The Flaws with Domain Appraisals

There are basically two ways you can get a domain name appraised. You can either ask for an appraisal from a domain expert or you can get one through an automated tool like Estibot.

Unfortunately, appraising a domain isn’t as black and white as appraising a house or a car. Sure we know the characteristics that make a domain valuable, but the value can range drastically depending on who you ask or what tool you’re using. At the end of the day, the only number that matters is what the buyer is willing to pay.

Automated Appraisal Tools

These domain appraisal tools are fun to use, but you’re wasting your time if you think you can sell a domain using these valuations as the primary¬†metric.

A computer program or software can not do the job of a human being. If valuating a domain only took a formula and black and white data, it could work. But it doesn’t. Research needs to be done and there are also gray areas that could increase or decrease the value. For example, a computer program might look at CarBean.com as being a premium domain with two generic dictionary words. But to the human eye, this domain does not make any sense. Also, an automated appraisal tool wouldn’t know how to valuate a brandable domain that may not be a dictionary word.

Human Domain Expert Appraisal

Humans are obviously better at appraising domains, but there are flaws.

  • Humans may be biased in their decision-making based on the industry they work in or have worked in.
  • Humans may be biased in their decision-making based on their preferred domain extensions. Every domainer has their favorites and ones they don’t like.
  • Humans have different opinions. If you asked a house appraiser, how much a certain property was worth, they may not give you the exact same number but chances are they will at least be in the same ballpark. With domains, the appraisal range can vary greatly – from one to two figures.
  • Sales comparables are often used by sellers/appraisers to justify the price tag, but when was the last time a buyer made their purchase decision based on comparables you provided?
  • How do you appraise a brandable domain that everyone can agree on? You can’t.

Unfortunately, I do not think there will ever be an industry-wide standard for appraising domain names. While there are many similarities between domain names and real-world real estate, appraisals are not one of them.

Can you think of any other flaws with domain appraisals, or can you think of any ideas to make appraisals more standardized in the industry?

2 Comments on “The Flaws with Domain Appraisals

  • Domain appraisal is absolutely useless and a total waste of time. Domain sale is purely based on what a buyer and a seller agrees upon. The price or value of a domain cannot be determined by computers that may have internal fault or virus.

    I tried a popular appraisal tool for a high valued domain, the result was a peanut amount of $45.00. I repeated the appraisal another day on the same tool, it provided a different result to signify inaccuracy. I did not stop there, I tried another appraisal tool, the result was about $2500.00.

    Considering these inaccuracies, domainers are advised to overlook following the misguide of the so-called appraisals and look forward to negotiating with buyers on what they are willing to pay for their domains. This is because buyers are the determinant factor on what you will sell your domains.

    Appraisal tools do not know how far you have struggled and suffered to sell one domain name. Appraisal tools do not know how many domains you lose per year because of expiry challenges.

    If you dont sell your domain with profit, how would you recover and refresh yourself from struggles, nights of prayers and bitter waters you passed through in order to sell one domain. All noises about appraisal is very worthless.

    Reply

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