We see it all the time. A customer comes to us to build a website, has searched for a domain name they want, and gives us the go-ahead to register it for them and build a new website. When we go to purchase the domain name, the cheap domain they saw originally suddenly costs $2500 as a "premium" domain name.
It's been well-documented that domain registrars (GoDaddy in particular) engage in these practices as a way to generate more revenue. Once you search for a domain, they know you want it. If you don't buy it right then and there, there's a good chance that if it's a desirable domain name, it's going to cost you more when you return.
So how can you avoid this happening to you? The first tip is to never begin your search with a registrar. When you do make the step to searching with a registrar, have your credit card ready and be absolutely ready to buy right then and there. Even if you're not sure you want it, spend the $20 (or so) as an insurance policy against losing it (or any other domains you may want if this is the only one that's available at a price you're willing to pay).
The first step in searching for a domain is to go straight to the source. Type the URL in your browser and see what pops up. If it's an existing business then move on to a new name. If it's a "For Sale" sign, go ahead and give it a shot by clicking the link to purchase the domain name. Just don't over-sell how bad you want it. Downplay your interest as one of a few domains you're considering and find out what they want for it.
If there's nothing there, the next step is to check with a whois directory to see if it's actively registered anywhere. For this, I prefer domaintools.com. If it's registered you can attempt to contact the current registrar. Private registrations will see less success than public, and you may or may not be able to contact the owner. A historical whois search can help here, but in general, if this is a new venture you're trying to name, it might be better to just move on to your next choice.
For help in domain name research, there are a few tools out there that I like and trust. If you already have a name, Domainr is a great tool for trying a number of TLD's to see if something works. (Pro tip: A TLD is a top-level domain like .com, .net, .org, .biz, .media, etc.) While I would have recommended against anything but a .com in the past, new TLD's are beginning to become more popular as .com's become more expensive and harder to find, and I think this trend is only increasing which means consumers will only become more comfortable using them in the future. I also use Bust A Name and Dot-o-mator as tools to help make suggestions based on combinations of words you enter.
Whichever way you go, be prepared with a number of options and always be ready to purchase at a moment's notice. Also don't forget that submitting an offer in writing (or accepting one for that matter) even via a quick email constitutes a binding agreement that's likely enforceable in a court of law so be careful how you word your negotiations if you're attempting to buy from another person! I'd also recommend a service like Escrow.com when engaging in a transaction like this to help protect yourself.
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