GoDaddy’s automated appraisal tool is a double edged sword, and my affection for it varies depending on whether I am buying or selling a domain name. Put simply, when it comes to unique assets, I don’t think an automated tool can accurately value a domain name. People do use the appraisal tool though, so it is something investors need to keep in mind.
This morning, I received a $1,500 offer to buy a two word .com domain name I acquired via auction earlier this year. In passing on the offer, I told the prospective buyer my domain name is worth more than $1,500. He replied asking me the value of the domain name and told me he based his offer on the GoDaddy appraisal:
“In relation to the value, what value would be acceptable? I went by GoDaddy’s valuation services that said it’s worth $1450, hence my offer of $1500.”
My reply explained that the tool is automated and it is not possibly to accurately value unique domain name assets. I gave an example of making a $40,000 offer to buy a domain name owned by GoDaddy that its appraisal tool says is worth $21,000. I know the domain name is worth much more than the appraisal tool, and I tried to illustrate that even GoDaddy doesn’t trust its tool for valuation when it comes to unique assets like domain names.
In addition, I shared about 10 publicly reported domain name sales that I believe are similar to the domain name I own. I did this to try and show what similar domain names are actually selling for compared to the appraisal tool.
Because of GoDaddy’s reach and brand trust, many people assume the GoDaddy appraisal is an accurate assessment about the value of a domain name. In many cases, it is frustrating when someone quotes this automated tool for domain name valuations.