Domain Name Appraisals are Similar to Real Estate Appraisals
You hear quite often that domain names are similar to traditional real estate. There are many similarities and differences in the two. Domain name appraisals are vitally important to both buyers and sellers and should be completed by experienced domain name experts.
Domain name values are extremely volatile with domain names ultimately worth what someone is willing to pay on the asset.
Domain name appraisals help owners understand the value and should be manually performed to accurately gather data points relevant to the current market conditions.
The appraisals should also base values on current market – no more than 24 months old.
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 domain name that’s related to your brand.
Or, you can be a domain investor with a vague idea of the worth of your domain and are worried about not selling for the right price.
While it may be true that the value of a domain name ultimately depends on what the buyer is willing to pay, there are other factors that determine the price of a named asset.
Some of these factors include:
- Comps – review names that have been sold previously that are similar to your domain name.
- .com is king – everything else plays second fiddle. Know the value of your TLD. Know how to price additional TLDs, based on the value of the .com
- Keyword – Understand the keyword value, Cost-per-click, and competition around the keyword.
- History and backlink profile – is the history of the URL clean?
- Number of search results – how many searches are conducted per month on the search engines?
- Generic and brand appeal – how likely is your brand to be remembered, or hold value?
- SEO Commercial Interest – how competitive and aggressive is the SEO around the keyword?
- Length of the domain – shorter is always better for value and long-term equity.
- Spelling – is the domain name hard to misspell?
- Industry Targets – how many leads can you market the domain name to?
- Marketability – how marketable is the domain name?
- Market Trends – how favorable is the market?
- Timing – how is the timing? Time of year? Maybe a company just got a funding round?
The domain name valuation process should cross-reference all criteria and dig deeper into the anatomy and history of the URL. Deeper research around the asset can help add value to your brand. Having an appraisal completed by an domain broker can give you a great idea of the value of the domain.
A domain name’s web ranking, age, its likelihood for a Google penalty or Facebook ban, etc. are determinants of its value.
There are many automated appraisal tools, but very few of them are accurate because there is no accurate way to calculate a domain name’s exact value.
An experienced domain name appraisal expert takes into account 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.
Types of Domain Name Valuations
There are three types of domain name valuations or price points that are outlined below:
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 companies or independent domain brokers. Liquid pricing is usually 20-30 percent of the total retail price. There are very few opportunities in the marketplace around the liquid pricing structure.
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.
Domain names that are offered by domainers, to 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 for the URL, and have conducted due-diligence and effective research on the opportunity.
Domain name appraisals can be used for negotiation, tax/estate planning, divorce proceedings, business valuations, asset diversification and many other uses. They are valuable pieces of information that will help you not leave money on the table.
What are you waiting for? Contact us for a domain name appraisal and remove the guesswork in predicting your domain’s true value!