Domain name valuations and appraisals - 
a 21st century con-trick?

Domain Name Valuation services are offered by a number of sites and individuals claiming to have a valuation model that will provide you with an accurate indication of the value of your domain name, or an indication of what you should be paying for a name.

~Domain Name Valuations and Appraisals~

Some sites even have on-line domain name valuation and appraisal systems that calculate the value of a name instantly. They look sophisticated and the sites always look very convincing, full of facts and figures to back up the valuation. Some even offer certificates.

~Domain Name Valuations and Appraisals~

Other domain name valuation and appraisal sites have users who will offer their opinion about the worth of a particular domain name - or in some cases, will even value your entire portfolio, completely free of charge.

~Domain Name Valuations and Appraisals~

Should you use these domain name valuation services?

~Domain Name Valuations and Appraisals~

A domain name isn't like real estate. It's value is not tangible because it doesn't really exist. It's not as though it cost anything significant to create and on it's own is pretty useless. It's resale value will depend on a variety of factors and these will usually only be known by the buyer, not the seller.

~Domain Name Valuations and Appraisals~

I have a personal view here, so I'll declare it. I think that most (but not all) valuations are a waste of time. Without exception, the person, company or robot performing the valuation is offering an opinion. Opinions are the cheapest of all commodities and by their nature are extremely subjective. Even mine!

~Domain Name Valuations and Appraisals~

For example, if you use the free valuations (often called appraisals) offered by other domain name owners at some sites, the first thing that happens is that the "appraiser" looks at their own portfolio of names to see whether any will compete with his/her names. If it does, do you think your name will be valued high or low?

~Domain Name Valuations and Appraisals~

Where there is a use for a valuation is when you are coming to sell your name. A buyer might consider that he is receiving an objective appraisal and valuation and this might of course, support your sales proposition. In reality, you will have either paid for the opinion or will have received it free from another individual who simply wants to exchange appraisals - "you value mine high and I'll reciprocate with one of yours" - it's not exactly difficult to see where a conflict of interest might arise.

~Domain Name Valuations and Appraisals~

The fact is though, that the buyer can also obtain a valuation for the same domain name, with another appraiser or valuer - and come up with an entirely different amount as a counter to the valuation that you have arranged. A piece of paper or an email means nothing - whether you are the buyer or the seller - though of course, if one party is easily intmidated by the word "certificate", it could be worth spending the money!

~Domain Name Valuations and Appraisals~

People new to domain name buying and selling can often fall foul of unscrupulous individuals who simply see a request for such assistance as an opportunity to part you from your cash. The amounts vary, but the result can only be the same. There simply isn't any way at all that someone can place an accurate and true, universally accepted, market value on your domain name. Don't waste your money with these people, use it to buy a couple more names instead.

~Domain Name Valuations and Appraisals~

Is there a valuation model that works? I'm not sure. The best you can do is to set your own expectations. Buyers will either pay the price or they won't. In reality, it's the buyer's opinion that counts and to a large degree, their opinion will be clouded by the same subjectivity as the so-called valuers and appraisers - with one difference. If the valuer is not prepared to buy our domain name, why should you believe the valuatioin. Have they been to domain name valuation school? Are there any qualifications? Of course not!

~Domain Name Valuations and Appraisals~

Let's say for example, that you own Flowers.com (I said assume, I know you don't). To a small flower shop in a remote area, it's a nice attractive name. However, as a small flower shop stuck in the middle of nowhere, the owner doesn't have an unlimited supply of money and finds your price of $5,000 outrageously expensive.

~Domain Name Valuations and Appraisals~

However, you know that a generic name like this can be used not only by small flower shops, but also by international delivery services like Interflora, or large international flower distributors, or perhaps even by an entrepreneurial marketing company that recognises that "flowers.com" might be typed into the browsers of millions of Internet users, just to see what happens. Does $5000 seem expensive now? Does $500,000 seem expensive?

~Domain Name Valuations and Appraisals~

The value of a domain name is only worth what somebody is prepared to pay for it. Hard and brutal, but true all the same. That does not mean that you should accept the first offer that comes along (unless you really need the cash and think it's OK). In the event of receiving a low offer, you should either stand firm and indicate a more realistic price, decline the offer or use the offer as a basis for conducting a mass-marketing campaign to encourage competitive offers.  It's amazing how much more interest you can get when there's an offer on the table. People want what they can't have.

~Domain Name Valuations and Appraisals~

Not all domain names have a great deal of value in the domain names aftermarket. Some have no value at all. Despite what some of the registrars tell you, there is no point in registering names that are meaningless. Just because you or I thought of a name that is still available at $10, it doesn't mean that it's going to make you a fortune.

~Domain Name Valuations and Appraisals~

I would even go as far as saying that I believe that the vast majority of names being snapped up by speculators are of absolutely no value whatsoever. How can they be? There are simply too many names out there. If you don't believe me, go to any domain name auction site or a forum and users what they think of your very best domain name. Within seconds you will see many viable alternatives available from people desperate to sell their names - probably for less money than you're looking for!

