Domain Flipping — A Comprehensive Guide

Key Takeaways

1. Domain flipping means buying domains at low prices and reselling them for profit, similar to real estate flipping.
2. Valuable domains are short, brandable, relevant, and search-friendly, and expired domains can also be profitable investments.
3. To sell domains, you can list them on marketplaces, create “for sale” landing pages, hold them until demand grows, or use auction sites.
4. Risks include legal disputes over trademarks, domain theft, search engine changes affecting value, and heavy competition.
5. Success requires securing your domains (privacy, locks, renewals), protecting against scams, building a portfolio, and staying updated on industry trends.

With most businesses moving online, domain names have become important to every organization’s marketing strategy. Because of this, their value has gone through the roof, making them prized pieces of online real estate. Like a realtor buys a cheap house to sell for a profit, you could do the same with domains.

So in the rest of this guide, we will show you the basics of domain flipping, where to find them, and some tips to become good at it. But before that, what is domain flipping?

What Is Domain Flipping?

Flipping domains simply means buying a domain for cheap, and selling it off to an interested party for a profit. With brands and businesses fighting for space on the Internet, domains have become a key component of that battle. Organizations are willing to pay top dollar for a domain that gives them an edge over the competition.

Such high demand has given birth to a market where people identify domains with potential, buy them, and then sell them for monetary gain. So, how did the business of flipping domains become popular?

The Rise of Domain Flipping as a Business

The first commercial domain name was registered on 15th March 1985. Since then, tech-savvy individuals recognized the potential value of domain names and bought them all up. Since good domains were no longer available, the only option left was to buy them from their owners.

People rushed to register domain names hoping it would one day sell for top dollar. This practice created a marketplace for buying and selling domain names.

Why Flip Domains?

1. To make money: The most obvious incentive for flipping domains is to make money. If you recognize and register a good domain early, you almost guarantee a decent profit when its value increases.
2. Flexibility: Since everything related to domains is done online, starting up a domain-flipping business doesn’t require a lot of capital. You also enjoy the flexibility of working and growing your business from anywhere in the world.
3. Scalability: The growing demand for memorable, brandable domain names is at an all-time high. This means the potential in domain flipping is endless. With the right strategy, it could become a very profitable business for you. So, how do you start?

3 Steps to Start Flipping a Domain

Search for a Domain

Because you’re trying to make a profit, your strategy should be finding a domain that is cheap but has the potential to be expensive when selling.

You can use domain appraisal tools to get an estimate based on the current market. Compare that with the cost to register and you’ll see if it’s worth investing in.

You can also check domain auction sites to see how much people are willing to pay for certain domains, study the trend, and see what kind of domains to buy.

Evaluate the Domain

When you find a domain within your budget, you’ll need to research and evaluate it carefully. These are some of the factors that make a domain name potentially valuable:

• length;
• brandability;
• relevance;
• search friendliness.

You can also research which keywords and phrases are trending in a particular industry. Then look for closely related domain names to invest in.

Register the Domain Name

Once you’re done with your research, you can register the domain to your name. This is usually a simple process that doesn’t take much time. But if you’re buying from someone, you should follow these few tips to get the best price. But before we get to that, here’s an extra tip that could be helpful.

Look for Expired Domains

Expired domains are treasure houses waiting to be explored. These are domains that were not renewed with their current registrars before the subscription period expired. Competition is low and you’re not buying from a private holder.

Strategies for Negotiating Prices with Sellers

The price you agree with a domain seller could be the difference between making a profit or loss.

To avoid being low-balled, you need to get familiar with these common negotiation tactics and practices:

• gather enough information about the domain and its market value by conducting thorough research on recent domain sales, industry trends, and comparable domains to establish a fair price range;
• be positive and respectful. This will create a more collaborative atmosphere and increase the chances of reaching a mutually beneficial agreement;
• try to understand the seller's motivations for selling the domain. Are they in urgent need of money? Is the domain underperforming in search engine rankings? This helps you identify potential areas for compromise;
• based on your research, make an offer that you believe is fair and reasonable. Your initial offer should demonstrate your willingness to buy the domain;
• negotiations can sometimes take time, especially if a significant price gap exists. Remain patient and open to compromises;
• have a maximum budget or the point at which the negotiation is no longer financially viable for you.

Here’s another extra tip that might benefit your domain-flipping business. 

