Automated domain appraisals aren’t perfect but smart domainers can use them to their advantage.
GoDaddy released its automated domain name appraisal system to the public last week, and quite a few domainers disagreed with the values it provides.
Valuing domain names is very difficult, especially with automated tools. Domain names are unique assets. The sales price of a domain name has a lot to do with how much money the buyer has and how much the seller is willing to hold out for.
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Still, automated appraisals provide immense value to domain name investors. You just need to know how to use them properly. If you dismiss tools like GoDaddy’s and Estibot’s out-of-hand, I think you’re leaving some great data (as well as profits) on the table. Here’s how I recommend using automated appraisals:
1. Don’t accept appraisals as the definitive answer.
Most domainers won’t have a problem with this. This isn’t limited to automated appraisals, either. Even appraisals by experts are not definitive. They are just a data point. In some cases, they will be very good starting points when you consider the data behind them.
2. Review the rationale.
Both GoDaddy appraisals and Estibot don’t just give you a number. They give you a rationale for the value. In GoDaddy’s case, it spells this out in plain English. In Estibot’s case, it’s a lot of data.
For example, Estibot might show that your .com domain name is also registered in .net and .org. That’s a pretty good sign of value.
Sometimes the rationale behind an automated appraisal will be wrong, so you need to take a look at it.
For example, I ran a domain name through GoDaddy’s tool that had three numbers and a letter in it. GoDaddy appraised it much lower than I sold the domain for this year. The reason was clear when I looked at the comps. My domain was a financial term from the tax code but GoDaddy was comparing it to other domains with three numbers and a letter that didn’t have secondary meaning. I wouldn’t expect an automated appraisal to pick this up easily. Estibot misses on this particular domain as well.
3. Review the comps.
Speaking of comps, comparative sales can be a goldmine. Even if you don’t agree with the value a domain appraisal gives you, comps can be excellent for determining what you think a fair value is.
One of the domains I tested on GoDaddy was AtlantaBodyshop.com. A comp included with the appraisal was KansasCityBodyshop.com. If a buyer tries to tell me I’m crazy for expecting my asking price, I can point to the higher sale of the Kansas City domain to show that it’s not crazy.
One area in which I believe GoDaddy’s appraisals excel is in finding good comps. Keep in mind that GoDaddy probably has more sales data than anyone in the world.
4. Use appraisals for buying.
Think automated appraisals are uniformly low? Then use them for when you buy domain names.
I’ve already used this to my advantage. I recently bought a domain name from someone who used GoDaddy’s appraisal syatem on his own intiative. It gave a reasonable number and he used it as his baseline for an offer. I offered about 60% of the appraisal value and he accepted. Consumers trust GoDaddy and you can use this to your advantage.
5. Find outliers with appraisals.
Every six months I run my entire portfolio through Estibot’s bulk checker. My goal is to find any outliers that I might not have noticed or that have changed in value.
Automated appraisals are good at finding diamonds in the rough that you might have overlooked. Perhaps some other company has recently registered the .net and .org to match your .com. Perhaps search volumes for a domain have spiked. Maybe there have been a lot of recent comp sales. If nothing else, run your domains through Estibot’s bulk checker before letting them drop.
I firmly believe that automated domain name appraisals have value. Are they spot on? Absolutely not. Are they built on great data that can inform your buying and selling decisions? Absolutely.
They have a huge portfolio and see the most sales in the biz, so why cant they value domains over $25,000. They are kind of saying “we cant” by the over 25k cop out they are doing now. If you place a value on any domain over $25,000, how can I trust your ability to correctly value it below that threshold?
Edit: if you cant place a value
Yes, good point.
It’s hard to take most automated appraisals seriously, even when they may have a couple useful metrics in their algorithm.
GoDaddy is the face of domain names to many people new to the industry. No one’s gonna look at domain names as a place to get rich judging by this app.
People don’t dig for tin or copper. They dig for gold. There is no gold in those GoDaddy hills.
