The Value of Automated Appraisals

10

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.

10 COMMENTS

  1. The problem here…

    Is that “domainers” often don’t have a clue what is really “meh” and what is really a relative gem even though they think it’s “meh.” And 98%+ of the time they are going to believe something is “meh” when it’s not. Especially when they see an automated “appraisal.”

    The only way to deal with that trap is to develop end user empathy and perspective vs. what I call “domainer think.” Especially with regard to the actual subject matter of each individual domain. In this context, “empathy” doesn’t mean what you might think, but means being able to view the domain and it’s value, utility, cachet and potential from the perspective of a suitable end user and the subject matter, industry, etc.

    I sold two several word domains for 5 figures last year that I know probably most domainers would have considered “meh,” and while I didn’t waste my time looking, I’m confident based on experience that the best “appraisals” for them at Estibot would have been at best $xxx.

    But the buyer certainly didn’t think of them as “meh.” And I knew they were not only not “meh” but were very good and extremely useful and valuable to an end user.

    • John, tell us about your actual portfolio results rather than talking about a couple of outlier sales. The world has changed and 3/4 word domains are not where it is at.

    • I watched one particular domain since the early 2000s. This was a “premium” (/end_sarc) multi keyword domain, a very obscure topic, owned by a very large domainer. It was being offered for sale at $1150 at first, then slowly increased over the years to $1350. Around 2015, that mega premium, valuable domain was just dropped. A big drop catcher got it and then marketed it again as “premium” for $3500. Next year it decreased to $2500. Then the next year it was dropped, and I think someone hand regged it not long after. That’s close to 20 years of reg fees. Appraisals were around the $750 mark from memory.

      Even the biggest domainers in the world can get it so wrong. Often way overpriced.

  2. PS: And it’s too bad Rick’s blog post about BestOdds.com was taken down. He addressed this matter in a huge and valuable way there. Wish I had saved it.

  3. the smart guys use the appraisals to their advantage when it suits them. jeff gabriel once said at namescon that he quotes estibot when the domain is appraised above asking and dismisses it when its below. it can be a valuable negotiation tool when used right.

    • You are correct Alex–there are always winners and losers in any business.
      The smart and sneaky ones use whatever tools to their advantage.

      Knowledge is POWER!!

  4. Occassionally I read some of the posts on NamePros. I believe Bob is an outstanding contributor. Never met him but he seems like a super person.

    I came across some of the requests recently — are these folks serious?

    Seeking GD domains with appraisals of 10 K plus — willing to pay up to 1 K for quick sale – WTF
    or
    Seeking 6 letter .com with GD appraisal of over 20 K and taken in at least 20 extensions – pay up to 2 K

    who responds to these bottom feeders?

    trust fund brats who inherited daddy’s premium domains and have no idea of the value and just liquidate everything?

    Disclaimer: I love all birds, except buzzards and vultures

  5. If you want to rely on a ROBOT to piss away your family’s future, that’s your choice. But it’s my choice to tell you to stop being an idiot and a fool!

    It’s not possible to value a UNIQUE ASSET, owned by a UNIQUE SELLER with UNIQUE CIRCUMSTANCES at a UNIQUE MOMENT IN TIME, to a UNIQUE BUYER that has UNIQUE NEEDS and UNIQUE CIRCUMSTANCES and UNIQUE DESIRES with UNIQUE GOALS and a UNIQUE FINANCIAL SITUATION!!

    Allowing a BOT to value your assets?? And taking it seriously?? Are you NUTS?? That is UNIQUELY DUMB! It makes no common sense. STOP IT and LEARN about domains! Especially the ones you BUY and OWN! I simply need to point out the UNIQUE absurdity of it. Why would you go out of your way to devalue your own unique domains?? And of course I will have a chorus of fools in the comment section defending the absurd!

    Earn hundreds listening to Estibot or Godaddy tools etc or make millions listening to reason and common sense. Your choice. Your future. YOUR VALUE!

  6. Two Points:

    (1) At NamesCon last month, I asked some senior GoDaddy managers how correlated were their actual sales prices vs the GD appraisal value. They said that in the range $2k-$6K, they correlate very closely,
    That has generally been my experience and it certainly makes sense. It is good to see they recognize the limitations of the tool.

    (2) I use both GD appraisal and Estibot as relative indicators and sanity checks, rather than absolute valuations. If you order a list of domain by GD or Estibot value, you’ll have an ordering that pretty closely matches their actual ordering of value.

    When evaluating a domain, I’ll run it through those tool and will often take a closer look at some of them to try to understand why the tools valued them so much higher or lower than I would have expected from them. Just a sanity check.

Leave a Reply