Last week, I wrote about a prospective buyer whose offer was made based on a GoDaddy appraisal. After the opening offer was made, I think I was able to make a pretty salient rebuttal to his offer. Although he ended up increasing his offer to a more reasonable number, we were unable to reach a deal. I won’t say the appraisal is what doomed the deal, but it did set the discussion off on a bad note for me.
Sometimes a low appraisal isn’t the issue. There have been other times when someone cited an appraisal that was more than I believe the domain name is worth.
Earlier this year, a person replied to an offer I made by telling me GoDaddy said his company’s domain name was worth substantially more than what I offered to buy it. He was referring to the free, algorithm-based GoDaddy Appraisal tool, which did indeed report that the domain name is worth more than my offer. I typically deal with buyers telling me my price is much higher than the automated appraisals, but I want to share how I replied to the domain registrant in this case:
“If I could sell my domain names for close to what GoDaddy says they are worth I could retire comfortably. I think it is in GoDaddy’s best interest to give high values so people continue to pay them to renew their domain names. For an example of how inflated their appraisals can be, GoDaddy says [Redacted.com] is worth more than $800 and that name is not even registered!”
I think it was very powerful to show that an unregistered domain name is appraised at $800 when his long registered domain name is valued by the same tool at 10x that figure. The example I used had part of his domain name in it, and the example domain name makes no sense. If he believes his company’s domain name is really worth $X because of the GoDaddy tool, he can see how unrealistic it is because a domain name that doesn’t even make sense is reportedly worth more than $800. Had I wanted to illustrate this without using a word from his domain name, I could have found an even more valuable unregistered domain name as an example.
There are times when I think GoDaddy’s Appraisal tool can be helpful. When someone offers me $500 for a domain name that I have priced at $12,000 and appraises at $20,000, I can send them the appraisal. On the flip side, it is frustrating when a counterparty uses the appraisal tool as a negotiating tactic. When that happens, it is my job to share why I think the tool is unreliable.