I'm buying a domain name from a private seller, and obviously I don't want to get scammed. What is the appropriate method of buying a domain name from a private seller. Do we go through the domain registrar (godaddy, network solutions), and how do I know the domain is mine? What certifies that I own it?
Ideally you want to use a system that secures the release of that domain into your property once payment has been made. There are a few ways to prevent this from using a reputable domain seller service online, or payment gateways that protect buyers from Fraud.
He can sell his domain on SEDO and it will be released to you once payment has been made, this is very safe but of course do read their terms and conditions and ensure you are satisfied with them before proceeding with the purchase.
Have the seller sell it online via EBay, this has some protection for buyers as well as the added layer of using PayPal, while the seller may ask for more since some costs will occur to the seller this is one of the safest methods.
PayPal offers some fraud protection but again your need to check their terms nad conditions, normally they are rather good but since your item isn't a physical item different terms may apply.
You can use this to show the buyer you have the money, they hold your money and then you release it once you have received the domain. A lot of freelancer website designs use this and consider it pretty good.
Use an escrow service like escrow.com or ecop.com. They will take payment from the buyer and hold it until the name is confirmed to be transfer to your ownership. You can confirm that you have possession of the name by checking your registrar account to see if the name is there - if it is, then it is yours. You can also check a Whois database and confirm that your information has replaced the seller's information.
I would not recommend any of the other venues recommended by an earlier poster. Sedo and ebay apply only if the domain name is already being sold thru those channels. If it is not, it is not worth the effort to cause them to be. And paypal does not offer the type of tight transaction controls (e.g., confirming domain transfer) that you will presumably want here.
You will need to negotiate with the seller as to who pays for the escrow service. If you have not done this, but already have settled on a price, probably you will need to pay the entire cost.
Also recognize that the transaction has several parts to it. Setting up the transaction on escrow. You making payment to escrow. The transfer of the domain name (which, of itself, may involve several steps). Confirmation of change in ownership. Release of funds to seller.
First of all, you have to make sure this person has the domain under his/her name through a WHOIS lookup and they have the authority to sell it to you.
Next, make sure to prepare a fair offer for the domain. They might get discouraged to sell the domain if your offer is too low.
In the payment phase, it is very important to use a third party to facilitate this transaction in order for both parties get what they want. Make sure to include the cost of this third party service within your negotiations, like who pays for it.
An escrow service, such as Escrow.com, is one such third party service that you can use. There are also other domain aftermarket platforms that you can check out including Afternic and Sedo. Regardless of the method you choose, make sure to check for reviews.
With regard to your comment about your seller sending you an Auth Code, perhaps he means an Authorization Code? It might be an additional code/step needed in order for you to complete the process on your end.