How Automated Appraisals Help Me Make Money

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Every morning, I receive several emails that list expiry-stream domain names coming up for auction that day. I receive a mix of emails from auction platforms and third-party services. The emails send me domain names that meet certain criteria I have set to help me find domain names I might otherwise miss.

Off the top of my head, at least two of these daily emails have automated appraisals in them. These appraisals are one of the factors I look at when buying domain names. I don’t take the number too seriously, but if an appraisal is higher than I might have expected to see, it grabs my attention and makes me do a bit of searching to see what signals are causing it to have more value.

I regularly participate in auctions, and I don’t typically let an automated appraisal influence my buying decisions. Last year, though, I saw a domain name with a relatively high appraisal in pending delete status. The name was generic enough that I wasn’t concerned about trademark issues, and I ended up winning it for $59 at DropCatch.com as the only bidder. I don’t remember what I initially priced it at when I first listed it at Afternic, but I do recall thinking to myself, “why did I even buy this domain name.

To make a short story long, I ended up selling this domain name recently via Afternic/GoDaddy. When I received the fast transfer email, I was pretty surprised to see that this particular domain name was sold.

When people criticize automated appraisal platforms and services, I tend to agree. I don’t think they are great, especially when end user prospective buyers cite them in a negotiation or set their expectations based on the valuation they see. I regularly use the automated appraisals as a gauge of value, and I have sold plenty of domain names that I bought where I used the appraised value as one indicator. In this particular case, the automated appraisal was almost certainly the only reason I even noticed the domain name in the first place. Had it not been for the automated appraisal, the domain name may have been deleted.

13 COMMENTS

  1. Amazing…I thought of you and your position on this when I posted in multiple blogs recently my opinion that Estibot has caused great harm to the industry and everyone. And I even kind of thought you would make another statement on that. And here you have.

    So yes indeed, they have caused and continue to cause great and real harm as far as I’m concerned. And I’m certainly not alone in my view of them (see Rick Schwartz, et al). And as I posted recently, let them call it something else, anything but using or leading people to even think of the word “appraisal” or anything like the word “appraisal.”

    Here’s the link to Estibot still “appraising” crypto.com at $48,000 even after it sold, btw:

    https://imgur.com/rLHELHg

    That and my posting about it one of the reasons why they recently made it impossible to do an “appraisal” since without first entering an email? Yes, no, maybe? 😉

    And sure, I get it, for people like you just looking to find inventory to make some money on from large quantity lists hard to review because of size, there may be some usefulness there. BUT DON’T CALL IT “APPRAISAL” or lead people to think that…

    Yes, I too have had the “Estibot” pill inserted to harm a negotiation before, btw…

    It’s even worse when you can’t list a domain anywhere without the “Estibot” abomination appearing to kill any chance of doing well when the figure is absurdly out of touch with reality. Last I checked, NameJet for instance, and I’ve seen it elsewhere too. Thanks a lot…

    Was going to close with a great “top secret” about this I’ve never mentioned before, but decided it’s still too much not in my best interests to do that. Suffice it to say, not even addressing the full extent of how harmful these “appraisals” are, and not just for the interests of domainers, domain investors, and also end users who may wish to sell.

  2. Good article Elliot. Your article highlights exactly why automated domain name appraisals are important.

    The core issue is that people, especially new investors and people outside of the industry, entirely miss the core value of these numbers and often take the actual $ number to heart.

    The greatest value of automated domain name appraisal values is not the actual dollar amount but the “heartbeat” it shows for a domain name’s quality when sorting through lists. For the most part (and yes there are always examples of this not working) when you run a list of 10,000 domains, or scan a list of expired domains, then an appraised value sort will help quickly identify domains “possibly” worth considering. It won’t catch them all but will save significant time and energy and is one of many sorts often needed to ultimately weed down a list.

    How much that automated number is? It doesn’t matter. That’s not the value of the data point. The value is simply the quality filter in bulk scans, and there is no doubt having this formula worked on and improved on year after year has helped people make tens and tens of millions in the domain name industry.

    Now ask many how much any of the domains were appraised at? Almost no one knows or cares. What they care about is the search filter it provides.

    Those who still argue whether or not the number is right simply don’t understand that building an algorithm to correctly value domain names in scale is an impossible task. Not only are likely 75% of sales never reported but most of those reported often result from inbound leads (meaning there possibly was never a second buyer in that range). The number of intangible factors unique to almost every domain name deal (on both seller and buyers side) cannot be measured. It’s a challenge I imagine even Alan Turing would likely chuckle and pass on.

    Data is only good as you know how to read it and use it. For automated domain name appraisals, it’s not about the number shown but where those numbers can lead you to.

    The gold is in front of you but maybe it’s not exactly what you see.

    • > “The core issue is that people, especially new investors and people outside of the industry, entirely miss the core value of these numbers and often take the actual $ number to heart.”

      Right, and therein lies the harm. As well as using the word “appraisal” at all or anything like it. And I would take out the word “often.” End users know nothing about such “domainer-centric” ideas, nor care to. They just see that they can have an “appraisal” just like with real estate. And even domainers scarcely know or care as well.

    • Alan — if that is the useful value of the automated appraisals then they are practicing pure folly in reporting out a ‘score’ priced in U.S. dollars. Instead, these automated appraisal systems should be reporting out a score on a scale of 0 to 100 only. That should yield the relative value needed for screening and sorting a long list of domain names to achieve the same ends that you and others find of value from using such systems — only seriously consider those domain names on the list sorted into the top 3 deciles of the 0 to 100 scale. So, in short, they have engineered the artificial intelligence incorrectly and should repurpose their USD results by scaling them to a 0 to 100 scale.

      • Logan, two things here:

        1. How great your point is, and what perfect common sense. There is no reason on earth why there should be any objection to that. A little embarrassed I didn’t say such a thing, but I guess I just feel it’s hopeless and a lost cause.

        2. How abundantly Mr. Dunn used the words appraisal, appraised, and appraisals in his comment. I know he’s a legendary domainer and that’s great, but I frankly wonder about that. Helping out friends? Sometimes some of the “luminaries” do seem to be doing that.

  3. I love the Esti random number generator, you simply knock off two zeroes and then halve the result – now you know what the domain might resell for and can discuss things with more clue 🙂

    • Even though domain appraisals are a joke to begin with as it says as the imgur.com link I posted above, that’s got to be an even bigger joke, right? With a description like that as providing a “clue,” do I even need to look at this feature to not think that must be a joke?

  4. And just to be clear, the “Estibot pill” that was introduced into one of my negotiations was by an end user in the real world, the market we are really trying to serve, not a domainer.

  5. They are misleading crap and may have additional ulterior motives, however Alan is correct they can be used as one of many data points to rank a large list. Not great but usable in balance with better data.

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