Domains are bought and sold every day. Some are sold through auctions, some through brokers and some sold through direct deals. As a seller of a domain, you want to get the most money possible for it, as a buyer - you don’t want to overpay. The following is a checklist of elements to consider when valuing a domain so that you have the best perspective for either buying or selling:

1. Does the domain already have a business on it? The difference between negotiating for a domain that is parked (ie, a site with no original content that drives revenue strictly through placing directory style ads on it) and a site that has a more developed business is enormous. If the domain is parked, it is basically generating pennies to dollars per day through people typing in the domain name. Parked domains can be set-up extremely quickly and are normally part of a larger portfolio. Domains with businesses on them have had planning, development and content creation put into it and are much more valuable as much for the work already put in as the vision of what the domain can become.
2. Are the domain keywords short, sweet and memorable? Domains that are part of the english dictionary, shorter and memorable are more valuable. The longer the domain keyword or the more words in the domain, the less valuable the domain becomes.
3. What is the search volume of the keyword(s) of the domain? A domain that has a high search volume (also known as a high type in volume) will be worth more due to the “natural” traffic the domain will receive. In addition, a high search volume type of domain gives the business an advantage over similar business models due to the importance of the domain name in search engine optimization algorithms.
4. Is the keyword(s) spelled correctly? Mis-spellings and multi-word domains that share a letter devalue the domain vs a correctly spelled domain.
5. What is the top level extension of the domain? The .com extension is more valuable than all other extensions due to the wider acceptance of .com, the scarcity of domains available with the .com extension and the fact that .com can be used internationally.
6. Does the domain have a hyphen or any special characters? Any additional charactes in a domain name like a hyphen or non-standard character will diminish the value.
7. What are the natural buyers or natural business use of the domain? The more natural businesses that can sit on the domain, the more potential buying competition there is.
8. Are there potential trademark infringement or other legal issues with the keywords in the domain? Much like a title search on a new house or piece of property, making sure the domain is free and clear to be transfered is important. This is especially important for high value domains. In addition, any potential conflicts with an established trademark will reduce the value of the domain.
9. What are the comparable transactions? When valuing real estate, agents look at what other comparable homes, property or buildings sold for. Same thing for domains. What have similar domains sold for at auction or through a broker recently?
10. Does the domain have branding and advertising potential? Amazon is a river, it is also the largest e-commerce site on the internet. Google is a pretty successful site too. The words are short, snappy and have good businesses built on them. Could the domain you are considering have the same potential? If so, it will be worth more.

While no single element will drive the value of a domain, looking at all of these elements together will help you determine the range of price the domain is worth. The rest is up to your negotiating skills and options available on the market. Future blog posts will go into how to go deeper into these elements including the tools available online.