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 recognize a reputable domain auction.

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What is a 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.

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The basics of domain auction explained

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.

Which domains are good for auction?

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:

Brandable domain name

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.

Short domain name

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.

Top-level domain

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.

Domains with keyword

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.

Radio test

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 backlink domains

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.

Correct domain name

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.

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How do you determine the value of a domain?

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 analyze 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: Thedomain’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.

Where can I buy or sell a domain?

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

How does a domain auction site work?

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 $59 fee 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.

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What are the options for a domain auction?

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.

How to recognize serious domain auction sites

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.

What is the difference between Direct Auction, Buy It Now and Domain Parking?

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.
Tip

Learn more about domain parking in our feature article.

Conclusion

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.