Should I buy that Domain Name from a Squatter?

It is very common to get a mass (spam) email asking if you want to buy a domain name related to your business.  Here’s an example that just came in:

Hello ____, my name is Margaret Grady with Fast Moving
Domains. autorepairyourcity.com will be listed for sale in
the next couple of days. You are one of 50
companies/individuals who are either bidding on, have 
organically integrated or operate domain names related to
the keyword set "auto repair your city". You can lower or
eliminate any current/future advertisement expenses by
becoming number one in search engines for this keyword set.

These email come from “domain squatters”. They buy domains (for about $10) and try to sell them for a profit, and perhaps sell you some other value added services. Blah Blah Blah…

What should you do? You are thinking, “Will the competition buy this domain name and compromise my business?” Don’t worry. There is little risk of that happening. But this is a good time to double check your domain names; both the properties themselves and the strategy of owning domains.

Strategic Domain Name Considerations

• First, have you got all your domain names organized? > In your name (not a vendor), in one account, password saved somewhere, somehow, that you’ll never forget?
• Second, are the renewal dates more than 5 years away? > You should always have renewed them (each year or so) for the maximum 10 year term for best search results. If they are under 1 year to renewal – your search results are suffering because of this!
• Now, you should be proactive and buy the domain names you need, or that you will actually use, now or in the future. For instance if you think you are getting a new franchise of some sort – buy the domain names ASAP. I’ve seen some auto dealers loose the Fiat dealership domain names (URLs) to squatters because the news was in the press long before the franchisees knew they might get one. The result; they either settled for a less desirable domain name or paid the several hundred dollars (maybe more) to get the ideal one from the squatter.
• Don’t worry about domain names that use your business name. You are legally able to wrestle those from someone who tries to use them for commercial purposes. However, that doesn’t mean a disgruntled customer could not buy the domain name just to post a bad review. But that’s legal and beyond the scope of this post.
• You could imagine using www.used-cars-your-town.com or www.usedcarsyourtown.com or www.used-cars-your-state.com – but you can see that there is almost no end to how many you COULD buy. The key is actually putting them to good use. And remember, you would still have to put a website on each one to generate visitors from search results – and that costs.

There are more cost-effective things you can do to increase your natural search results exposure for “something in your town”. If you have acted according to the bullets above, you do not need to go to the expense of buying domain names and putting websites on each one.