Maybe, just maybe Verisign will become the champion of the hyper domain name market. I need to speak to Phil Corwin 🙂
Using this tool to appraise domain names is the worst ever provided by GoDaddy. By comparing some of my domain names that were actually sold this year and the price I have received using GoDaddy’s Appraisal tool for 15 different domain names, the loss is substantial or amounts to 57% blow the actual sales price. Using this tool, would give buyers something to validate their lowball offer, which would bring the value of domain names much below their actual market value. You can only use this tool to buy a house, but you can’t use it to sell a domain name. Compare $50K sale price to $2678.00 using godaddy
Even Godaddy isn’t taking their own appraisals seriously so why should anyone?
Yes, yes. Capping at 25K is worthless. Coming in so low is also pretty useless. If visitors want worthless and useless, they will simply buy one of the many incredibly stupid new tlds. I suspect and hope that GD can do better than this. SoftwareCareers.Com for just $1889? Maybe this was the tool they used to derive the generous offer of only $167 to KEvin Ham for each of his domains.
Why will godaddy not provide a valuation for their own domain…. hmmmm I know it would show as $1259!
I’ve never used the Go Daddy one. For Estibot, I have never seen a figure that is not completely off in another galaxy, and completely harmful. That includes two domains I sold for over $20k recently that they pegged at an anemic $xxx. I have even seen Estibot appraise a domain that someone real really tried to buy for over $5,000,000 once at only high $xxx.
Sometimes it would really help if you gave real life examples.
I understand Tony. I’m sorry and I would probably also say the exact thing you just said too. At the same time, however, I also understand when people feel they can’t do that, such if they are remaining undercover, or especially for business reasons such as not wanting to call attention to the three word .com I’ve alluded to numerous times that I consider to be easily worth nine figures.
On a separate note, btw, I replied to you regarding a domain you asked me about here in case you didn’t see that: https://onlinedomain.com/2017/11/08/domain-name-news/post-3-best-domain-names/#comment-211820. If it were me for instance, I wouldn’t even know about the reply because I have not been getting the email notifications of new comments in the blogs for many months now.
Thanks for the courteous reply here and the thoughtful reply in the link which I agree with.
I also asked you on a thread somewhere what motivated you to recommend bitcoin to your clients many years ago. Just curious what the rationale is. I think it was you that mentioned that before.
Need to call someone now but will be back later for this.
Back now…so re Bitcoin, did not see anything from you on that, perhaps because of the email notification issue. Or perhaps it was someone else?
So I missed out on $millions, $hundreds of millions, and possibly even $billions with Bitcoin, just as I missed out on the early days of domain names. Even more so the latter. I guess it just wasn’t meant to be.
It was not like that in terms of “clients.” Here is what happened:
I had seen a little bit in the news here and there about this “Bitcoin.” Around 2009/2010 and when you could still get it for pennies as I recall. Unfortunately I was going through so much stuff at the time that I didn’t look into it but it stuck in my mind.
When Greece was having it’s big financial meltdown, I heard it suggested in “the media” how people there could consider trying to save the value of their money by stashing it in Bitcoin. At that time, I used to play poker on Facebook a lot. The poker game I used was a top-notch one, a subsidiary of Disney and WSOP branded for a while. It was very social, however, and was non-stop chat where you could develop long term relationships, unlike most poker games where people usually sit like zombies. So I recommended to some of the players in Greece whom I would often see that they consider doing that because they might have nothing to lose and possibly everything to gain, but since there did not seem to be any compelling need here in the US I still did not go near Bitcoin myself.
Then the rest is history. Not willing to jump in at $20. Then soon $40, etc…
Correction: I meant even more so the former. 🙂
Wow, you declined a $5 million offer? From someone “real really interested?” You must be extremely wealthy sir! This is Luc from EstiBot, please share the domain that you got a $5m offer on so we can investigate why we’re appraising it so low. You can share it here publicly so that the entire process is transparent.
No, not me. I do not wish to mention details here now for various reasons, however, just as I don’t want to point out a three word .com I consider worth nine figures to end users (not mine), but it was something known and reported on in the past. I also don’t see any point in saying which two I sold for over $20k recently that Estibot pegged at $xxx. I see Estibot.com was registered on May 13, 2007. The attempt to buy the particular .com domain alluded to for over $5m occurred before Estibot existed.
