I would say at least once a month in a negotiation with a prospective buyer or seller, a domain name appraisal is used by the other party to justify an offer or counter my purchase price. The appraisals are almost always from free automated appraisal services like GoDaddy and Estibot. While I think there is some value to those tools, I do think it is quite easy for someone to present them as authoritative when that is not the case.
Nat Cohen, who has sold some of the top domain names and has likely netted more income from domain names than almost everyone else, likely deals with this issue much more than I do given his portfolio size. He recently shared a rebuttal that others might find useful when a prospective buyer mentions the appraised value in a negotiation:
A possible response if a potential #domainname buyer cites a valuation provided by a free online appraisal service:
“A free online appraisal is not meaningful. An appraisal service can’t determine how much a domain name is worth to a particular company… /1
— Nat Cohen (@domainarts) January 4, 2021
…Each domain name is unique. Each company’s situation is unique. A domain name will deliver different value to different companies.
What matters is the value this domain name will deliver to you, not the value spit out by an unknown algorithm… /2
— Nat Cohen (@domainarts) January 4, 2021
If the domain delivers more value to you than the asking price, then you are only hurting yourself if you don’t make the purchase. If the domain delivers less value, then you shouldn’t make the purchase, no matter the appraisal. Your unique situation is all that matters.” /3
— Nat Cohen (@domainarts) January 4, 2021
I think it is a compelling and lucid argument that is not confrontational or argumentative.
I looked through my email, and extracted a handful of rebuttals I have used in the course of a negotiation where someone mentioned the appraised value to me:
“I agree, but you’re quoting the Estibot price and I think you know an automated appraisal is BS.”
“LOL… good try!”
“GoDaddy’s appraisal tool is an automated tool, and it is not accurate. By way of example, GoDaddy says [redacted].com is worth just $21,216. GoDaddy actually owns [redacted].com, and they did not accept my $40,000 offer to buy it, which shows how much they trust their own appraisals.”
“Appraisals from GoDaddy are automated, and I do not believe they are reflective of real market values. In fact, there have been many times I have offered above the GoDaddy “appraisal” to purchase a domain name owned by GoDaddy, but they are unwilling to sell because they value the name more than their automated appraisal says it is worth.”
After these comments, I try to illustrate the value the domain name will bring to a business if we are able to come to terms. Here’s a recent discussion, in which I was able to close the deal:
“In my opinion, there is considerable value in telling people your business can be found at [redacted].com – in addition to potential SEO benefits of having the domain name. Owning it would also prevent a competitor from having it, but I think the vanity reasons are greater than defensive reasons.”
Note, I don’t generally mention anything about the SEO because that is not my area of expertise, but the buyer had mentioned it to me as a reason for acquiring my domain name so I reinforced what he was saying.
I would be interested in reading how others react when presented with an automated appraisal in a negotiation.
As I said many times, the buyer already know the domain market and trying to play dumb and already know who the seller is….
The buyer is just an A-hole trying to F up your mind and wasting your time .
Have you ever sold a domain and later found out to be someone you know in the domain community and s/he just duped you for selling low!!?
These tools are often roughly around the low retail value so it will be very hard to rebut this in a credible way.
Many brokers refer to Estibot and it is definitely a good negotiating strategy (which is why domainers hate it).
I would not argue and tell them to contact you down the track if their budget changes.
There is only one response…..
“Go buy it from them!”
I think you need to “build” a DomainInvesting appraisal tool , that just shows the output and you should be able to just put whatever number you want for the sale and add 20%.
Come back with , the Domain Investing appraisal tool comes back with a value of $XXXX . My sale price is 20% less , so seems like I may have priced it low
Each of the appraisals are equally correct .
🙂
Or, under each domain name for sale on your website, say “Click here for an authoritative appraisal” and then on the next page just put what Nat Cohen said.
Estibot is so shameless they never even bothered to revise and correct their “appraisal” of a domain like this, even after the numerous times I posted links to images of it myself:
crypto.com
Now at $31,000. To my recollection, that may even be down from an all time high of $48,000, so it seems perhaps they did revise and update it after all.
These “appraisals” are worthless because it’s impossible for them to calculate the value to an enduser. Their methodology seems to be geared towards domainers buying/selling from other domainers. We had an 80K appraisal for Whisky.com from Estibot right before we sold it for $3.1 million. We recently lost a sale for Islanders.com to an enduser (“Islanders” is part of his brand name) after his partner showed him a ridiculous Estibot appraisal for 45K.