes on for 10 days. Tons of domains can be picked up for $10 plus the reg fee. I have also seen plenty be bid up to $1,000+++

    Period 2: If no one during period one bids then the domains are pushed to this section. For $5 plus reg fee you can use Buy It Now.

    Period 3: Now for the normal reg fee you can buy the domain.

    What are the steps before these 3 periods? It looks like the one you mention for $59 is? If that is the case though how do some fall through the cracks down to period 1 and go for $1,000+?
     
  17. Katarsis

    Katarsis Registered Member

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    Thanks for the thread zombieshucks, very informative and interesting.

    The part about not jumping right into this to try it if you have a low budget and no prior experience with domaining was especially good - not that too many will listen probably, but I'll definitely check those forums you mentioned, so thanks!

    Definitely looking forward to that price guide as well; you've a succinct and to-the-point way of writing that's great to read. :)
     
  18. zombieshucks

    zombieshucks Registered Member

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    SnapNames.com and NameJet.com are the two major players in the drop scene. They get the best domains that are actually worth anything. The others (including GoDaddy) pick up the leftovers.

    Depending on the domain's registrar, an expiring domain will go to either SnapNames or NameJet (and in the rare case, Pool.com).

    ALL Network Solutions and eNom names will go to NameJet because of its agreements with the registrar. The quality of names at NameJet, thus, can be very good (since NetSol was the first registrar). I personally don't use NameJet because I don't approve of their auction/business practices, but you are free to use it (and probably should).

    ALL Moniker domains go to SnapNames, along with domains from a ton of other registrars like MyDomain, OnlineNIC, etc.

    Both SnapNames and NameJet have anything from 50-100 registrars that try and grab the domain the moment it drops. In the drop game, the more registrars you have the better; it means you can send that many requests to register the domain the second it drops. It costs upwards of $100,000 to form a registrar, which puts the smaller players completely out of the race. You can, if you have a good set up, get some domains but these will be entirely worthless crap that isn't worth a penny.

    Once SnapNames or NameJet let go of a domain (because it wasn't backordered by anyone, nor did anyone take it up for tasting), then its usually acquired by GoDaddy (through their backorder service). If you believe that your name won't be backordered or tasted (i.e., Snap/Namejet will let it drop), you can bypass SnapNames/NameJet and go directly with GoDaddy, which costs $19 for a backorder. There is, however, no guarantee at all that they'll get your domain even after SnapNames or Namejet let it go.

    The safest option, thus, is to go with either SnapNames or NameJet (preferably both).

    If a domain is not taken up by even GoDaddy, then usually a large domain taster like Belgian Domains (do a Google search for them) takes it up to taste it for traffic.

    Bottomline: if you want a good name, you'll have to get it at the first stage of the drop itself, which is SnapNames and NameJet.

    Sites like FreshDrop.net are searching platforms and not actual backordering services. They are great for finding good dropping names, not backordering them.


    Btw, I forgot to share one tool: Estibot.com

    Its the best automated domain appraisal tool out there. Its not perfect, but it'll give you a good idea of a domain's value. Use it everytime you backorder a domain (its free), but always double check the stats it gives you. Never make a purchase solely on an Estibot appraisal without doing your own research.
     
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  19. Okame

    Okame Newbie

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    I tried to register at http://SnapCheck.com but asked me for 49+ dollar to get register. I know nothing about this all and not to invest that lot of money on blank experience (knowledge).
    Anyhow how thanks for this nice article.
     
  20. Katarsis

    Katarsis Registered Member

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    Okame:

    Please don't take this the wrong way, but I think you should re-read everything that zombieshucks wrote in this thread.