Only looking at the domains you sell will skew your opinion of domain name appraisals.
Automated domain name appraisals, such as those provided by Estibot and Godaddy, are extremely controversial in domainer circles. Focusing on cases in which domains sell for much more than the appraised value is an easy way to try to discredit these appraisals.
Consider this post that Mike Mann made on Facebook comparing his sales to GoDaddy’s appraisals:
He notes “All inclusive of our top sales, not selective.” Yet, by focusing only on his top sales, he is making a great example of selection bias.
Mike holds out for top dollar on his domains. So of course when he gets this top dollar, the number is going to be way off from an automated appraisal.
If someone appraises my domain at $10,000, and I refuse to sell it for less than $20,000, then the appraisal (whether automated or by a human) is going to seem wrong.
What about the domains that didn’t sell? Did they not sell because the price expectation was too high?
I recall a conversation at DomainFest many years ago. I was riding home from a party with a couple of other people, including a domain owner who makes lots of five and six-figure sales. That evening he had asked several people how much some of his domains were worth. These were all domains he had sold already. The domainers’ estimates were all over the place and didn’t match the sales prices.
This shouldn’t surprise anyone. Appraising domains is difficult.
Rather than focus on the accuracy of any one domain appraisal, I think people should use appraisals differently.
They should also not let selection bias color their impression of domain appraisals.
Godaddy appraisals are complete garbage. they have one purpose… to make money for godaddy by helping them sell domains. if godaddy was willing to buy domains at even 1% of their appraisal prices i could do nothing but sit at home, handreg domains, and get rich. that is why they overvalue worthless domains and undervalue great domains. i think their algo is set around $1400 and like a massive gravitational force pulls all domains toward that number. jmo/other opinions may differ.
think it is one of the greatest tools ever for domain appraisals, here is why. It all depends how you use it.
If your buying a domain name from a private owner you can use Godaddy’s tool to show them what the domain is worth. You will get some bargains if you use it this way. Half of private domain owners are not even in this business and would trust GD for an appraisal.
If your selling well don’t ever use it or refer to it. IT is at an extreme wholesale level tool.
Also from what I can tell if you place your domain name on godaddy say for 10k and it appraises at 5k they will not show the appraised price. That is good. But if it appraises at 15k then they will show the appraised price at 15k and buyer showing at a bin at 10k.
from my experience they seem to overvalue garbage domains and undervalue good domains.
Appraisals are always way off because their methodology is not geared
towards Endusers. Whisky.com was appraised for $80,000 and we sold it for $3.1 million. I can give the same story for our other sales like Rate,com and LagunaBeach.com. That being said, there are only two groups of buyers. One is Domainers/Investors/Speculators and the other is Endusers. Every one of our sales are to Endusers. They are the only ones who will pay top dollar because they have a practical use for the name that justifies the value. The rest are just looking to flip.
What’s worse than GoDaddy’s appraisal tools is Sedo. I have no idea how they base their appraisal value on. But I can say that I own a domain that was appraised for $2,000 by sedo and I refused an offer for $200,000, without mentioning what domain name it is. No company should tell you how much you should sell your domain name for and put limits on the maximum buy now price. This would help only the buyer, not the owner of the domain name.
I offered to buy a domain that Godaddy owns using their own appraisal tool as the price. I was told I needed to offer 10x what their own appraisal was. In other words, they do not stand by their own appraisals. Godaddy is great with most of its products and services, but that appraisal tool is a dismal failure.