Learn what goes into a domain name appraisal
Domain name appraisals are vitally important to both buyers and sellers. Domain name 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 gather data points relevant to the current market conditions.
An experienced domain broker 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.
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 selling for the right price.
The value of a domain name ultimately depends on what the buyer is willing to pay, but there are other factors that determine the price of a domain name.
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 domain can help add value to your brand. Having a domain appraisal completed by a domain broker can give you a great idea of the value of the domain.
Running Domain Name Comps
Similar to real estate, understanding the value of other domains 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 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.
.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 $20M.
Is there SEO value with commercial interest?
There are many factors when determining the SEO value of a domain. Things like search intent, keyword value, backlink history 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 competition of the domain.
History and backlink profile
The backlink history of a domain plays a major role in its value. The cleaner and larger the backlink 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 backlink profile can have lasting effects on its future performance and it is important to fully understand the link profile to ensure it 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 domains are one or two words that are easy to spell.
Domains that are easy to remember and spell will generally drive a higher value than harder to spell, longer and more specific domains.
Marketability, Timing & Market Trends
The market always will dictate timing and the marketability of a domain name. Timing the market can be critical in determining when is the right time to sell or position your domain name for a potential sale on the open market.
Issues using an automated domain name tool
There are many automated appraisal tools, but very few of them are accurate. Automated 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:
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.
What are you waiting for?
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.