When it comes to buying domains, everything starts with the purchasing phase-the construction of the initial portfolio. There are many different ways to do it. Below, we’ll consider four different ways:

  1. Buy domains from the primary market in bulk. Many domain registrars will allow you to do this at a discount. You may be able to reduce the price by 30-40% by doing this. However, you may need to buy anywhere between 50 and 100 names.
  2. Buy part of a portfolio from an existing domainer. In many cases, domainers will need to liquidate large parts of their portfolios in short periods, even if they are doing well. You should pay attention to these firesales, as domains are often sold in bulk below market price.
  3. Buy domains after they “drop.” This generally occurs after a long-time owner of a site goes out of business or decides that it is no longer worth it to keep the site. When the business does not re-register, the domain will “drop” and become visible as an available domain.
  4. Look for leads on domain name forums. On it is common to discuss domain name sales and purchasing strategies. Look for tips about big, new sales; and use them to start your portfolio.

In addition to these four strategies for starting your portfolio, there are dozens of others.

The Best Websites to Buy Domain Names

With over 1,000,000 subscribers and more than $4 million in domain transactions each month, Sedo(dot)com is one of the best places to buy and sell domains.

As we discussed earlier, there are two types of markets for domains: primary markets and secondary markets. Primary markets consist of registrars that allow you to purchase a domain for the very first time. Secondary markets, on the other hand, consist primarily of site owners and speculators who are reselling domains that have already been registered and held; and are now being resold.

Sedo is perhaps the best known out of all of the major secondary markets for domains. In its current format, Sedo allows sellers to auction off domains to a thick market of buyers (with a reserve price if desired).

Sedo offers two options to sellers: they can either sell in the “great domains” section; or in the general marketplace. The “great domains” section is reserved for domains that have short, one-word domains with reasonable reserve prices and that fit several other important criteria. These auctions typically enjoy a lot of attention from buyers and often sell at higher prices as a result.

If you are a relatively new buyer with a small portfolio or no portfolio at all, the best place to look at least initially is the marketplace. When you search in the marketplace, you will have the following ways to tune the following set of options:

  1. Keyword. You can look specifically for sites that fit your target portfolio categories. For instance, if you used the 10 categories that we mentioned earlier in the book, then you could use this feature to see if any domains that were currently being auctioned were related to golf, yachts, restaurants, or any of the other categories.
  2. Extension. If you have a portfolio that is heavy in a particular type of generic top-level domain, you may want to diversify out of it. You can use this feature to focus specifically on.com domains, generic top-level domains, or country code domains.
  3. Category. You can use this feature to think up and find new categories of a domain that you can focus on in your portfolio.
  4. Price. If you use the strategy outlined earlier, you should use this option to target domains that are in the $100-300 range. In particular, look for domains that have received a significant amount of bids, as this indicates that the market for that name is thick. On the contrary, avoid auctions that have only 1 or 2 bids, as it may be difficult to get to replicate the price that you pay in the future.
  5. Listing Type. While most listings are auctions, you also have the option to look at “fixed price” and “offer/counteroffer” listings, too. Unless you feel very confident about the quality of the domain in question and its viability in future sales, I would avoid these categories and stick to auctions, since the auction itself gives you important information about the quality of the domain.
  6. Length. You can use this option to narrow down domain listings according to the number of characters they contain. Unless you have a good reason to focus only on short or larger domains, I suggest looking at all lengths. Even though shorter domains are often higher quality and receive more type-in traffic, longer domain names can sometimes offer a great bargain.
  7. Exclude. You can use this feature to get rid of certain types of domains. If you need to narrow things down, I recommend getting rid of domains that contain hyphens, as these have fallen out of favor among domainers and site owners alike.
  8. Domains/Websites. In addition to simply searching for domains, you can also look for existing websites. While the purchasing considerations here should be different, many of them are similar.
  9. Visitors/Month. While many do not pay careful attention to this criterion when searching for secondary market domains, it is very important. Not only does a high volume of traffic increase the value of the domain, but it also makes it easier to generate revenue from “cash parking” the domain between the purchase and the resale.

Using these nine different search criteria, you can work through the set of auctions to determine which sites will be the best additions to your portfolio.