[larrys]

Just so you know the filter that people who own and trade domains is actually much better than even what the OP (and you) are describing. It's actually more like "a 3 letter .com being sold for $5,000" where the 3 letters aren't particularly memorable and the domain might typically be worth $10k. You'd have to be in the business to really know the risk involved.

With domains you have to make sure you know the history of the domain (which takes a bit of research) and additionally most people in the domain business, at least with valuable domains, tend to use escrow.com as an intermediary to make sure there is recourse.

That said another thing to watch out for is buying a domain which has been stolen from someone which does happen. In that case a domain is priced attractively (not to cheap not to expensive) and unloaded quickly before the real owner even knows what has happened. This can happen as a result of a simple hijacking of an email address (of the rightful owner) or by social engineering the registrar. As only two examples. That is much harder to detect and even in the case of using escrow.com you would still be out of the domain once it gets yanked back to the original registrant.

Source of the above: Me, I've been doing this for almost 20 years and get paid to buy names as well as buy on my own account.

[notahacker]

It has to be said that "domain stolen from rights holder" is the only reason why anyone actually having control over a highly-sought after term which is the brand of an active commercial web property would want to sell it on a standalone basis for $500.