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  1. #31
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    Originally posted by DomeBase
    It sortof moves along with general inflation figures when there is no change in ownership, *but* when a house is sold, the appraised value is updated to the sales price... exactly what we are talking about here. The town does not cling to their projected value and say that the buyer is incorrect, they just incorporate the new information and move on.
    I think they would be working on the assumption that a single sale price is a good indication of what something is worth. I don't think that would apply to domains, where prices can be all over the place. The price paid for the same domain can double or halve (or more) over a few weeks, and not because of market changes but simply due to mispricing.
    GamesRoom.com, Possum.com, Arithmetic.com on greatdomains auction, low reserves, priced to sell!

  2. #32
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    value = price X probability of sale
    Then you may wish to revise the forumula in your signature shown above. When an event happens, its probability becomes 100%. Thus, for a domain that has sold, according to this formula...

    1) value = price x probability of sale

    2) value = price x (100%)

    3) value = price

  3. #33
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    Originally posted by DomeBase
    When an event happens, its probability becomes 100%.
    How do you figure that?, if a domains gets sold for 10k that doesn't mean it has a 100% probability of selling for 10k. Much like if I flip a coin and it lands on heads that doesn't make the chance of coming up with heads 100%.
    GamesRoom.com, Possum.com, Arithmetic.com on greatdomains auction, low reserves, priced to sell!

  4. #34
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    Originally posted by snoopy
    How do you figure that?, if a domains gets sold for 10k that doesn't mean it has a 100% probability of selling for 10k. Much like if I flip a coin and it lands on heads that doesn't make the chance of coming up with heads 100%.
    if it sold for 10k then, yes, there is a 100% probability that it can sell for 10k because it just did

    if you require more than one sale at a price in order for your formula to work, then add an "s" to the word sale ->

    value = price x probability of sale*s*

    this is a very odd conversation we are having, Snoopy

    if you carry your logic to the extreme, then the price at which something sells has no relevance to its value because any expected future sale price remains as uncertain as it was before the sale

    this is very very very odd

    how many times does a good or service have to sell at a given price before you incorporate the sales price into your appraisal model? once, twice, 10 times? 100 times?

    maybe I am just tired and this will all look better in the morning
    Last edited by DomeBase; 08-06-2006 at 02:03 PM.

  5. #35
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    Originally posted by DomeBase
    if it sold for 10k then, yes, there is a 100% probability that it can sell for 10k because it just did

    if you require more than one sale at a price in order for your formula to work, then add an "s" to the word sale ->

    Once an agreement is reached, a contract is formed, the seller needs to transfer the domain and the buyer is obligated to pay for it. If what you say is correct that "there is a 100% probability that it can sell for 10k because it just did" then you are implying the the domain can now be sold a second time.

    Originally posted by DomeBase
    if you carry your logic to the extreme, then the price at which something sells has no relevance to its value because any expected future sale price remains as uncertain as it was before the sale

    this is very very very odd

    how many times does a good or service have to sell at a given price before you incorporate the sales price into your appraisal model? once, twice, 10 times? 100 times?

    That is the whole point, many domain sales seem to have little relationship to a domain's value. If an inflated looking sale was resold for a similar price multiple times that would be an indication the price might have reflected value, of course that doesn't happen.
    GamesRoom.com, Possum.com, Arithmetic.com on greatdomains auction, low reserves, priced to sell!

  6. #36
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    Domebase (and Showcase) is absolutely correct on this Snoopy. If it sold at that price it means the domains value is exactly the same. It's a bit ridiculous to say anything else and really weird to claim multiple sales at that price are needed to really verify the value.

    Another example is if my house sells for $500K the real estate appraiser and bank would agree it is valued at 500k, same with other products and services. The last sale price is without any question the value of the domain snoopy.

  7. #37
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    Originally posted by trader
    If it sold at that price it means the domains value is exactly the same. It's a bit ridiculous to say anything else and really weird to claim multiple sales at that price are needed to really verify the value.

    Here is real world example for you and a question,

    I bought a domain in 2002 for $1000, the seller had bought the same name a few weeks earlier for $1800. (ie he made a loss of $800)

    What was the value of that domain?
    GamesRoom.com, Possum.com, Arithmetic.com on greatdomains auction, low reserves, priced to sell!

  8. #38
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    Re: Appraisal methodologies

    Just FYI

    I recently was asked by multiple buyers to prove my domain had traffic that I claimed. Having screenshot of my stats from a ppc provider did not help me very much, as this guy wanted to know for a fact that domain was generating certain amount of traffic and from which sources it was coming from.

    I searched everywhere on the internet, but I only found one company called TrafficTest.Net , actually through a friend that did traffic estimates for a domain. After redirecting my site to them, they captured every request analyzed it through their traffic identificator, then sent the request back to me so I could still serve ads.

    I gave buyer the real-time URL he could watch for stats, and after 3 days he bought it. I am very skeptical about domain appraisal, but one thing I do trust is domain traffic, for me traffic sells a name. This is what's worth the most. Ofcourse there are probably lots of people out there with good names but which dont generate traffic.

