Domain Appraisals: What’s The Value?
Top Notch Domains, Generic Domain Names January 29th, 2008
Domain appraisals can vary by huge amounts depending on where they are done. Whether using a professional service like Moniker or Sedo, or asking for a free appraisal on a domain forum, the amount of the various appraisals can vary by tens of thousands of dollars and huge percentages. People often wonder if appraisals are motivated by outside factors - either by people wanting to buy a domain name, so the appraisal is much less than they sincerely believe, or they want to sell someone a domain name by convincing them the name is worth much more than name would actually fetch.
For the sake of curiosity, I would like to know how much deviation there is when domain investors look at one name and place a value on it. I am reaching out to you to give me an appraisal on my DebtCollectors.com domain name. I don’t plan to publish the appraisals (or post the names of the appraisers), but I will give the average and the outliers. I know how much I paid for it recently, and I have an idea about how much it would sell for if I would put it in auction.
I know there are various factors that can play into a domain’s sales price, including the buyer, the seller, the market conditions and the venue, but I am looking for a single dollar figure. Not only do I want to test my own ability to value a name, but I want to see what others think in an unbiased venue.
January 29th, 2008 at 11:50 am
I paid for one appraisal last year just for fun and it was really, really high. Of course, it benefits moniker and sedo to give high appraisals to increase the general market value.
I think the appraisal should be broken into what the name would get at auction that day, and what the name could get from an end user in the following year.
The name i got appraised I bought for $1400, it would go to auction for probably $2,000 and an end user might pay $4,000 or $5,000.
It was appraised for $21,000.
January 29th, 2008 at 12:37 pm
Elliot:
Though I would share a data point I discussed at last week’s DomainFest show.
AfternicDLS sales history shows that domain names listed for sale that are accompanied by a professional 3rd party appraisal sell at a rate 10X higher than non-appraised names. There is literally a ten fold increase in probability of sale when a $20 Appraisal is purchased.
While this data is pulled from Afternic’s sales velocity history, I have no reason to assume the same performance lift would not hold true for other marketplaces as well.
All the best and Good Selling!
Pete Lamson
***UPDATED BY ELLIOT***
Pete,
It’s a valid point and I would agree that people sometimes rely on appraisals to gauge the value of a domain name, as many buyers aren’t familiar with domain valuation… however, it does beg this question: If the sales performance lift is so great, why people can’t get an appraisal on Afternic for names owned by other NameMedia properties?
I know the answer to that question
January 29th, 2008 at 1:21 pm
Pete - If I understand things correctly, that sounds a bit misleading.
You have tens (hundreds?) of thousands of names. It only makes logical sense that of all those names, people ask for appraisals on names they are already interested in. That is like saying “houses that get a home inspection” sell at a rate 10x higher than homes that don’t (though not a perfect analogy).
More importantly, what percentage of all names you sell have had a professional appraisal?
That number is much more important, imo.
January 29th, 2008 at 2:23 pm
Elliot:
To answer your question, NameMedia does not offer Appraisals on names our company owns due to the inherent conflict of interest in charging a customer for an appraisal of a domain we are hoping to sell them.
Gordon:
I may have been unclear on my prior post - the 10X multiple sales velocity lift pertains to Appraisals purchased by the Seller and attached to the domain name they are offering for sale. The 10X velocity multiple has nothing to do with Appraisals purchased by buyers.
Our data shows that Sellers who are willing to invest in a professional 3rd Party Appraisal have a much greater chance of selling their name than sellers who do not purchase an Appraisal.
My apologies if this was worded in a confusing manner.
Pete
January 29th, 2008 at 3:05 pm
Thanks for clearing that up - very interesting.
January 29th, 2008 at 5:02 pm
Rick Schwartz said in a recent post onhis blog that domain appraisals are…
“ALL WORTHLESS. Absolutely worthless. Not a single one has a clue. Not a one and SCAM is usually the first thing that comes to mind when I read a worthless appraisal that somebody actually paid for.”
January 29th, 2008 at 6:20 pm
Judging by past experiences, I would tend to agree with Rick Schwartz here. I still have our 20K appraisal for Sample.com in the same folder as our last $1.5 million offer.
January 29th, 2008 at 7:32 pm
Certainly divergent opinions exist on the value of Appraisals.
All I am sharing here is the quantifiable impact an Appraisal has on AfternicDLS sales velocity.
Sellers who also purchase an Appraisal to accompany their listing experience a tenfold increase in probability of sale.
As I said above, I have no reason to believe this acceleration would not also take place on other domain marketplaces as well.
I would add this is certainly not a scam, as all Appraised Names are subjected to the identical valuation process as NameMedia owned names that are listed for sale on Buydomains.
March 19th, 2008 at 2:13 pm
Hi Elliot,
Recently (March 2008) we bought 4 appraisals from Afternic for domains that we intend to develop out (but that we might put up for auction, depending). Our average purchase price was $1650, and the average appraised value was $3,425. Our metrics showed average monthly search volumes for the keywords in these domains of between 800 and 15,000. One of the domains was OrthopedicPhysicians.com. Another was SeedCatalogs.com.
We sought the appraisals to see whether folks with more valuation experience than we had also saw inherent value (more or less the same as your reasoning for this post).
I wouldn’t argue with Rick Schwartz about the value (or not) of obtaining 3rd party appraisals, and I do believe that a domain is worth what someone else is willing to pay for it (as David Castello pointed out). But for us, it was helpful to know that our initial valuations were at least in the ballpark of Afternic’s, and that if we were inclined to list our domains at auction, we’d probably double (or more) our investment. Not an entirely useless thing to “know” for $20 each.
But as I said, we’re developing these domains, so their worth will be many multiples higher than the current appraised value when that work is done.