Do automated appraisals work?

Sometimes, but there are notable limits.

It’s one of the great debates in the domain name industry: do automated domain name appraisals work? Are any domain appraisals (even from humans) accurate?

I thought about this again today as I put together the end user sales report. People usually comment that certain domains were priced really low.

So I decided to run a non-scientific sample from Afternic’s sales this past week, starting with the top 15 reported sales. Here’s a comparison between what domains actually sold for and how Estibot pegged their worth:

You’ll notice some that are pretty spot one, while others are way off. I think you’ll also quickly understand which types of automated appraisals tend to be way off.

But before drawing some generalizations, I decided to also run appraisals against Afternic’s sales that are closer to the mean value of a domain sale at the venue ($1,200):

Most of these domains were valued “in the range”, although Estibot tends to value them a bit lower than what they actually sold for.

Here are my generalizations about automated domain valuation techniques based on my 10+ years in the industry:

1. Automated appraisals take into consideration only the data-specific elements of a domain name.

If you run an appraisal on Estibot you’ll get lots of data, such as keyword frequency, CPC rates, etc. These are the sorts of data point items that can be used in an automated fashion to value a domain name.

2. Automated appraisals will not match the purchase price of many generic domains.

How could a tool like Estibot account for the fact that someone may wake up one day and decide to name their business or something similar? It’s very hard. So on a domain name like that, it’s perfectly reasonable for Estibot to give a low valuation while someone ended up paying $7,500.

3. Actual sales prices have a lot to do with the circumstance of the buyer and seller.

Partly because comps are difficult to conjure up, the circumstances of the buyer and seller often have more to do with a sales price than the underlying value of the domain name.

Domain trading is a relatively inefficient market. Take a look at some of the values of top sales on Afternic this past week: for $7,500, for $6,500, and for $18,500. Many of these would have sold for much less had the owners not held out. If the owner of one of these domains needed the money, they could have sold for a fraction of these prices.

As for the buyers…take a look at at $20,000. Estibot pegs it at $390. Before today I’d think it was worth $1,000 or so to the right buyer. But a big buyer stepped up to the plate. (I’m not sure who it is, but they used Marksmen to get the domain. Marksmen works with a lot of large domains.)

4. Automated appraisals have their place.

I believe automated appraisals are very important in the domain name business. That’s especially true for large portfolio holders. It’s the only way to efficiently separate the wheat from the chaff. In the long run, automated appraisals are directionally correct. The most common scenario is that an appraisal helps someone discover that one of their domain names is worth more than they think because the appraisal identifies something about the domain that the owner didn’t know (e.g. changing use of the term, other registrations, etc.)


  1. says

    Interesting analysis. I also agree that automated appraisals can be useful in some instances. Sometimes they can be pretty accurate and other times not so much but that is to be expected.

    I mainly use them to get a quick snapshot of the search volume, number of extensions registered, PR, etc. Search volume in Estibot has been way off since Google changed their algorithm a few years ago for their keyword tool but you can still get an idea if something is getting searches or not.

    Sometimes these types of appraisals will incorrectly parse the keywords in a domain and that will throw off the appraisal as well. For instance, Estibot parsed into K UBI X which came up with no value and when I changed it to re-parse kubix as one word the appraisal changed to $5,900 which is more in line with what it sold for.

    • says

      @ Jay – so that’s a perfect example. Facebook is a one in a million buyer with an endless pocket book. Appraising a two letter domain on Estibot doesn’t make much sense.

  2. says

    After a sale Estibot is a LOT better than just valuation based on search metrics, basically because they include sales comps in the valuation.

    DomainWorth is an interesting one too, think their ‘visits potential’ is quite close to the real thing.

    I don’t know about paid appraisals from Afternic / GoDaddy / Sedo but all the automated numbers are quite far removed from actual domain values.

  3. required says

    Anyone looking at these comparisons would think that estibot appraises too low. But arguably, many domains are overpriced.

    If a home has been on the market for a couple of years we would say that it is priced too high. Yet a good proportion of domains are priced such that they will never sell.

    Because the most profitable strategy is to wait for buyers who for whatever reason are willing to handsomely beat all other bidders, and leave remaining domains in the trash.

  4. Dimester says

    A few weeks ago I sold a name:
    valuate – $300
    sold for – $3500

    Today I sold a name:

    valuate – $540
    sold for – $10,000

    Both names were sold to end users. Since I sell my names to end users to build a business, I find automatic domain name appraisals useless. I have found the same trend with many names I have checked and sold.

  5. Jay says

    @Andrew – It is not just about right buyer. If you have and there is no Facebook at all, would you sell it to anyone for $161k..? No way for me.

  6. says

    Agree that automated appraisals have their place. However, as you’ve touched on, the best they can hope to achieve is some reflection of fair market value – what the domains or website is worth to someone as a stand-alone transaction. And that goes for manual appraisals too.

    Actual sell price can be lower when the seller has marketed the sale poorly, or higher when the buyer is willing to pay a premium if it aligns to their existing portfolio or project. I think appraisals work when framed in that context.