So you are with Estibot, ay? I’ve never seen you mentioned before, but I have posted about Estibot a number of times. I’m not sorry to say that I consider what you do in terms of “appraising” to be extremely harmful overall to the industry and to individuals, notwithstanding any isolated ways in which occasionally someone may have a little use for it. In case you haven’t seen it, on numerous times I have called Estibot an “abomination” because of that, including recently in some of the blogs. I’m not sorry for that either. As I also pointed out recently, I am certainly far from alone in regarding this kind of “service” to be harmful: https://domaininvesting.com/thankful-helpful-domain-industry-tools/?replytocom=894007.
You may want to now say that you offered to address a particular domain and be transparent but I declined, yada yada yada, but people often have plenty of reasons and too much life experience for not wanting to take the bait on statements like that. I have no confidence whatsoever that the cost of doing that would be worth any real potential benefit. I’ll pass, thank you.
Hey Andrew, my reply to Luc here just got stuck in moderation. 🙂
CareYourWay.com $5,112 Valuation
Comps:
careyourway.com $24,888
careyourway.org $995 (was this tld given equal weight?)
healthyourway.com $10,000
More…
careyourhealth.com $2,988 (care, your, but doesn’t make sense)
workyourway.com $1,435 (wrong vertical ‘work’)
paveyourway.com $3,888 (wrong vertical ‘work’)
livyourway.com $799 (‘liv’ is just wrong)
styleyourway.com $1,088 (wrong vertical ‘style’)
shopyourway.com $1,640 (wrong vertical ‘shop’)
learningyourway.com $1,990 (wrong vertical ‘learning’)
This bot doesn’t seem to factor industry, tld and price increase over time. Seems to reduce the price versus trend. Healthcare would command a higher price versus say Pave, Liv, and Shop in the example above. Just comping “your way” is not enough.
It’s always nice to have a free tool to use, thanks to GoDaddy for that! As a frequent buyer it is helpful to sort by valuation to identify bidding targets. Far short of full MLS style data access with dates of sale like Zillow though.
Right now my thought is that it should be used to aid the person ‘Listing’ the domain for sale, and, available to club members (for sorting). Asking someone off the street to understand the difference between a $5,000 valuation and $10,000+ list price might be too much and fuel the fire — unless a link is provided to a full page titled “How To Value Domains” noting clearly the above failing points.
Are the dotCOM valuations averaging $2,500 in a range of $1,000 to $4,000? Seems like the range people are most willing and able to credit card purchase a domain name. Brokers want to SELL, not list for-everrrrr. I get it.
The appraisal bot has flaws, but I ran some of my domains that I’ve estimated to be in the range of 2000 USD – 5000 USD and I thought the GD valuations were pretty close.
Yes, the plus 25 K needs work, and it has problems with 3 letter domains, but for key words, I thought it did a decent job, albeit for domains worth less than 25 K USD.
I’m looking forward to GoDaddy’s complete portfolio appraisal bot. Again, there are significant flaws, but domain appraisals require so many data sets, unlike real estate, collectibles, autos, boats and fine art.
The closest comparison to valuation would be issued patents, which uses about 8-12 data sets, according to the leading patent brokers.
I think tools like Estibot have value for domainers wanting to process through large lists of expired domains to look for outliers.
I’ve recently reviewed Estibot’s $29.95/mo plan on my website. While I’ve found 150 lookups per day very limiting when I’m mainly interested in sorting through large lists of expired domain names to find some gems, I think the $49.95/mo plan with the DAILY drop lists with Estibot appraised values could pay for itself quickly. It’s the outliers you’re looking for. I’ll likely be trying out that next.
Here’s why..
There was an expired Godaddy Auction recently with a short domain name that I thought sounded interesting. I looked it up via Estibot for the heck of it. It appraised at $50k on Estibot. I then checked Godaddy Appraisal Tool and it appraised there for $20k+. The domain had a bid of less than $100 on it a few hours before the end of the auction. I bid on it up to $600 and it ultimately sold for $890. The domain itself was the .NET of a foreign name meaning “TEAM” where the .COM had sold for $10,000.
That domain should theoretically have shown up in Estibot’s daily drop lists. That’s why I think the $49.95/mo plan would be worthwhile.
Also, like it or not some people will be influenced by seeing an Estibot value on a for-sale listing and it will influence their bidding amount or purchasing decision a bit. Even just as a marketing tool when selling a domain the appraisal values can serve a purpose.