Domain Appraisals = Wallpaper
By Alan on Mar 19, 2008 in Domain Appraisals
I’m a proud capitalist and believe everybody should make a buck but domain appraisals – come on. In the past couple months this has been a key buyer’s element in the negotiation of a few smaller deals we did.
I can not emphasize how ridiculous these appraisals are and how we have never, nor ever will, consider these “appraised values” as a factor in determining price.
GoDaddy (in a matter of seconds) spit out an appraisal that determined the value for one of our domains between $10,000 and $28,000.
Maybe I should have them appraise my house. Wonder if the bank would accept an appraised value by a certified expert of between $750,000 – $2,000,000. Let’s just a pick a number for fun and refinance.
I can’t blame the companies for selling them – everybody has had the itch to buy one with hopes of hitting the lottery (still not sure where you would cash the ticket but it’s a pretty souvenir) but some buyers actually take this information serious.
Here’s the lowdown…
Unless you are using a low appraisal to help convince a domain owner (who has no real knowledge of the industry) to sell a domain for somewhere around the “appraised value” then you need your head examined if you waste money on a domain appraisal.
Companies will sell you anything – it’s thier mandate. Your mandate is to find value in how to spend your money.
Domain appraisals are not value.
Want more facts – Not a single quality portfolio owner or reputable domain investor would ever consider the “appraised” value of a domain name as a remote part of the domain valuation method.
So why should you….
Francois | Mar 19, 2008 | Reply
Except Afternic, I tested most of the appraisals services ~2 years ago.
Verdict:
Moniker and SEDO were the best ones.
GoDaddy was the worst without any doubt (it’s shame).
…
Domain valuation has value when done seriously.
Now, never forget that “circumstances” (thanks Rick for the term) have a HUGE impact in the sale price(see iReport.com sale).
admin | Mar 19, 2008 | Reply
I agree, when done seriously domain appraisals can have value, but that’s where the current services are lacking. Moniker’s appraisals (on the generic names) seem to be somewhat reasonable, some of the time. However you hit it with how “circumstances” can impact the sales price.
Many factors including circumstances, the X factor, demand, industry and so many more have a direct impact on the value of a name.
Problem is – unlike real estate – there are SOOOO many intangible elements behind a domain’s value that domain appraisals have become simply OPINIONS.. not true indicators of value.
Vic | Mar 21, 2008 | Reply
You make a strong case against the validity of domain appraisals.
Having tried GoDaddy (automated) appraisal service on a number of domains, I agree 100% – it is not worth the cost of electron transfer, or the disk space their appraisal report occupies.
At this point, however, I’m not ready to accept the same verdict at least for Moniker.
Still, for a moment, let’s accept that all domain appraisals are worthless.
How, then, does an owner/seller or potential buyer try to fix the value of a domain?
Would you suggest a formula/method or at least some basic factors that can be used to determine a sort of rough-rough value? Or do you believe that different factors/parameters apply to the valuation of each domain?
——————
NF *** Vic, it’s hard to give you a solid answer. Keywords (in the correct tense) are very important, obviously .com’s are worth more but (depending on the domain) sometimes the .org can be worth more than the .net. Most of all the value is in how much is it worth to you to let go or acquire. We have our own valuation method – and even that is not an exact science.
Sahar posted a great article last week about questions they ask when considering a domain’s value. ***
Adam | Mar 26, 2008 | Reply
Appraisals and sale prices really have nothing to do with one another.
My first home was recently appraised and it came back at $7,000 less than the offer I had received. The buyers were freaked out but when we looked at the method the appraiser used we figured out why it came so low. He was comping houses nowhere near where our historic neighborhood and not using similar sized homes.
We had a second appraisal done and the price came in $2000 above our asking price. Go figure. Sold it for $2000 under asking.
Automated appraisals are always going to be screwy but even experts can use the wrong information, not have all the information and come up with “wrong” appraisals. I think you’ll see this sector of the domain business mature more and more as domain values become more important in the corporate world and not just among domainers.
NF ** I hope you are right. **
victor | Aug 13, 2009 | Reply
I think estibot is a great appraisal site. Plus, it is free and list the traffic.