98+% of domain names are meh. They may not all be junk, but they aren’t gems either. My domain portfolio is full of meh-ish domain names, and I bet yours is, too. There’s nothing wrong with meh domain names. They sell every day on every platform and at every domain registrar. Businesses and people use meh domain names when it matches a brand name or when they can’t afford to buy a gem domain name.
Automated appraisals like the GoDaddy appraisal tool or Estibot take a lot of heat from domain investors – and rightfully so in many cases. I get aggravated when a prospective buyer approaches me about one of my gem domain names and says, “well GoDaddy appraises the domain name at $x,” and $x is thousands of dollars lower than the purchase price in a public auction, let alone the price I would consider accepting. Even GoDaddy prices many of its gems well above their appraised value.
Automated appraisals can be annoying and frustrating deal killers.
On the flip side, there is value in the automated tools. The GoDaddy appraisal tool often comes in on the higher side for meh domain names. If a GoDaddy customer sees an appraisal, it can act as a means of educating buyers about the value of domain names. These aren’t always $10 domain names that can be registered today. They are valuable assets that are worth substantially more than the registration fee.
Like the high percentage of meh domain names, a high percentage of domain name buyers does not know anything about domain name values. To most, a domain name is worth the $10 registration cost they expect to spend, and domain names may be interchangeable. Seeing GoDaddy appraise a domain name for $3,500 when it is listed for sale on its network for $2,500 may appear to be a good deal for them. Automated appraisals help show people that domain names have value. Even the meh domain names you and I buy for < $500 on the drop or at expiry auctions often show value into the thousands of dollars.
There are plenty of good ways to rebut a prospective buyer who mentions the automated appraisal. Nat Cohen shared some good insight about that. Nat has an exceptional portfolio filled with gem domain names, so he probably deals with the issue of people quoting low appraisals more than most other people. Yes, having a low appraisal thrown into a negotiation can be frustrating, although that prospect probably isn’t the ideal buyer and is grasping at straws.
My personal favorite rebuttal is to point out when GoDaddy gives a high appraisal to domain names that aren’t even registered. That kind of rounds out the point that I am trying to make here. Put simply, automated appraisals tend to suck when it comes to higher value, unique, gem-quality domain names. On the other hand, when it comes to the meh domain names that make up the bulk of our portfolios, automated appraisals may be generous – – and they indicate to prospective buyers that domain names have value beyond the $10 registration cost.