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?