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In the previous article I spoke about where you can purchase domains. Some of the places included the domain auction sites, forums and of recent times the live auctions at a number of the domain name conferences. In this article I will tackle purchasing domains at a number of the domain market places.
 I would like to thank a reader who reminded me that I'd neglected to mention this area. It was a complete oversight on my part.
There are a lot of domain market places but most notably there is:
Sedo.com
GoDaddy.com (TDNAM.com)
Afternic.com
BuyDomains.com
Domain Distribution Network (Dark Blue Sea)
Purchasing domain names in the marketplaces has the advantage that they will provide any escrow facilities so that your investment in protected on the way through the transaction.
Each of them has their own individual fee structure but typically speaking for a basic service to sell your domains you are looking at parting with 10% of the sale price. This means that if you sell a domain for $1000 then you will only receive $900.
I know many people that successfully buy and sell domains in the domain marketplaces but understand that if you are a seller then you may trigger a tax event for the domain. What do I mean by this?
In Australia and other countries, if you are deemed to be "trading" (ie. treating domains as stock items) then you do not get the capital gains tax provisions that would normally be available for the sale of an asset. This means that the sale price of your domain hits your profit and loss and not your capital account.
The key here is whether you are a "trader" of domains or a "holder" of domains. The more transactions that you do the more likely you will be deemed as a "trader" and find that the tax office decides to tax your revenue at the company tax marginal rate, which is never good.
I would highly recommend that you seek your own professional advice prior to selling any of your domains. It's really easy to throw money away without the proper professional advice.
So back to the marketplaces, most of the domain marketplaces are typically designed to maximize the sales price of a domain via an auction system (exceptions here are Dark Blue Sea and NameMedia's solutions that treat domains as stock items).
This means that when purchasing domains you need to really keep your head about you or you can burn through a lot of money for some pretty poor domains. When we do any purchasing of traffic domains we do a lot of research into what we think will be the maximum price and then stick to it. If we lose the domain, we lose it and move onto the next one. This strategy works as long as there are domains with traffic to purchase.
Although the marketplaces do their best to assist in completing transactions some of the ccTLDs that you may attempt to acquire take a long time to complete the transaction. For example, I've waiting for about 3 months for a co.uk transaction to complete and physical paperwork to change hands. Make sure that you take these delays into account when purchasing.
There are a few tips with purchasing domains in the marketplaces and I hope that you find them useful. In the next installment of the Domainer 101 series we'll move onto to managing domains and what you need to do as your portfolio grows bigger and bigger.
Wiki: Sedo, Godaddy, Buydomains, Afternic, Dark Blue Sea
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