I have never been a fan of domain appraisals. My opinion is that a domain name is worth what someone will pay for it at a given time. In fact, I pretty much have a set response for when I am trying to buy a domain name and the owner suggests a domain appraisal to determine the value. Here’s my most recent reply to someone that recommended an appraisal:
“I don’t believe appraisals are accurate or in the best interest of a buyer. Both companies you mention have aftermarkets for domain sales. In my opinion, the more they tell you that you can get for a domain name, the more likely it is that you will engage them to sell it. For instance, if company A said your name was worth $5,000 and company B said it was worth $25,000, which company would you engage to sell the domain name? Most likely the company with the higher valuation/expectation I would think. It’s in the best interest of a company to provide high appraisals. From my perspective, a domain name is worth what someone is willing to pay, and I’ve made my offer.“
With all that being said, a comment on my blog got me thinking that perhaps suggesting a domain appraisal could help you sell a domain name when someone inquires and you can’t bridge the gap between his offer and your asking price.
Let’s say a person inquires about a domain name you own and offers $5,000. Because of the price you paid (based on your own gut feel), you tell the buyer you need $20,000 to sell it, but you’d realistically let it go for $15,000+. The gap is just $15,000, but in reality, the price is 4x what the buyer is willing to pay.
Now might be a good time to seek out a domain appraisal from a company like Sedo, Afternic, and/or GoDaddy to use it as a part of your negotiation strategy.
If you plan to do this, I would order one appraisal before suggesting it to the buyer just to be sure your pricing is in line with the appraisal. If the appraisal is the same or higher than your price, you could then present it to the buyer and show him the independent appraisal to show that your asking price is fair and reasonable.
I would not recommend doing this if you are a passive seller or don’t care whether your name will sell or won’t. This is a strategy that is more likely to work if you are a proactive seller.
Keep in mind that the buyer can easily say something like, “great, I know your price isn’t bad but this is all I can afford.” However, I’ve had a number of buyers discuss purchases and in our discussion, it’s come out that they haven’t bought a domain name in the aftermarket and don’t have great valuation insight.
A domain appraisal from a reputable source, complete with factual information about why it’s worth what it say it’s worth, may help close a deal. It’s something I am open to trying and want to share the idea with you.