How to navigate a domain auction site

Valuable domains can be a great in­vest­ment for buyers and sellers. Domain auction sites allow sellers and buyers to trade web addresses. This is similar to the real estate market in a sense. However, it is important to know what a domain is worth and how to recognise a reputable domain auction.

Anyone familiar with eBay and Sotheby’s knows what is involved in an auction. Pro­spect­ive buyers submit bids for items and the highest bidder receives the coveted object. Domain auctions show that it is not only material goods that can be auctioned. Domains have proven to be sur­pris­ingly valuable for traders. Stat­ist­ics from domain re­gis­trars show that the most valuable re­gistered domains can go for millions of dollars at auctions. Most domains are auctioned off for sig­ni­fic­antly less money.

Domain auctions are a lucrative business field. A domain auction is also worth­while to sell unused or expired domains for a profit. Owners and investors put domains up for sale on domain auction sites.

The basics of domain auction usually start with these questions:

• Which domains sell well?
• How is a domain’s value de­term­ined?
• Where can a domain be sold?

If you know the answers to these questions, you’re already ahead.

The value depends mainly on supply and demand. However, it is not guar­an­teed that a valuable domain will sell. Some sellers will actually sit on valuable domains for years, while cheap domains can sell quickly. It is important to know the following sales criteria to un­der­stand what a domain costs:

Sites like Wikipedia, eBay or Amazon wouldn’t be as suc­cess­ful without their un­for­get­table names. Domain value depends heavily on ori­gin­al­ity, keywords and catchi­ness. Some sites sell pre-generated company names and domain names. A well-marketed domain name can be very valuable.

Less is more. Short domain names stick in people’s minds, and they are easier be market. Just look at suc­cess­ful companies and their domains. Nike (nike.com), adidas (adidas.com), Google (google.com), BMW (bmw.com). Although a domain name may contain up to 63 char­ac­ters, short and snappy names are far more popular.

A domain can’t be auctioned suc­cess­fully without important domain types such as TLDs. Generic top-level domains like .com, .net or .io domains are crucial as they are more popular and therefore more trust­worthy. Country specific domains such as .de, .fr, or .co.uk also offer sales ad­vant­ages.

Keywords are search terms which cor­res­pond to the interests and wants of end users. Domains which have at least one keyword in the name have an increased chance of finding potential buyers at auctions. Therefore, people who are buying a keyword domain at auction must ensure that the domain matches their company or activity. Investors who trade domains should also pay attention to popular keywords in the domain name. Domain selection for SEO plays an important role for newcomers if the domain name rep­res­ents the business or search in­ten­tions.

Domains which pass the radio test are easily un­der­stood names. The radio test checks whether people know how a domain is spelled just by hearing it. Potential customers will not find a domain if they do not remember it.

Older domains have safe places in the Google ranking and index, which is an advantage for your SEO. It’s even better if there is still a serious backlink profile. This involves backlinks, which link to the domain from other websites and generate valuable traffic.

Domains that are identical to well-known domains except for minor typos can be very valuable. Think of 'gogle.com' or 'amazn.com'. Some companies like to pay a little and buy incorrect domains. So, you can make a lot of money by re­gis­ter­ing domains with small errors. However, you should make sure that serious domains have correct spellings.

We recommend finding out the domain value if you want to earn money with domains. These are values are averages and estimates, but they use com­par­is­on, es­tim­a­tions and valuation services to determine a good benchmark.

• Com­par­is­on: An overview of past domain sales can help estimate a value. In­form­a­tion services such as do­main­namewire.com analyse domain trans­ac­tions and report on sales. The market trends among domain providers also help determine values.
• Appraisal and valuation: It is re­com­men­ded to carry out an appraisal and valuation before going to auction. There are free valuation services available for this purpose. However, valu­ations only provide guideline values.
• Will­ing­ness to buy: The domain’s true value will depend on what in­ter­ested parties are willing to pay. Therefore, an auction is the best way to determine a value. A minimum bid can be set on a domain auction site to ensure the domains sells at the minimum value.

If you are looking to buy a domain or sell one, domain auction sites are where you will find the traders. These are virtual auction houses where you list, park and auction domains. The largest mar­ket­places are:

• Sedo
• Flippa
• GoDaddy Domain Auction
• Afternic
• Epic
• Mabya

A domain auction site provides the platform to put domains up for auction. There are thousands of potential buyers on large domain auction sites like Sedo. Simply create an account with the auction site to list your domain for sale. Depending on the auction site, you may have the choice between instant purchases or auctions within a set time. Minimum bids can be set to avoid losses. The auction site will usually charge a com­mis­sion fee on sales.

We’ll use Sedo as an example to explain how a domain auction site is used.

Step 1: Create an account on sedo.com.

Step 2: Put the domain up sale. It can be listed for free. You can use the 'Buy it now' option for no bidding or you can start an auction. Sedo also offers the paid option 'Premium Listing' for more traffic. There is a fee of around £50 for a direct auction (as of August 2022).

Step 3: A 15 to 20 percent com­mis­sion fee is charged on sales. The owner to buyer transfer follows, which includes an escrow service. This is completed with an auth-code generated by the registrar, which you receive from your provider and domain provider. This il­lus­trates the dif­fer­ence between buying and re­gis­ter­ing a domain. A domain itself cannot be bought, rather the domain holder’s use rights must be acquired.

You have three selling options when auc­tion­ing a domain on Sedo:

• Direct Auction: A direct auction does not have opening bids or bidding phases. The auction begins after you choose the start time and the minimum bid. Direct auctions take place for up to ten domains at a time.
• Auction with sale guarantee: The sale guarantee ensures that the first bid is the same as the minimum bid. This attracts in­ter­ested parties and it ensures a prof­it­able sale. Bids are also ad­vert­ised in search results and on the Sedo homepage.
• Great­Do­mains and theme auctions: Great­Do­mains auctions take place twice per month for par­tic­u­larly valuable domains. Up to five domains can be offered at auction. Theme auctions are held for certain domains such as keyword domains or short domains.

There is also an option called 'Buy it now OR best bid'. This lists a domain with two selling options. Pro­spect­ive buyers can buy the domain im­me­di­ately at the price listed or start a ne­go­ti­ation with a bid. Sellers have the option to accept or decline the bid.

It is important to take into account the ser­i­ous­ness of auction sites. Only pro­fes­sion­al sites guarantee security and reliable pro­cessing. Pay attention to the following criteria:

• Valuation: Reputable domain auction sites offer a valuation for the best possible sale price.
• Verified Bidders: Some auction sites only accept re­gistered and verified par­ti­cipants.
• Minimum bids: The 'minimum bid' option should be offered by every reputable auction site.
• Reserve function: Ideally, a secret value can be set as the minimum bid. The seller does not have to sell if no one places the secret minimum bid.
• Escrow service: An escrow service should be included to securely transfer sold domains.

The options direct auction, buy it now and domain parking differ cater to a seller’s different needs:

• Direct auction: If you want to get high prices for high-value domains, use direct auction with minimum bid and ne­go­ti­ation options.
• Buy it now: If you want to sell domains with a fixed sale price, opt for buy it now with no auction. There is no ne­go­ti­ation possible here.
• Domain Parking: If you want to keep unused domains or use them prof­it­ably, use domain parking. You can keep domain names without linking them to web or email services. Domain parking on Sedo allows you to place similar ad­vert­ise­ments on parked domains for free and continue to generate revenue. Domain parking is ideal until a domain is sold.

Selling domains and buying high-quality domains at a domain auction can be a good source of income. Reputable auction sites like Sedo have helpful features such as instant sale, domain parking or an auction with minimum bid.