Do a little leg work and you can nab expiring domains for a fraction of the price.

Competition for top expired domain names on NameJet and Snapnames is fierce, and auction prices go sky high. What if there was a way to usurp the auction process and buy premium expired domains at fixed prices? There is. It takes a little work, but your smarter domainer friends are already doing it.

When a domain name expires, it gets added to the queue at partner expired domain services (e.g. Network Solutions to NameJet). You can take the easy way out and backorder the domain, only to face off against 100 people in an expired domain auction…

Or you can contact the previous owner and buy it at a fraction of the price. People have been doing this for years, and I ran an experiment last year to see if it was worthwhile.

Now, the expired domain companies and their partner registrars aren’t dummies. That’s why they switch whois information to private and often block archive.org access as soon as a domain expires. That makes it harder to find the owner. So you need to sign up for an account at DomainTools to look at historical contact for the domain.

Once you get the email address from the historical record, you send an email to the owner:

“I noticed you let domain name xyz expire. I might be interested in buying it…”

99% of the time your email will bounce. If it’s a good domain and expiring, odds are the owner has outdated email information. So your next step is to pick up the phone and call the number in historical whois.

I tried buying about 50 domains this way last year, focusing on three letter domains and other high value domains identified by FreshDrop. Here was my experience:

1. Received response from 5 out of about 50 domain owners. Majority of others had no valid contact info.
2. 3 of 5 said they planned to renew the domain and just hadn’t gotten around to it.
3. 2 others engaged with me. On one I thought I had a deal, but someone else was also playing this game and convinced the owner to sell to him instead before I had a chance to counter. It was a good three character domain that also was a word. (The owner of that domain told me “man, you’re like the third person to call me today about this domain”.) The other was a three character domain that I nabbed for $2,500.

As an individual, it may not be worth your time to contact 50 people manually to acquire one three character domain at a good price. But if you systematize it, and perhaps outsource some of the contact legwork, it could be very profitable.

Size of bidding scandal becomes clear.

A document filed today (pdf) in a lawsuit against Oversee.net and Snapnames shows that the total loss to U.S. customers from the bidding scandal was about $1 million, including interest. The total damages for all customers can be extrapolated to be about $2.0 million.

The document was a declaration of Lance Martinez, General Counsel of Domain Services for Oversee.net, filed in response to the court questioning if the case was big enough to be certified as class action. In order to be certified as class action, the amount in question must be at least $5 million. Using some opportunistic math, the plaintiff in the case suggested the amount at issue was over $5M.

Martinez’ declaration shows just how much was lost by U.S. customers, and hints at the total amount overpaid by all customers. Here’s the data:

-55% of auctions affected by Halvarez involved non-U.S. customers. Therefore, 45% of auctions were U.S. customers.
-Over 70% of auctions where a U.S. bidder paid more because of halvarez involved overpayment of $20 or less, and 45% involved $5 or less.
-Total set aside for rebates to U.S. bidders was about $1 million, including about $150,000 in interest.

If the amount lost in auctions by non-U.S. bidders was equal to the amount lost per auction by U.S. bidders, then the total lost by all bidders excluding interest was less than $2 million, and the total including interest was just over $2 million.

How much did customers overpay thanks to Halvarez?

Last week I reported about how the judge in the California lawsuit against Snapnames questioned how much money was at issue. In order to qualify for class action status, at least $5 million must be at stake.

In questioning the total number, the judge noted that the plaintiff in the case had lost a whopping $20. If ‘halvarez’ participated in 50,000 auctions at an average overpayment of $20, that would be only $1 million. It’s simple math, but the plaintiff decided two can use that logic.

Yesterday the plaintiff and his lawyers submitted their own crude analysis. The lawyers say they talked to a number of people, one of which had overpaid by $200 in an auction. So between one overpayment of $20 and another of $200, the median is $110. Multiply that by 50,000 and you get $5.5 million.

Hmm. Seems like a stretch to pick the highest overpayment selected out of talking to many people who were affected.

I’ve talked to lots of people, too. And I’d estimate the amount at play here is well under $5 million. Perhaps it makes sense for SnapNames to file with the court the exact amount at issue.

Registrar explains its expiration notification policy.

A lot of times domain name registrars get the blame when their customers forget to renew domain names. “I didn’t get the notice” is a common line.

Of course, you can easily say the opposite. Really, how many emails does GoDaddy need to send me about my expiring domain names? It may seem like they trip all over themselves to get you to renew domain names. And that’s exactly the point.

In the wake South African Airways forgetting to renew its domain name, Network Solutions has penned a blog post about why it pesters customers to renew. It explains its notifications:

We start sending domain renewal notices 75 days from the expiration date, then again on day 45, day 20 and day 10. If we get a bounce back from the email address that’s on file on day 20, then we send a written notice to the registrant’s physical address on file.

Sending postal mail based on a bounce back is great — and something most registrars don’t do.

In the case of South African Airways, it appears their outsourced technical team was actually the group to drop the ball. The email address in whois is dns(at)itnt.co.za, which is a South African web company.

ICANN has been looking into how domain names expire. My message has always been that more notifications to registrants aren’t necessary. The reason valuable domain names expire is because the registrant has incorrect contact information. More bounced emails won’t solve that problem.

Answers to three commonly asked questions about the ‘halvarez’ scandal.

The topic commonly known as ‘halvarez’ — the insider bidding scandal at Snapnames — wasn’t a major topic at DOMAINfest. I didn’t expect it to be, either. Within days of the scandal breaking I talked to several big SnapNames customers. They were disappointed about what happened, but also understanding. Most had accepted SnapNames’ compensation offer and moved on.

But a number of people still have questions. So I took advantage of a media breakfast with Oversee.net CEO Jeff Kupietzky last week to get some answers to some of these commonly asked questions.

If ‘halvarez’ did what Oversee.net alleges, why hasn’t a lawsuit been filed against him?

This is the questions I hear most frequently. Kupietzky described it as an “ongoing legal matter”. This makes sense. Contrary to what some people believe, the first reaction when someone allegedly does something wrong isn’t to file a lawsuit. There are other ways to get restitution or compensation.

Has it always been against SnapNames’ policy for employees to bid on auctions?

The exact date that employees were notified they may not bid in auctions isn’t known. However, the employee’s alleged behavior of bidding to increase customer’s costs has clearly been against the rules and norms.

How much compensation has been paid out to customers?

SnapNames isn’t releasing the actual dollar amount. But of the compensation pool it set aside, about 55% has been claimed.

My personal knowledge from talking to some of SnapNames’ biggest customers is that most customers weren’t owed nearly as much as you might read about on some forums and blogs. Some of the biggest customers were owed low-to-mid five figure sums. This depends, of course, on what types of domains they were bidding on. But as I mentioned before, most big customers I’ve talked to took the compensation offer and continue to bid at SnapNames. (Hat tip to Kieren McCarthy for asking the last question.)