Create a Portfolio of Domains for Flipping

Because you’re just starting, you will feel tempted to buy one domain to flip, but that isn’t a good idea.  

We advise you to build a portfolio of domains because it gives you a wider reach and a higher probability of making a sale. Only some of your domains will make you money but flipping one of them for a decent price can make your entire operation successful.

With your domains in hand, how do you sell them?

How to Sell Your Domain

Now comes the difficult part, finding someone willing to pay more for the domain than you did. This is easier said than done but there are several ways to flip a domain:

• you can buy and hold on to the domain until interest in it and its value increases. By making your registry public, those interested will be able to reach out with an offer privately;
• another way to find buyers is to create a ‘domain for sale landing page’ using a URL redirect so that when anyone tries to visit the website, it shows the domain is for sale;
• you could be more aggressive and reach out to potential buyers by listing your domains on online marketplaces;
• the fastest way to flip a domain is through auction sites where people bid live for your domain.

Establishing a Transfer Process

When you agree on a price, the next step is to transfer ownership of the domain. This is a simple process that doesn’t take time. However, we advise you to secure the transaction using an escrow service. An escrow service keeps hold of the payment until the domain name is transferred.

Still, the domain flipping business comes with its challenges and risks.

Challenges and Risks

Legal Issues and Disputes Over Domain Ownership

Domain names are valuable intellectual properties, so when two parties claim ownership of the same domain, it leads to a dispute. Conflict usually arises concerning trademarks and other IP rights being used in domain names. The most common domain name dispute scenarios are:

• reverse domain hijacking;
• cybersquatting;
• when two entirely different businesses with similar names have an interest in the same domain name because it best captures their brand.

This can lead to long legal battles, which will take up your time and lawyer fees. To avoid disputes over domain names, always check and ensure your domain is not infringing on any registered trademarks.

Domain Theft and Hijacking

With some domains selling for millions of dollars, cybercriminals are looking for ways to either steal or hijack domains and then sell them for a profit.

Changes to Search Engine Algorithms Affecting Domain Value

Search engines normally implement algorithm changes to improve their search functions with different technologies and processes. While this is typically beneficial for the user, that might not be the case for all domains.

Because these changes are unpredictable, a domain you’re trying to flip with high traffic and good search engine rankings might lose its performance because of an algorithm change, sending the value of this domain crashing down.

Competition

With the huge potential in the domain flipping business, people are joining by their numbers. This means more competition for valuable domains, leading to less profitable opportunities.

But fear not, we’ve got some tips that will help you succeed.

Tips for Success

To succeed as a flipper, you must learn how to protect your assets. Here are the things you should do:

Use Strong Passwords

When you buy domains to flip, they automatically become assets liable to theft. We advise you to use unique, strong passwords and enable two-step verification. Enabling a two-step authentication prevents hackers from accessing your account even if they know your password.

Renew Your Domain Registration Promptly

When you buy a domain you didn’t register, check its expiration date to ensure it’s still active. You don’t want to lose your assets due to a silly mistake. For new domains, we advise you to enable auto-renewal so you don’t constantly check your calendar.

Protect Your Domain from Phishing Attacks

Keep the details of all your domains as a closely guarded secret, sharing such information with someone could be you setting yourself up for theft. Delete all emails containing such details and make sure your domains are registered in your name so you can prove they are yours in case of any eventualities.

Do not respond to or click on any link from a suspicious email requesting registrar data. If in doubt, contact your domain registrar and seek clarification.

Enable Domain Locking

Log into the dashboard of each domain you own to ensure the domain locking feature is enabled. This prevents any unauthorized transfer of your domain names.

Enable Domain Privacy

By default, the database of every domain must have the owner’s personal contact information. Make sure to choose a registrar that offers WHOIS privacy protection.

With your domains well-secured, you can give yourself an edge over other flippers by:

Staying Up-to-Date with Industry Trends and Technology

With search engine algorithms constantly changing and new technologies matching them stride for stride, you need to be up-to-date with the latest trends in the industry. 

• subscribe to relevant journals, blogs, and newsletters that publish the latest news, opinions, and trends in the domain industry;
• follow the leading voices in the domain industry on social media, they usually get first-hand information on the latest happenings and technologies which they often share with their followers;
• reach out and collaborate with other domain flippers. Together, you can map out strategies on how to achieve success.