Domain Investors don’t rush in! There are sharks in these waters
When starting out in this game it’s incredibly easy to just dive in without dipping your toe in the water first, and if you’re anything like me you probably got quite a nasty shock when your head went under.
There are so many mistakes that you can make and most of them come down to acting too quickly and not doing your due diligence.
It’s quite amazing when you think about the size of investments people make in Domains and the amount of research they actually do. Would you buy a stock after having done five minutes research? No, well at least I hope not. You’ll look at analyst reports, look over the companies balance sheets, see what the forums are saying about the stocks, read their statements. All of this for a $1000 investment.
Yet when faced with the opportunity to buy a discounted domain for a similar amount all this sensibility goes out the window and we shove our nose in the trough convinced we’re about to chew on one thing, but haven’t really checked we’re not getting another.
I’m not writing this post to lecture to others, it’s more as a reminder to myself as I find I seem to do exactly what I say not to, namely rush headlong into a deal without doing the necessary due diligence.
So what should you be checking for – well here is a list of sites and things I usually do before making a significant purchase:
1) Check the Whois data is up to date – if possible call the person.
2) Look on Archive.org and see what the site has been used for in the past.
3) Google the sellers name.
4) Google the sellers e-mail address.
5) Use an escrow service. I use Escrow.com (I know some people have had trouble here, but I’ve never had any issues.)
6) Use Estibot.com to look at their stats and their valuation.
7) I look at similar sales on Namebio.com
I see if the name is popular in google searches and just how much competition is out there.
9) If it’s a big purchase I run the deal past a few contacts I have in the business to see if they think I’m making a wise purchase (very important to have this group as you can shoot ideas with each other – this has saved me a fortune in bad deals.)
These are just some of the checks you should be doing as it’s truly a minefield out there. Stolen domains, overpriced domains, trademarked domains, then you have revenue generating domains that can soon dry up after a short period.
Another important factor to take into account is obviously price! Can you afford the name? What is your goal for the name? Are you looking to build a successful business or just flip it on for a small (or large) profit.
Lets just say you want to build a site on microwaves. Microwave.com sure is a great name for this, but is it worth the $100,000 it will cost you. Will you really get that much more traffic because of the name?
So these are just a few of the questions and checks I think it would be wise you undertake before buying a name.
If you perform checks I haven’t listed I’d very much like to see what due diligence you undertake.
James
All great points to remember, and all so easy to forget. I think loads of domainers buy on gut feeling. This can pay divdends for sure. But gut feeling with doing reasearch surely is the best approach.
Hi Andy,
I agree, most of domaining is about gut feeling and taking a risk. But that risk must be managed and minimised as much as possible, otherwise it’s quite easy to find yourself in deep water without a liferaft. Most of my purchases have been a little more clinical, as i focused on a segment and knew the sort of thing i wanted to buy. Going forwards i’m keeping my gut out of it and using cold analysis until the current problems have passed.
James
some great points, I’d like to keep ‘em in mind while doing some nex investments -:)
Jay
Also Google banned domain check tool = )
Gut feeling and risk is fine in the initial stages. I do neither. When you reach the level of expertise where you are 100% certain, you can’t and won’t fail.
I may come off as a bit arrogant, but I do not make mistakes anymore. My acquisitions are so well researched, I have no choice but make a profit.
Forget gut feeling and risk. Educate yourself to the point that you have a clear idea where the industry is headed specific to the name. Asking someone fore their opinions is useless. It just deflects your pace and direction.
Become THE expert. You can’t lose!