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Talking about automated appraisals with domain buyers

Appraising homes with an automated tool is difficult; valuing domains that way is even harder.

Photo depicting valuation of a home. Person in white shirt with magnifying glass looking at a scale with a bundle of money on one side and a green house on the other.

A lot of domain investors are frustrated by automated appraisals. When someone wants to buy a domain name and quotes an automated appraisal, it’s usually less than what the investor wants for the domain.

I think automated appraisals can be helpful but I also understand this frustration.

Elliot Silver has a great take on how to respond. But you might also be able to compare it to another automated appraisal service that most people know about: Zillow.

Zillow assigns a value to houses, and it often doesn’t do a good job. When we sold our house in Austin, Zillow’s valuation was off by about $200,000.

Sure, on a percentage basis, it’s not as much as domain appraisals can be off. That’s because there’s a lot more data available to Zillow and comps are much, much easier to get for houses.

Yet homes are something people understand. And on anything other than cookie-cutter neighborhoods, Zillow seems to struggle mightily.

When it comes to home valuations, there’s Zillow’s automated valuation and then there’s a human valuation. The human appraiser that comes out to value a house in person for the bank is much more accurate than the automated one.

Depending on who you’re negotiating with, it might make sense to ask them how they feel about Zillow’s valuations. Are they accurate? You can then discuss how it’s much more difficult for an automated domain appraisal to get within the ballpark than it is for Zillow.

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  1. MIKE says

    I tried automated appraisals on several domains I sold. One for example I sold for $27,000 yet it was appraised for $1,200. Would not trust them and gives false ideas to buyers.

  2. Fat Anon says

    I remember this summer Namescon auction. Namejet has Estibot appraisal attached to all names, everyone knows that. So there was this memorable domain, penis.com. Appraised at about 150 or 160K.

    Less than a month after the auction, the appraisal suddenly changes to… 5 millions!

    Did anything change n the real world about this keyword to increase its value so much? No, nothing did.

    And the domain appeared being listed at Dan.com with this price. Conveniently. (Although now it has already changed to 2.5M). What haven’t changed, though, is the fact that these estimates are pure scam.

    Make a shady deal with someone at Estibot and there is your high appraisal. Don’t make one and your domain “is” cheap.

    That’s the only true goal of the appraisal services, informational terrorism, to force domain owners to pay for beneficiary appraisals.

  3. Mansour says

    How I almost lost $50,000 if I would have listened to GoDaddy’s domain brokers, quoting the auto appraisal to price my domain name. I received an offer from a GoDaddy broker to sell the domain name lifeforce.com for $20,000. I refused the offer. He kept quoting the price of auto appraisals that GoDaddy and other companies have several times and insisted it was the best he could get. I asked for $70,000 net for the domain name. The buyer wanted the domain name desperately, so after GoDaddy failed to deliver the domain name, buyer contacted me directly and paid me the $70,000 I asked for and escrow closed in three days. Be very careful listening to these auto-appraisals, especially if you are selling a really premium domain name.

    • Ethan says

      Did you and that buyer have a legal agreement that you could disclose the domain name and its sale story freely on the internet?

  4. Mansour says

    no agreement and if it was conditional I would never sold the domain to him I disclose all my sale. I am the owner if you like it buy it if you not do not you must be one of the brokers who try to fool domain owners, this story is to educate other domain owners so they do not sell there domain cheep. when you get an offer and the buyer is using gmail.com insist on an email using buyer company email.

    • Ethan says

      I’m not a broker. I just think that not all domain buyers like their negotiations and purchase details be disclosed.

      • Mansour says

        I hope someone will learn some thing from my discloser not so many sellers or buyers or brokers has the guts to do that. I hope this will help some sellers I am also a real estate broker and my fiduciary relation is to the sellers.

    • Arafat says

      I have some domains like taxiairlines.com menaairlines.com defi.es & be8ing.com
      They are not well priced in auto appraisal.

      Should i bliv them or not? need buyers so wanna know what price i should ask.
      arifarafat888 @ gmail.com

  5. John says

    These fake “appraisals” have caused and continue to cause a GREAT deal of real harm. In fact, they have caused nothing less than devastation overall. Notwithstanding that some people are able to extract some practical advantage with them for their personal benefit. In fact, I believe that even I have actually experienced certain particular and occasional instances of advantage from some of them, but ONLY within the context of something extremely harmful and destructive overall that should not even exist or be allowed to exist in the way that they do. They are one of the biggest scourges of the industry and will continue to be as long as they exist in their present form. Making them unrecognizable from their current form is one kind of government regulation I would heartily support in this cynical wild west.

    Companies have all the incentive in the world to create as much undervalued inventory “churn” at your expense as possible just to make some money and profit, so it’s not rocket science.

  6. joesaba2014J says

    The appraisal of a house and a domain, from a commercial perspective we can choose the $ figure to buy and sell:

    A second-hand studio apartment in Miami in Zillow $ 217,825
    A new studio apartment in Miami in Zillow $ 575,000

    To get these $ figures in the domain market you must be at least 5 to 10 years or more.

    I currently have 600 domains 90% (.com) about 10 are with the brokers slowly and very good sales of 6… figures each.

    The rest I see that give money with the advertising of Landing page and CTA continue in portfolio the rest all for sale for $ 500 to $ 1000 and return to invest in new domains, since the Real Estate of the domain is not the same as Buy and Sell Studio Apartment in Miami.

    You have to touch your feet on the floor.

  7. Raihan Azali says

    I hate using automated appraisals
    Always show cheap price on my domain.
    Here my domain, TillSell.com LaVegs.com equipmentary.com and others

  8. j1ceasar says

    It’s all phony and just there to give you an idea I have about 50 names very similar to each other and the price is very 100% from 1,000 to $2,000 it doesn’t make any sense whatsoever meanwhile I have a 15 year old in Maine that’s only $250

  9. thelegendaryjp says

    Many variables thus an automated tool on value when not removing easy to appraise acronyms/numbers to resellers and potentially end users is useless.

    Hey machine whats my 2-3-4word domain worth beep boop beep boop … There is no one on the planet who knows the magic number besides the seller and no one who knows the ultimate offer amount in mind besides the buyer.

    Lets be honest, most asking prices on 2-3-4 word combos are pulled from thin air unless they fall into prime generic categories.

    In saying that I believe most smaller resellers who have a price in mind base it on that months credit card debt or mortgage payment. Keep it real.

  10. John says

    Industry “luminaries” (including domainers) CONSPICUOUSLY absent from this thread, not even for the purpose of attempting some BS in favor of these “things.”

    In the public at large, i.e. here in America, many people are in denial and don’t want to accept or believe or recognize much of what we have been doing in the world. The reality of it is hard to bear and there are mountains of cognitive dissonance to overcome with the truth. That is what a true patriot does, however.

    In the same way, people in domaining don’t want to admit or talk about or fully recognize and be conscious of what companies that are supposed to be our friends have been doing to us (as well as to end users) with these purported “appraisal” services in order to create profitable “churn.” After all, people are otherwise largely “in bed” together with many various relationships with these supposed friends outside of blogs and forums. To do so would require risking some of that for those who are benefiting in ways they may perceive to be “good enough” for their own personal interests.

    Numerous of the “luminaries” could be saying plenty if they wanted to, however, and as they already have. Unless of course they have done a flip flop since their last statements on such matters, in which case one need only “follow the money.”

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