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August 27, 2012

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Here's the The Lowdown from DN Journal,
updated daily
to fill you in on the latest buzz going around the domain name industry. 

The Lowdown is compiled by DN Journal Editor & Publisher Ron Jackson.

Sedo Set to Introduce a New "Price Suggestion Tool" for Domain Sellers - Can Automated Appraisals Be Taken Seriously? 

Sedo is about to unveil a new Price Suggestion Tool aimed at providing domain owners with some guidance on how high they should price their domains on the popular aftermarket sales

site. Sedo has been beta testing an iteration of the free feature that had been labeled Auto Appraisal Tool. In a newsletter sent to clients this afternoon they said the new name for the public rollout in August (the exact date has not been set) will be Price Suggestion Tool

Incorporating the word "suggestion" in the title is a good idea. It will be up to the user to decide to go with something near the suggested price or come up with their own number. I haven't seen Sedo's tool yet but to this point in time I have never seen an auto appraisal tool that didn't frequently produce wildly off the mark results. Some may make entertaining parlor games but I haven't seen much value beyond that, especially since some novices take even laughable results seriously.

Professional domain appraisal? 

To be honest, I have very little faith in human appraisals either (including my own). There are too many unknowable variables involved, not the least of which is how motivated is the seller? How badly might a specific buyer want a given domain? With those and many other other considerations involved, I don't think there is any way for anyone to consistently predict what individual domains will sell for. Yes, appraisals can have value for tax purposes if the IRS recognizes the appraisal company as a credible source - but as a reliable indicator of what the name would sell for on the open market - not so much.

Another problem with paid human appraisals is that there is a big incentive for unethical appraisers to give customers an inflated value for their domain so they will be happy and spend more money for additional "feel good" appraisals that have no real value to anyone, especially the mislead customer.

In real estate homes have enough in common (and enough historical sales data) to make recent prices paid useful in 

appraising homes that are currently on the market.  However most domain names are unique in terms of how individual buyers with varying needs would value them. iReport.com was worth $750,000 to CNN but others with a use for the domain might not have paid more than $5,000. As is usually the case, any appraisal for that domain would have been meaningless. 

Every week, after we post our domain sales report, people comment on names that have been sold, often saying things like  "how could that name go for that much?" Or "I have names that are a hundred times better than that and can't sell them for a fraction of the price that name went for!" Again it comes down to what name did the buyer, for whatever reason, decide was a name they really wanted for their business or domain portfolio. 

Having said all of that, if Sedo has improved on the other models out there they may have a tool that is good enough to provide inexperienced sellers with some guidance to consider and there would be some value in that. I think that over time the more successful domain investors develop a "feel" for pricing domains and I  think that is about as good a handle as anyone can get on the ever elusive "value" of a specific domain name.  

(Posted July 24, 2009)


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