  7. says

    @ Jay – It may be a little low, but based on recent two letter domain sales I can understand the appraisal. For example, sold for $245k this year and sold for $186k last year.

  8. JP says

    I maintain that automated appraisals should spit out some sort of rating rather than a dollar amount. For example A+ through F (like a report card), or a 5 star type system.

  9. says

    Sales price is used by Extibot (and others) immediatly in the appraisal after being published, to make a usefull analysis you need to check the domains before they are sold (in an auction for example)

  10. says

    No computer logic or algorithm can predict human behavior in different extreme circumstances. A domain deal leads to very unpredictable situation like ..

    1. Is the buyer interested to start a project
    2. Is he having hordes of cash or VC funding etc
    3. Is the seller having cash crunch
    4. Has seller sold high value domains before
    5. Liabilities as on that date on the seller.
    6. How many previous offers were made by the same buyer or seller

    and so on ..

    Thus any automated appraisal can provide a price which is devoid of any such circumstances in a fair marketplace.

    However i find Estibot a good tool for providing metrics and Esa is continuously trying to upgrade it & we should all commend him for his work.

  11. Abel says

    Roughly four months ago, I sold a two-character .tv for $15,000. Estibot gave it an appraised value of $85 – I place zero value on automated appraisals.

  12. Abel says

    Just checked and it valued the same two-character .tv domain that we sold for $15,000…ready for this…ZERO VALUE. What a joke.

  13. Gaurav Kohli says

    Very interesting analysis! We’ve got to note that estibot acknowledges sales values while appraising a name…that makes it much less useful for a seller.

    I’ve been using domainindex for a while & they’re also affected by incorrect parsing & the tool lacks an understanding of the ‘recall value’ a name carries…a factor that’s more important now that lots of sellers are putting up non-generics for sale.

    It would probably be more helpful for a tool to provide a range or rating ( does that) rather than a figure.

    Till then, though I’m using automated tools while identifying domain names to purchase, I’m hoping there’s another semantically evolved tool somewhere in the making.

  14. says

    Use all things in moderation right?

    Same goes for automated appraisals. I am a domain broker and I use them regularly to get an idea of a domain’s statistical value, but I also have my own formula that I run against it and if either of them seem off I will usually double check all of the factors they are relying on.

    When I’m done with the statistical stage I then have to take a step back and use human logic to determine just how desirable a particular domain name is. They are all very unique properties and statistics tell only part of the story. One letter can make all the difference between having a $xx,xxx domain or a $x,xxx domain.

  15. says

    The only .tv known to be sold at that level was and it shows 15400 USD. But value for .tv is indeed difficult to catch.

    Off course there is no way to figure out the end-user sales price for a domain.
    The point is more to find out if there is value according to the stats of search and comparable sales, especially for masses of domain names like drops, mass-regs or large portfolios that one simply cannot look at manually.

  16. says

    Unscientific assumptions – Whatever valuation is always based upon choice of characteristics of the house, ground, business, potentioals, vehicle type and other parameters, as for Internet Domains.
    –> It’s a matter of belief <–
    Whatever is important for one person could be totally unimportant for somebody else, and vice versa.
    An appraiser usually doesn't know why and how urgently somebody needs to buy or sell something.
    Nothing to do with TLD, SLD length or language, brand ability (anything can be branded eventually – look at Yahoo etc)etc.
    Appraisals do can be used to try to convince some party into some deal, but let's be honest: Who will sell for less than really wanted, and who will pay more than budget range?
    I don't mind about appraisals, since there seems to be some market for that.
    For me, everybody can make a living selling whatever people want.
    Just don't try to talk me into appraisals of whatsoever.
    I'm 62 of age, and sold and bought real estate, and many other things including domains since 1993.
    No more advising since a while, but I feel must speak here.
    Appraisals are always based upon parameter choice, thus never objective.
    Success to all.

  17. Alastair says

    Auutomated appraisals may have their place, but….anything that “values” a domain at $10,000 on Monday, then “values”it at $0 on Tuesday, because it has changed its algorithms overnight, surely can’t be any more reliable than Snake Oil? It might work for some, but not everybody…

    PS the above is a REAL example!!

  18. Abel says


    I can’t reveal the .tv that we sold, but it was two-character (LetterNumber.TV) and sold for exactly $15,000 to a European company in May, 2012. We were asked by the buyer not to disclose the sale, so we respected that.

  19. DoktorThomas says

    Beauty is in the eye of the beholder.
    My trash may be your gem…
    The intrinsic worth of a given domain name is significantly less than when it is developed, deployed and giving value to both users and owner. The cost of obtaining the .com has little to do with real worth/value.
    Neither automated nor human valuations are completely accurate.
    Like any other commodity, a .com is worth what a willing buyer will pay a willing seller in an open market. I wouldn’t pay $10US for; you might value it higher.
    The fact that some domains are brokered, diminishes the size of the market and likely the sale price.

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