Even though the domain name aftermarket isn’t as lucrative as it was before the economic downturn, there are still ways to “flip” a domain name in the same way real estate speculators flipped houses. Many of the principles are even the same, since the usual method involves buying distressed or undervalued property, remodeling and refurbishing it, and selling it to the highest bidder for a quick profit. Similarly, just as there were people who dabble in real estate as a sideline, there are people in the webmaster and search optimization field who practice website flipping as a hobby that occasionally turns into a full time job.
The late 1990s and early 2000s are usually seen as the “gold rush” days for domain name speculation. This is because there were plenty of domains that could be bought for $35 (the price has gone down since then), and some of them could later be resold for millions. In 1999, Business.com was sold for 7.5 million dollars. Later on, Creditcards.com sold for over 2.5 million dollars, and Fund.com sold for almost 10 million. As the early days of domain prospecting ran their course, the domain flipping era matured. Some individuals and companies own scores of available domain names, and only need to sell a few of them to make back their entire investment.
As a concept, website flipping is very similar, but with the difference that nowadays, you are better off having a website on your domain, even if it consists of just a few pages. There was a period of time where a domain name could be “parked” and it would get search engine traffic. Domain owners could make money by pointing the domain at cash parking services or Google’s own Adsense for Domains program. Domain parking is still around, and still makes money, but usually the traffic comes by way of links from referring sites, as the search engines have done a very good job of removing parked sites from their results. Having a basic website on your domain makes your site much more likely to rank in the search engines, get noticed, and get bought.
How do you flip a domain? First, you need to buy a domain name. You can either buy a brand new name via your domain registrar like Web.com through an auction, through a list of expiring domain names, or resellers like GreatDomains or SEDO.com. Ideally you want a domain that is likely to get high keyword demand, or one in a very profitable sector. It is generally best to avoid buying domain names that contain trademarks or copyrighted phrases.
Next, you generally want to host a website on the domain. Sometimes you can buy domains that already have active websites, but if not you will want to build one, or use a template. Normally, a website flipping strategy calls for the use of Search Engine Optimization (SEO) techniques in order to give the domain name prominence on search engines such as Google. If you can create a useful resource for your topic, your site is more likely to get good search rankings. You can run ads on the site to monetize it while you wait for the right buyer to come along. Simultaneously, you usually will want to list the site for sale on domain name aftermarket sites, or you may wish to solicit existing site owners personally. Generally the people who are buying Adwords ads for your keyword phrase are the best audience, especially when they see that your domain and website are already on the first page of Google. (As a courtesy to these advertisers, you want to copy and paste their sites into a browser instead of clicking on the ad when you want to get more site information.)
The best type of domains to flip, and the ones that are easiest to SEO, are exact match domain names. Although it isn’t as commonplace as it was in the past, people used to type a popular phrase followed by “.com” into their browser bars. This could account for a significant amount of traffic. Today, search engines still give special preference to domain names that match search terms, even if the sites have lower ratings for links and content than the adjacent search engine listings. As a result, the “.net” and “.org” extensions can still be valuable in the domain name marketplace for competitive or popular terms. In a few special cases, the “.info” domain name may have some value, but search engines aren’t generally very enthusiastic about many of the exotic domain extensions that have cropped up over the past few years.
Despite the number of ebooks and “get rich quick” schemes that tell you how easy it is to flip a website, there is a certain level of skill involved, and most of that skill comes through experience. Domains and sites may need to be appraised. Domain appraisal scam artists will approach you, posing as buyers. (They really get a commission off a 3rd party appraisal, then say they don’t want your site.) During the selling process, there is usually a bit of negotiation. Sellers often price their domains too high, and potential buyers may put out a bid that is far too low. A complete sale then goes through an escrow process, where you don’t get paid until the domain transfers, and vice versa.
How much money can you make selling domains and websites? The answer depends on your level of skill, luck, and patience. You may not want to quit your day job in the meantime. A good domain name may be worth millions, but there are quite a few in the marketplace that can’t even be sold for their original registration cost. If you’re able to anticipate traffic demand for a new product or trend, you can pick up top level domains at low prices. You can also opt for the more conservative approach of finding undervalued sites and domains that will sell for a few thousand dollars each. This generally involves a little hard work, but can pay off when you choose sites that are in the right sector, or have great domain name potential.
The use of SEO to flip websites requires a certain level of commitment. Unlike domains that are essentially “day traded” without any development or improvement, flipped websites generally require a longer period of time before they become viable in the search engines. Search engine optimization can take months for many sites, and years for ones in sectors that require more trust, so the amount of effort should be proportional to the expected value of the final sale. You also don’t want to use tricks or shortcuts when doing your SEO, since a banned site is not likely to attract too many buyers.
While you’re waiting to sell the site that you’ve optimized, you may even find that your monetization efforts are bringing you more income than you had expected to get from selling the domain. Naturally, this is the type of problem that most resellers want to have, but many people prefer the challenge of improving a website property until it is sellable. Even though the virtual real estate market also has its bubbles, people who dabble in domains can still get into the field with a minimal investment, and the process can be rewarding from an educational and financial standpoint. If you have the time, SEO knowledge, and enough money to buy a good domain name, then website flipping might make for an interesting hobby, second job, or career.