Tough for a Domain Flipper to Get Full Value | DomainInvesting.com

Tough for a Domain Flipper to Get Full Value

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As someone who tries to get good deals on domain names to flip them fairly quickly (ideally one day to 6 months), one of the biggest issues I face is getting full value for the domain name assets I want to flip rapidly. It’s not usually easy to buy a domain name and quickly find a buyer who is willing and able to pay close to its retail value, but that is the goal in this cash flow dependent business. Domain flipping is one objective of my business, but it’s not easy to get the full value for domain assets with that business model.

If I buy a domain name for $50,000 because I think it’s worth 6 figures, I could have to wait a while to sell it for the 6 figure valuation (that may never actually come to fruition). Sitting on expensive domain names isn’t the worst thing, especially when they earn passive PPC income,, but for a business that relies on the cash from the sale of domain names in order to operate and grow, it isn’t optimal either.

The opportunity to sell a domain name at a great profit beats most other typical investments, and it surely beats the bank interest that would be earned with the same $50,000 in a savings account. The flip side is that a domain investor has to be certain the $50,000 domain name is really worth what he or she thinks it’s worth because domain names tend to be illiquid, and there could be a steep drop from the $50,000 price if it was put on the market with an urgent need to sell. Having too many of those $50,000 domain names can stifle growth and acquisition opportunities.

During the last four or so years, I’ve been building alternative revenue streams with my domain names to enable me to pass on low margin offers when I think the domain name is worth much more in better conditions or to the right buyer. When I didn’t have those revenue streams, I may have had to undersell domain names to drive cashflow. If you are a domain investor or are hoping to become a domain investor who flips domain names for a living, this is a consideration that has to be made. Great profits are very possible, but prospective investors need to be mindful that this tends to be an imperfect market with generally illiquid assets.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (22)

    Dhanu

    Hi,
    I’m a new domainer. Very new. Registered 2 names a month before. [gadgetaries.com and staywithtech.com] What if I put that into auction. Can I make a profit at this young age of the domains.

    March 25th, 2014 at 10:26 am

    Leonard Britt

    While one-word .COMs may sell for five figures, many people reading your blog (particularly those new to the industry) don’t hold such domains and should not have price expectations that high. I get challenged by prospective buyers at asking $1500 for a .COM and was recently offered 100 euros by an end user for a .COM domain related to women’s purses (Spanish). One cannot be intimidated by lowball offers but at the same time if your pricing isn’t realistic, a sale will not occur. I’ll admit that because I have never sold a domain for even close to five figures that I rarely win domain auctions. I cannot justify bidding aggressively and then just sitting on a domain which cannot be sold at a profit.

    Perhaps your readers might find it useful to learn how you determine a reasonable end user price for a particular domain.

    March 25th, 2014 at 11:06 am

      Elliot Silver

      Off the top of my head, some things include (in no particular order aside from as I am thinking about them):

      – How much advertisers are paying in Adwords for the keyword
      – How many similar domain names are developed and (and by whom)
      – Public and private comparable sales
      – Public and private comparable asking prices
      – How many companies in that market
      – How many companies advertising for that keyword
      – How much income the domain name earns
      – How much I paid for the domain name
      – How my business is doing
      – Who wants to buy the domain name
      – How many inquiries I’ve received for the domain name
      – Past offers for the domain name
      – Recency of offers
      – Can I use the cash to buy something better

      In reply to Leonard Britt | March 25th, 2014 at 11:12 am

      Larry

      All time record in low offers for a 3l .com recently: $25

      Was from a high school student.

      (Not to mention the people who think that because you aren’t using the name you will just give it to them at no charge).

      In reply to Leonard Britt | March 25th, 2014 at 12:01 pm

      Elliot Silver

      I’ll be a sport and offer $50 :)

      In reply to Larry | March 25th, 2014 at 12:02 pm

      Leonard Britt

      All good points though quantifying them might still be a challenge. SEDO reports that domains sold on its platform have a median price in the $500-$600 price range depending on TLD. From my personal experience, sales above $1500 are rare so I have to keep acquisition costs low – another reason why I have not regged any of the new TLDs. I have domains priced above $1500 but am cautious about pricing above $3000 because potential buyers tend to disappear anytime I quote anything over $1000.