~Domain Name Valuations and Appraisals~

Check for yourself. NameBoy has an excellent and free-to-use tool that will provide you with hundreds of viable alternatives instantly - now how great do you think your name is?

~Domain Name Valuations and Appraisals~

The fact is, that a person looking for a domain name for a business, personal or hobby site will easily be able to register a brand new name that is probably equally as good or better than anything you or I could come up with - and at a fraction of the price.

~Domain Name Valuations and Appraisals~

Under such circumstances, does it really matter what a domain name valuer thinks your name is worth? In the face of competition from other sellers and low-cost new registrations, your name, unless specifically targeting a niche group, is absolutely impossible to value accurately and I defy anyone to prove otherwise. Just because a name sells for the amount that it is "valued" at, is not proof that valuation is accurate - it's simply an indication that two parties happen to agree that this is the value that they will conclude a deal with.

~Domain Name Valuations and Appraisals~

On your travels to find an accurate domain name appraisal service you will see all kinds of figures banded about. You'll see claims about how a name was appraised at $x and then sold later for an amount very close to $x. It's hardly surprising really, as the sellers expectation had been set by the valuer - the seller might have sold way short of the real value - someone may have been prepared to pay more! These claims of accuracy cannot be substantiated in the vast majority of cases.

~Domain Name Valuations and Appraisals~

The fact is that the buyer could go on to resell that smae name for a hundred times the amount he or she paid you - what use was the "valuation" in that scenario?

~Domain Name Valuations and Appraisals~

Go to a site like Afternic or Great Domains and take a look at the thousands of people offering a domain name valuation model. Each person is convinced that they have discovered the golden secret to applying a magic formula to reach an accurate valuation figure. They can't all be right!  (Actually, if you want to see how stupid some people can be, take a look at http://auction2.net/ )

~Domain Name Valuations and Appraisals~

The reason new names are so cheap now is that this price represents a level where the registrars can sell names by the million! You should always bear this in mind. Have you seen or taken part in the recent "sales" offered by the likes of Register.com? They lower their prices to just $1 on some weekends in an attempt to get users to register hundreds of names at a time - and it works! Don't get caught up in this hype - save your cash, because if you're like the rest of us, you are not going to turn that $1 investment into $1,000,000 - although there are plenty of sharks out there who, for a price, will tell you that you can!

~Domain Name Valuations and Appraisals~

Resale value is derived from the application of a name, not necessarily the name itself. To increase the value of your names, you need to demonstrate how it can be used by an individual or company and how it can add value in the process. Names do not generally increase in value on their own just because you or I own it!

~Domain Name Valuations and Appraisals~

One way that I try to increase value, is to pick generic names applicable to competitive and easily defined vertical markets. (This is only one method and it's not foolproof). I try and pick known key words from Internet search engines - search terms. This information is available to you if you know where to look. I then make a domain name up of two or even three words separated by hyphens.

~Domain Name Valuations and Appraisals~

Not everyone is a fan of hyphenated names, but almost without exception, search engines are very big fans. I know, I have over 50 names achieving top ten positioning on major search engines against a variety of search terms. That provides me with hundreds of top placed positions!

~Domain Name Valuations and Appraisals~

The reason for this is that they look at the domain name for relevance against the search string. Choose the right words and your domain name will score number one search engine positioning before it's even attached to a web site! Most of mine do. The same name without the hyphen usually comes nowhere on the same search and requires a lot of page manipulation to get a good result. I therefore add value to both the domain name and to the purchaser by providing an incentive to buy, rather than being one more domain name amongst millions.

~Domain Name Valuations and Appraisals~

My own portfolio now comprises names that achieve number one or top-ten search engine ranking on most of the major searche engines, including, but not limited to Google, Yahoo, Excite, Lycos, Dogpile, Ask Jeeves and AltaVista.

Even this page gets great positioning - look at www.google.com and search for "domain name valuations" - I'm sure you'll find it on the first page!

~Domain Name Valuations and Appraisals~

Does this add value? You bet it does! A domain name on it's own is very difficult to value. A domain name that also has pole position in a competitive vertical market on a search engine is suddenly tangible. One that occupies top spot in 10 search engines and delivers visitors seeking specific information suddenly rockets in value to the point where you can almost name your own price - especially as search engines are now keen to develop the pay-per-position model!

~Domain Name Valuations and Appraisals~

I know of no appraiser, valuer or on-line resource that can take all of these factors into account. For this reason, I recommend that you don't get caught in the loop. It only serves to fuel your insecurity or to stroke your ego. If you need that, there are plenty of people waiting! Links to known appraisers and valuers appear below for information purposes only.

~Domain Name Valuations and Appraisals~

Please note that these links are included in good faith. A link does not represent a recommendation, but if you are seeking 3rd party confirmation about the potential value of a name, then maybe, just maybe, one of these companies might prove to be the exception to the rule. Some are free. Buyer beware!

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