Domain Buying Guides
Learn What Goes Into a Domain Appraisal
Domain name appraisals estimated value are vitally important to both buyers and sellers of domain transactions. Domain name appraise and values are extremely volatile with market conditions, age, past use and future potential are all things taken into account.
Domain name appraisals help owners understand the value and should be manually performed to accurately estimate and gather data points relevant to domain sales in the current market conditions.
An experienced domain broker takes every request into account and review multiple factors, including the industry that’s likely to benefit most from the name, advertising effectiveness, and current trends before offering a detailed report to their clients.
You can be a startup entrepreneur looking for domain names for your new venture, or an established business who has been approached by a seller offering a free domain name that’s related to your brand or services.
Or, you can be one of the many domain investors facing challenges in valuing your portfolio of domains and worried about selling for the right price.
Understanding Domain Value
Understanding domain value is crucial for making informed decisions when buying or selling a domain name. Domain value refers to the fair-market price you pay to acquire a website name, which can range from a few dollars to six or seven figures.
Determining the value of a domain name can be challenging, and incorrect assessments can cost thousands of dollars. This is where a domain appraisal service comes into play. A professional appraisal service can provide a detailed analysis of a domain’s worth, taking into account various factors such as market trends, search engine suitability, and potential revenue streams.
By leveraging the services of a domain appraisal service, you can ensure that you are making well-informed decisions, whether you are adding to your domain portfolio or selling a valuable asset.
Running Domain Name Comps
Similar to real estate, conducting a domain analysis to understand the market value of other domains and services that have sold recently can help value a domain name. This is a tricky process because the type of domain name can play a huge role in the current value.
Comps are performed manually, and estimates are based on similar names that have been sold and are available as market comps. A comp includes a complete breakdown of the anatomy of the domain name asset and becomes the basis for the valuation estimate.
.com domains are the most valuable
The top-level domain (TLD) is a major factor in appraising and understanding the value of a domain. Although there are 100s of TLDs available to use (.com, .org, .net, .io, etc), .com is still by far the most valuable.
A domain with the same name with a different TLD can drastically change the value. For example, Poker.net is the highest .net domain ever sold for $750K, but that pales in comparison to the sale price of Poker.com in 2017 at an estimated value of $20M.
How valuable is the SEO?
There are many factors when determining the SEO value of a domain. Things like search intent metrics, keyword value estimates, backlink history estimates, and search results all play a huge role in determining the SEO value:
Keyword value of a domain name
The search intent of a user when searching can help determine the value. For example, domains that are more generic (shopping.com, poker.com, driving.com) all have millions of searches made per month. This can increase the cost per click when paying for keywords and increase search volume and competition of the domain.
History and back link profile domain analysis
The back link history of a domain plays a major role in its value. The cleaner and larger the back link profile, the easier a domain will have ranking for targeted keywords.
This is a big value add to a domain if there are 1,000s or 10s of thousands of valuable domains pointing back to the domain you are evaluating.
On the opposite end of the spectrum, if a domain name has been involved in black hat SEO techniques to artificially increase the domain’s authority, this can be a big problem as Google can penalize the domain and knock it out of the rankings.
A negative back link profile can have lasting effects on its future performance and it is important to fully understand and create the link profile to ensure it data was not manipulated.
Domain name age
Typically, the rich history of the domain name age helps with the overall value of the name depending on use of the domain. In some instances, past usage can diminish the value of the domain based on the previous owners’ use.
For instance, if the domain was used for spammy or questionable activity, this can hurt the value of the domain. Past use of the domain should be looked at carefully before purchasing a domain name.
Generic and brand appeal & length
Easy to remember domain names hold more value. All of the top selling domains are easy to remember, generic domains that have broad market appeal. In addition, most of these core domains are one or two words that are easy to spell.
Domains that language that are easy to remember and spell will generally drive a higher value than harder to spell, longer and more language specific domains.
Marketability, Timing & Market Trends
The market always will dictate timing and the the speed of marketability of a domain name. Timing the market can be critical in determining when is the right time to sell or position sell your domain name for a potential sale on the open market.
Issues using an automated domain name appraisal service tool
There are many free automated appraisal tool tools, but very few of them are accurate. Automated the tool tools do not take into account all of the factors that were laid out above.
Types of Domain Name Valuations
There are three types of domain name valuations or price points that are outlined below:
Liquid Pricing
Domain names are being unloaded by an owner, bankruptcy, or court-filing. They are typically sold in a lot—or as a portfolio.
Most of the liquid inventory is sold by private brokerage companies or independent domain brokers. Liquid pricing is usually 20-30 percent of the price of the total retail price. There are very few opportunities in the marketplace around the liquid pricing structure.
Investor Pricing
Domain names that are offered by domainers, typically looking to turn-over inventory. Most investor-priced domains could be acquired via Auction or directly between domainers in the space.
Sometimes, domainers trade with other investors or become partners on certain domain names with other like-minded domainers. Investor pricing is usually 40-60 percent of retail price.
Retail Pricing
Domain names that are offered free by domainers, to interested end-users. These buyers are typically the ones that benefit the most from owning the digital real estate. They have a clear use, and understanding of demand for the URL, and have conducted due-diligence and effective research on the opportunity.
Domain Appraisal Service
A domain appraisal service is an invaluable tool for anyone involved in the buying or selling of domain names. This service offers a comprehensive analysis of a domain’s market appeal, estimated value, and potential revenue streams.
It delves into the domain’s history and usage, providing insights into its past performance and any potential red flags. Additionally, the service assesses the domain’s potential for future development and growth, giving you a clear picture of its long-term value.
Whether you are a domain investor looking to expand your portfolio, entire domain portfolio or a business seeking the perfect starting point for your online presence, a domain appraisal service provides a fair market estimate that can guide your decisions and help you achieve the best possible outcomes.
Benefits of Accurate Domain Appraisal
Accurate domain appraisal is essential for making informed decisions when buying or selling a domain name. The benefits of accurate domain appraisal include:
- Determining the True Value: An accurate appraisal helps you understand the true value of a domain name, ensuring you do not overpay or undersell.
- Informed Decision-Making: With a precise valuation, you can make well-informed decisions, whether you are buying domains to enhance your brand or selling to maximize your returns.
- Avoiding Financial Pitfalls: Accurate appraisals prevent you from overpaying or underpaying for a domain, protecting your financial interests.
- Identifying Revenue Streams: A thorough appraisal can uncover potential revenue streams, such as advertising opportunities or high search volume keywords.
- Assessing Future Potential: Understanding a domain’s potential for future development and growth can help you plan long-term strategies and investments.
By ensuring your domain appraisal data is accurate, you can confidently navigate the various domain sales marketplace and make strategic decisions that align with your goals.
