One area that tends to be a bit of a mystery to those newer to domain investing is how domain drop catching actually works. To get a better perspective, who better to have guest blog than Richard Schreier, CEO of Pool.com, one of the pioneers in the drop industry. Pool has been a drop catcher since 2003 and Richard has been CEO since 2005. Pool was the strategic auction partner for ASIA, BIZ and more recently .CO and has one of the most diverse selections of TLDs in the drop including .CA. On to Part 1 of Richard’s 3 part series.
If you are planning to try and acquire domains that return to the marketplace when someone else no longer wants them, then you should know a little about the domain life cycle. It’s not as simple as you might think and there are multiple points in the process where you may have an opportunity to get the domain you want.
It’s important to understand that when you “buy” a domain, you’re not really “buying” it, you are simply paying for the rights to use it for a specified period of time. And those rights can be taken away for any number of reasons (we’ll save the discussion on UDRP for another time). And, there is a lot of flexibility about how long you buy those rights for, anywhere from 1 to 10 years. Regardless of how many years registration you pay for, eventually, that registration period will run out, and your registration will expire.
You can always tell the expiry date on your domain reliably if you check the whois details. And the expiry obviously should be on the anniversary of when you acquired the name (although this may be different in the case where you acquired the name initially as a transfer from someone else). Nonetheless, your domain registration will expire on a specific date, so make sure you know what it is.
Registrars use the point in time that a domain expires to remind registrants that their registration has lapsed. You haven’t lost your domain yet. Depending on your registrars rules you have up to 45 days to renew your registration. This period is called the Expiry or Renewal Grace Period. .But, be very careful! Different registrars deal with expired domains in different ways.
First of all, the registrar has already paid for the renewal because the domain registration auto-renews at the registry. So, for all intents and purposes, your registrar is now the owner and for a brief period they often do what they want with the domain.
They will send you reminders that you haven’t paid for your renewal. They might shut off or change the DNS setting so your website stops working or resolves to some other parked page. Or they may stop email services if they are providing it through your site. They’ll do anything to get your attention so they can say they tried their best to remind you to pay for your renewal.
Some may even try to sell the domain even though you have every right to get it back during the Expiry or Renewal Grace Period. So be sure to check your registrars Terms and Conditions to see what they will when your registration expires.
Eventually, the registrar needs to make a decision about deleting your name and they have to do that before the 45 days are up. If they successfully delete the name before the 45th day deadline, then they will get their registration renewal money back. If they are too late, then the domain will have been renewed for another year and they’ll be stuck with a domain whose registration has renewed but was not paid for by the customer. So, what happens if they delete the name in time?
The domain will now enter the next phase of the life cycle called the Redemption Grace Period (RGP), which lasts for 30 days. If you were to do a whois on the domain during this time you would see a registration status of “Redemption”. And the moment a domain enters RGP, the website and email will definitely no longer function. If you missed the opportunity to get your domain back during the Expiry Period, all is not lost, you can still get it back during the RGP. However, the cost to regain the rights to the domain once it has entered RGP are higher than the standard registration fees so even though you can get it back, it will cost you a bit more and note that you as the previous owner are the only one entitled to get it back. Every Registrar has a policy on getting domains back during the RGP so again be sure to check the fine print in your Registrar agreement.
Finally, when the Registrar sends the command to the Registry to delete the domain, the domain now enters the last phase of the lifecycle called Pending Delete. This lasts for 5 days and no-one can get the name back now. It will be returned to the market in the drop in 5 days time. So if you have not been successful at getting the name prior to it entering Pending Delete you’ll have to play in the drop like everyone else to get it. And if it’s a good name, that will be a competitive process, so if you can, try to get the name you want well before any of this happens.
So, before a name actually hits the drop market, try contacting the current registrant to see if they would be willing to sell. Even if the name is in Expiry or RGP, the previous owner should still be able to get it back And if they do, you are one step ahead of the drop. If they don’t ,well that’s a discussion for the next posting.