      In reply to Elliot Silver | March 25th, 2014 at 2:54 pm

      Samit

      This comment should be a post of it’s own Elliot! Good info, cheers.

      In reply to Elliot Silver | March 26th, 2014 at 1:24 am

    Horizon

    Hi Elliot,nice thoughtful blog,my ex father inlaw,well 25years ago Father inlaw was a VERY smart man,you may laugh,but he sold fruit and vegies,and built that business into the biggest business of it’s kind in Australia,his feeling was if you take a dollar today,and turn it into 2 dollars the same day,you then have that to invest the next day,and have more cash flow to build more,domaining is different,but waiting to get 3,4,5 times your money,can take time,whereas he would make many multiples of that over a time period.By the why he is worth over $300million Dollars today! Just saying,regards Horizon.

    March 25th, 2014 at 11:10 am

    todd

    To flip anything in this price range everyone has to be realistic in their expectations. If we buy a name for 5 grand we can afford to sit on it for an extended period of time to get 10 times back or $50,000 but to buy a name for $50,000 and expect a 10 time return or $500,000 in the same amount of time is wishful thinking. At the $50,000 price point we would be lucky to earn a 1 time return on that money. As the acquisition price of the domain goes up profit margins have to come down or you won’t be flipping very many domains.

    March 25th, 2014 at 11:42 am

      Elliot Silver

      That is true to an extent but keep in mind that as the price level goes up, the number of qualified inquiries over the years has gone down. So a guy who owns a name that wants $50k for it has probably received far fewer qualified offers than the guy who wants $5k for a name.

      March 25th, 2014 at 12:00 pm

    BullS

    I put all the investment in Stocks since 2010 and am very very happy..68%return.

    Tsla bought at $150 and gone as high as $250.

    Now I can cash out and buy the domains.

    March 25th, 2014 at 12:37 pm

    BullS

    with 3 keystrokes, 15seconds, I can “SELL” and the big chunk of money goes to my account whereas selling domains might takes years and years and maybe NEVER.

    March 25th, 2014 at 12:40 pm

      Adam

      and yet you still keep on posting.

      In reply to BullS | March 27th, 2014 at 1:48 am

    Andrea Paladini

    Elliott,
    I guess that by “alternative revenue streams” you mean mainly domain monetization through parking, right?
    Or something different as leasing names?

    March 25th, 2014 at 10:59 pm

      Elliot Silver

      Pretty much anything… for me, that includes revenue from my blog and other websites my company operates.

      March 26th, 2014 at 10:09 am

    Naji

    Excellent post.

    March 26th, 2014 at 7:16 am

    Ivan

    Unfortunately the system is set up for domainers to exist, but you guys are useless cunts that increase the value of names, for no reason.

    If you disapeared the world would be a better place.

    March 26th, 2014 at 10:12 am

      Elliot Silver

      LOL…

      There are many real estate developers who have uttered similar words about people who bought up the good plots of land.

      People have said the same thing about financiers, bankers, and others.

      The irony is that there are plenty of SEO experts, engineers, designers, and other web developers who bought exceptional domain names they don’t use anymore or will never use. If you ask them to sell those names, they are more than happy to quote a market price because they understand the value of domain name assets.

      It’s always easy to criticise people who have what you want, and most of the time, jealousy is the main culprit.

      March 26th, 2014 at 10:15 am

      Daniel

      Ivan….

      It is most unfortunate in your use of language..!

      In reply to Ivan | March 26th, 2014 at 11:27 am

    Horizon

    Good one Elliot,Ivan no need to go down that path,that sort of name calling is the worst,and there are Ladies on here,to Elliots credit he has let your post stay,you wouldn’t be Russian would you Ivan?

    March 26th, 2014 at 11:15 am

      Aaron Strong

      Horizon,
      There are many good “Russian” people. Your comment is more offensive than anything Ivan said. Racism is a “social” issue that is much larger than foul language and an uninformed opinion…Let’s not go down that path as this is a global industry….

      In reply to Horizon | March 26th, 2014 at 12:07 pm

    Igor

    In Mother Russia cybersquat is olympiks sport.

    March 27th, 2014 at 1:51 am

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