Could a Domain Appraisal Help You Sell a Domain Name? | DomainInvesting.com
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Could a Domain Appraisal Help You Sell a Domain Name?

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I have never been a fan of domain appraisals. My opinion is that a domain name is worth what someone will pay for it at a given time. In fact, I pretty much have a set response for when I am trying to buy a domain name and the owner suggests a domain appraisal to determine the value. Here’s my most recent reply to someone that recommended an appraisal:

I don’t believe appraisals are accurate or in the best interest of a buyer. Both companies you mention have aftermarkets for domain sales. In my opinion, the more they tell you that you can get for a domain name, the more likely it is that you will engage them to sell it. For instance, if company A said your name was worth $5,000 and company B said it was worth $25,000, which company would you engage to sell the domain name? Most likely the company with the higher valuation/expectation I would think. It’s in the best interest of a company to provide high appraisals. From my perspective, a domain name is worth what someone is willing to pay, and I’ve made my offer.

With all that being said, a comment on my blog got me thinking that perhaps suggesting a domain appraisal could help you sell a domain name when someone inquires and you can’t bridge the gap between his offer and your asking price.

Let’s say a person inquires about a domain name you own and offers $5,000. Because of the price you paid (based on your own gut feel), you tell the buyer you need $20,000 to sell it, but you’d realistically let it go for $15,000+. The gap is just $15,000, but in reality, the price is 4x what the buyer is willing to pay.

Now might be a good time to seek out a domain appraisal from a company like Sedo, Afternic, and/or GoDaddy to use it as a part of your negotiation strategy.

If you plan to do this, I would order one appraisal before suggesting it to the buyer just to be sure your pricing is in line with the appraisal. If the appraisal is the same or higher than your price, you could then present it to the buyer and show him the independent appraisal to show that your asking price is fair and reasonable.

I would not recommend doing this if you are a passive seller or don’t care whether your name will sell or won’t. This is a strategy that is more likely to work if you are a proactive seller.

Keep in mind that the buyer can easily say something like, “great, I know your price isn’t bad but this is all I can afford.” However, I’ve had a number of buyers discuss purchases and in our discussion, it’s come out that they haven’t bought a domain name in the aftermarket and don’t have great valuation insight.

A domain appraisal from a reputable source, complete with factual information about why it’s worth what it say it’s worth, may help close a deal. It’s something I am open to trying and want to share the idea with you.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (13)

    Larry

    A domain appraisal is a great idea to sell to someone who is not a domainer. (Or an inexperienced domainer for that matter).

    People not in this business tend to give appraisals credibility that they don’t deserve because they will compare the word “appraisal” with something they know (like a blue book value or a real estate appraisal which is actually legitimate). That’s to a domainers advantage.

    You are exploiting lack of knowledge.

    That’s how you make money.

    Assuming a company that wants to buy a name has the money but needs justification (to a board or partners) and they aren’t particularly internet saavy this is a great idea.

    One example: I once handled a deal for a name that was a reasonable trademark infringement. The person who wanted the name got an appraisal from NSI for +-$5000. We got an appraisal from Moniker for +-$35,000. The buying company ended up paying +-$20,000 for that name. And let me repeat this was a strong potential UDRP. They buyers were happy and legal action avoided.

    August 31st, 2011 at 2:16 pm

    Anthony Noe

    A few years ago I received an appraisal from Mon*ker of $32,000 for a domain name that sold at auction 48 hours later for $174,000. I still have both, the paperwork from the appraisal and the sale.

    Appraising domain names is a lot like appraising real estate; no two properties are perfectly identical, so the best you can do is compare one beside others that have actually sold. And even then, it’s only really useful if it is the buyer that is looking at the side-by-sides.

    A great example of a useful tool is here:

    http://dntaxsale.com/comparables/

    I created the tool so potential buyers could do a reality check on their own appraisals before submitting an offer. It only has data on about 3,500 domain name sales, but demonstrates how a serious appraisal tool might work.

    August 31st, 2011 at 2:43 pm

    Jason Davis

    sometimes its the people from the appraisal companies looking to get you to spend money on an appraisal so they tell you they are interested in acquiring one of your names but they need an appraisal to feel comfortable before buying.

    August 31st, 2011 at 2:52 pm

      Elliot Silver

      @ Jason

      True, but I don’t think any of the big/legit companies do that. Too much negative publicity if they were caught.

      August 31st, 2011 at 2:54 pm

    Gene

    Appraisals might make sense in certain situations, like the one you gave.

    The problem with them, though, is that the approach to any particular name can’t possibly be the same, i.e., we plug it into our ‘proprietary’ tool, then add the human element, based on our experience, to come up with a value.

    The other issue is credibility – and competency. What makes someone think that because an appraisal is offered by a registrar – or long time domainer, for that matter, that that’s optimal? I’m a TM lawyer, life-long options trader, and bought my first domain portfolio in 1997; yet I don’t offer such services…because any opinion that I (or anyone) offers is based on gut, with a little bit of sales data mixed in.

    August 31st, 2011 at 3:07 pm

    Elliot Silver

    @ Gene

    Part of most appraisals is market comps to help justify the price. In addition, most appraisals I’ve seen contains quite a bit of information in addition to a valuation. It’s not like xyz domain name is worth $x. It’s more like xyz domain name is worth $x because… and there is quite a bit of insight to back it up.

    August 31st, 2011 at 3:23 pm

    BullS

    “BullS” is appraised more than facebook/google twitter and all the websites combined as all of them are full of BS.

    If you put ‘BullS” on the billboard, who is more memorable?

    Domain appraisal is full of BS…period!!

    August 31st, 2011 at 3:47 pm

    Anthony Noe

    @Jason et. al. Just to be clear, I didn’t receive an offer for the domain name after I received the appraisal in the case I referred to above. Nor did I perceive there was any particular motivation behind the obviously low appraisal. It was just a real-life example of how far off appraisals can be.

    August 31st, 2011 at 4:07 pm

    luizh

    I think that most of the acquisitions of domain names are influenced by the brokers and targeted advertising. In this case, the buyers are usually people or companies that really need of a domain name. In any type of business you have to be seen by the buyer and to have the chance to seduce him to purchase your product. However, the universe of bad domains is infinite and the of good names is limited, in this situation we have two different universes and in both is difficult to get a fair price to a domain name.

    August 31st, 2011 at 5:01 pm

    Sam Nunez

    ‘For low-value domain, you are usually better off fixed-pricing your domains. So there you need an appraisal.

    For high value domain, it seems to me appraisal is part of the negotiation strategy, like you would for a house.

    Any thought as to the relevance of Sedo appraisal? Any features you would like to see added or improved?

    September 1st, 2011 at 1:10 pm

    Jason Davis

    and Sam, if you didn’t work for sedo would you have just left that comment?

    September 1st, 2011 at 1:30 pm

    Elliot Silver

    2 Sam

    Can you post a link to read a sample appraisal?

    September 1st, 2011 at 1:31 pm

    Anthony Noe

    @Sam – My feeling is that Sedo has the only appraisal worth serious consideration. It seems to me that they are retail appraisals, meaning they may seem high in a domainer-to-domainer sale, but domainers also have the knowledge base needed to discount them for a wholesale transaction. It’s maybe like looking up the Kelly Blue book for my car and getting only the “Excellent” price – I can work with it from there. Personally, I would rather have the retail value and make adjustments as needed for a particular sale, then to get a wholesale value and have to explain it upwards for a retail sale. (And no, I do not work for Sedo and otherwise have no interest in the company.)

    September 1st, 2011 at 1:56 pm

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