    Anyways feel free to check out the company at http://TrafficTest.Net

    See you.

  9. #39
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    I would say a value is what something is or may be worth in the open market. If it is dependant on factors which all relate to one buyer being able to spend alot on it then that is not a value in my opinion as those factors all disappear the moment it is sold.
    I think I might not have been clear because I was not thinking about a single buyer - but rather variables such as time and demand (which is usually a product of having a number of suitors, their resources, the merit of alternatives etc).

    Maybe your loosing sight of the tens thousands of promotions that launch each year and the companies that previously wouldn't have thought it necessary to have an individual url identity to support that promotion. www.companyname.com/products/whizphrase just dosen't hack it any more.
    I don't see how this helps support the idea that using the value of developed hosuehold name sites that use creative names somehow props up the value and demand for creative domains per se. I'm not saying some companies don't use some creative names to good effect, just speaking in terms of value which is a result of demand for specific creative names.

    When looking at creative names for a product/brand its easier to be able to consider alternatives (vs something like a root term for an industry or the root term for a company name) which dilutes the demand for specific creative names. It seems sensible to have to factor this lower probability of a sale into the equation when considering value - certainly liquid value.
    When using google for counts - use double quotes for usage counts for multiword terms and set "match type" to "exact" for all search volume lookups. Click here for more info

  10. #40
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    when a house is sold, the appraised value is updated to the sales price
    If you buy a house for $x and request an appraisal the next day they don't just factor in the purchase price of the house - they look at what it will resell for in the market which may be less that the amount paid.

    Another example is if my house sells for $500K the real estate appraiser and bank would agree it is valued at 500k,
    Must be different in the us vs the uk, in the UK the bank would require an appraisal (valuation) be performed which has nothing to do with the agreed purchase price as people can and do overpay for houses and the banks don't want to find they have no equity to claw-back due to valuing based on overpayment.
    When using google for counts - use double quotes for usage counts for multiword terms and set "match type" to "exact" for all search volume lookups. Click here for more info

  11. #41
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    Originally posted by snoopy
    Here is real world example for you and a question,

    I bought a domain in 2002 for $1000, the seller had bought the same name a few weeks earlier for $1800. (ie he made a loss of $800)

    What was the value of that domain?
    Hello Snoopy,

    A person buys a domain for $1,800 and a few weeks he sells it to you for $1,000 correct? Frankly, that sounds like someone that found himself in a situation needing cash quick.

    I too picked up a domain two years ago for far below what it should have been sold for. The seller needed cash and did not have the patience for the domain business. Those variables would not contribute to establishing the value of the domain.

    Regards,

    Showcase

  12. #42
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    A key point to recognise in this spirited discussion is that unlike real-world goods and services, no two domains are alike. For instance Sex.com and Sex.net cannot be valued the same. Examples of houses sold have been given, but the fact is that houses can be identical in some cases based on their design, location, building materials etc. And these criteria can form a basis for valuation.

  13. #43
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    Mar 2004
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    147
    Originally posted by Magick
    A key point to recognise in this spirited discussion is that unlike real-world goods and services, no two domains are alike. For instance Sex.com and Sex.net cannot be valued the same. Examples of houses sold have been given, but the fact is that houses can be identical in some cases based on their design, location, building materials etc. And these criteria can form a basis for valuation.
    Point well made................................

    Of course the extensions will certainly play a role in determining value, but your statement respecting no two domains are exactly the same is really so true.

    Showcase

  14. #44
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    Originally posted by safesys If you buy a house for $x and request an appraisal the next day they don't just factor in the purchase price of the house - they look at what it will resell for in the market which may be less that the amount paid.

    Must be different in the us vs the uk, in the UK the bank would require an appraisal (valuation) be performed which has nothing to do with the agreed purchase price as people can and do overpay for houses and the banks don't want to find they have no equity to claw-back due to valuing based on overpayment.
    No, it the same in the US. What you said is entirely correct. I should have made it clearer that I was referring to the transaction closing and deed recorded, not based on only a purchase contract which is not counted when appraising.

    Once it closes that becomes the best comparable for a real estate appraiser to use when appraising another property and that sale indicates the value at the time of a new appraisal (if recent as far as time goes and location). Other similar properties (known as comps) are evaluated based on closed sales (comps are tough to do involving domains of course).

  15. #45
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    I should have made it clearer that I was referring to the transaction closing and deed recorded,
    right, so for the transaction to be closed the bank would be in agreement on the market value of the property (at least with regards to it being more than the borrowing).

    Once it closes that becomes the best comparable for a real estate appraiser to use when appraising another property and that sale indicates the value at the time of a new appraisal (if recent as far as time goes and location). Other similar properties (known as comps) are evaluated based on closed sales (comps are tough to do involving domains of course).
    So it becomes a valuation based upon a market valuation as it were.

    And yeah, it does become harder with domains because there aren't always comparable alternatives so it becomes a transaction based upon desire to own/sell.
    When using google for counts - use double quotes for usage counts for multiword terms and set "match type" to "exact" for all search volume lookups. Click here for more info

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