Domains are more than a web address. They often have value that extends well beyond their initial registration price. Depending on how memorable it is or how well it ranks on Google, a domain that initially cost a few bucks can be worth a lot of money to the right buyer. That’s why domain auctions exist – to give domain owners an opportunity to sell their name for a profit, and give buyers a chance to get a name that can take their website to the next level.
This is similar to house flipping, where a home is purchased and fixed up in order to sell for a quick profit. Unlike house flipping, however, there is essentially nothing to be done with the domain name in order to increase its value. Therefore, the key to a successful domain flip is being in the right place at the right time in order to acquire a valuable domain name before it is given a premium price.
Wait for people to contact me: When I bought my two domains, I didn’t pay the extra $12 for Domain Privacy, learn about Domain Privacy here, so anyone can look up the owner of IHateCold(.com) and ReallyFunnyJoke(.com) in the ICANN WHOIS Database. It can tell you whoever owns any website unless that domain owner pays for domain privacy. So if someone was really interested in any of my websites, they could look me up and shoot me an email about their interest.
The domain name industry is quite similar to the real estate industry in a lot of aspects. There are end users, brokers, consultants and domain flippers or “domainers”. Domain flipping works similarly to buying a house, renovating it (or even sometimes just sitting on it) and then selling it again at a higher price point. The gist of it is: you’re purchasing a domain name and betting it’s worth (or will be worth) more than you paid for it. If you’re right, you get a nice paycheck and move on. Those who make a living out of this just rinse, repeat, and scale.