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  1. #1
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    Appraisal methodologies

    ///mod note: This thread started out as posts in response to an appraisal request but moved into general discussion of approaches to appraisals so the relevant general posts were copied to this new thread ///

    Originally posted by snoopy
    Do you think $12,000 is the value of this name? If you had 100 domains of similar quality do you think you would get this kind of price for them all if you put them up for sale?




    That's what I told the buyer I wanted, and he accepted, so I
    must have been comfortable with setting the value at $12,000.

    I have had this domain for a while now, and over the past couple of years I have had offers from $5,000 to $10,000 which I turned down. I am satisfied with the $12,000.

    Obviously it was only worth $50.00 to $100.00 to you, which is fine, but the buyer has a specific business plan in mind. Certainly this domain would not be worth $12,000 if you were only going to use it to collect PPC revenue.

    I am certain you must already know, transactions with end-users are very different from those with other resellers.

    At the end of the day the buyer is happy, and I am happy. I will just enjoy the delight of this sale, and worry about my entire portfolio tomorrow.

    Have a nice day..............

    Showcase
    Last edited by safesys; 2006-08-06 at 01:30 AM.

  2. #2
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    Originally posted by showcase

    I am certain you must already know, transactions with end-users are very different from those with other resellers.

    Right, that is is because those selling to endusers generally sells a small proportion of their inventory each year. eg buydomains sells about 1% annually and dotcomagency came out with some data a while back showing 3%. The prices people are able to sell small %'s of their portfolio each year sell at doesn't reflect "market value", the seller needs to factor in the domains that don't sell.
    GamesRoom.com, Possum.com, Arithmetic.com on greatdomains auction, low reserves, priced to sell!

  3. #3
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    Originally posted by snoopy
    Right, that is is because those selling to endusers generally sells a small proportion of their inventory each year. eg buydomains sells about 1% annually and dotcomagency came out with some data a while back showing 3%. The prices people are able to sell small %'s of their portfolio each year sell at doesn't reflect "market value", the seller needs to factor in the domains that don't sell.
    Who said all of the domains in a portfolio need to sell in a year? I'm in no hurry. IMHO......this is no different than selling land. It may be swamp land to you, but it is paradise to another.

    Further, why do I need to factor in the domains that I don't sell in a particualr year? If they are paying for themselves and making a profit to boot........I just need to have patience.

    Additionally, what market value are you wanting to be reflecfted? The reseller market or the end-user market? The market I am interested in is the end-used market. Certainly a more difficule market, but one I like.

    Got to run............

    Cheers,

    Showcase

  4. #4
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    Hello Snoopy,

    If one had a 100 domains making $7,000 per year on PPC rather than a $1,000 per year, why would there be a rush to sell them in a very short period of time? Just because a domain doesn't sell in a very short period of time doesn't deem it a looser particularly if it is generating profit after expenses.


    Showcase

  5. #5
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    Originally posted by showcase
    Hello Snoopy,

    If one had a 100 domains making $7,000 per year on PPC rather than a $1,000 per year, why would there be a rush to sell them in a very short period of time? Just because a domain doesn't sell in a very short period of time doesn't deem it a looser particularly if it is generating profit after expenses.


    Showcase
    I'm not saying that, I'm saying the value of a domain is what it can be sold for in a short space of time. It isn't what domains *might* sell for over a very long period of time.

    The model you have adopted though is one of selling lower volumes at high prices. I'm not saying the model is any better or worse than the person who sells their entire inventory in a year, but the high prices on some names need to balanced out against the fact that the majority of names in a portfolio won't sell for a long time or perhaps even will never sell under this model.
    Last edited by snoopy; 2006-08-01 at 03:35 PM.
    GamesRoom.com, Possum.com, Arithmetic.com on greatdomains auction, low reserves, priced to sell!

  6. #6
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    Originally posted by Bailey


    I'm not so sure that any comparison to the 'Buy-domains' model is correct as their strategy seems to be almost any term in common or recognisable usage will do, which to my mind is a world away from identifying premium .coms using marketing acumen.
    Just…, if there is no parameter there is open range, which enters in a revolver door for the day to day business.

    The gilding process of a domain going from reg. Fee to high accumulation is based on cornerstones which often proof distance between value and price.

    “ The lucky finder of the golden nugget might know what is in his hand, but lines of hundreds beyond him, holding up their stone in hope the buyers blessing will fortune their excavations soon.”

    Unknown

  7. #7
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    Originally posted by Sprocketwheel
    Just…, if there is no parameter there is open range, which enters in a revolver door for the day to day business.
    I was being over critical, which I accept was uncalled for. Too often the buydomains model is used to explain away good solid purchases imo.
    Last edited by Bailey; 2006-08-04 at 10:27 AM.

  8. #8
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    Too often the buydomains model is used to explain away good solid purchases imo.
    I think the opposite is true - too often only domains that have sold are focussed on and the ones that don't are ignored. If probability of a sale isn't factored in (which requires looking at the names that didn't sell) then its like valuing lottery tickets based on an average of only the winning tickets.
    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

  9. #9
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    I think the opposite is true - too often only domains that have sold are focussed on and the ones that don't are ignored. If probability of a sale isn't factored in (which requires looking at the names that didn't sell) then its like valuing lottery tickets based on an average of only the winning tickets.
    I accept the point which has been made many times and from many quarters but that argument chooses to ignore where much of the new growth and spend originates from. Don't get me wrong I would love to be playing at the top of the ppc tree but, the fact remains that apart from the best generics you wouldn't want to be using some of the respectable but slightly long winded ppc strings on the side of a van any time soon and obviously I'm refering to any type of visual or spoken media.

    I don't think anybody with a head on their shoulders would argue against your maximum efficiency model but, Good or even reasonably good word-art speaks for itself in our media saturated world.

    And of course this model dosen't bode well for a young newbie with a fresh credit card and on over stimulated imagination.
    Last edited by Bailey; 2006-08-04 at 08:56 PM.

  10. #10
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    I don't think anybody with a head on their shoulders would argue against your maximum efficiency model but, Good or even reasonably good word-art speaks for itself in our media saturated world.
    You're missing the point - it has nothing to do with ppc model per se other than ppc (type-in) names have a higher probability of a sale - its 100% up to quite large multiples for descriptives.

    Brandable names have lower probabilities of a sale for a given pricepoint - thats why so few, relatively speaking, sell for high premiums.

    It all comes down to supply and demand.

    And of course this model dosen't bode well for a young newbie with a fresh credit card and on over stimulated imagination.
    thats why its important to temper the sales with the not sold - which is done by allowing for the probability of selling a brandable name at a premium.
    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. #11
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    This thread has become amazing. I know the Realestate industry is glad you guys are not appraising property.

    To me domains are similar to property. I bought a lot four years ago for $1,500 in Florida. In the last 18 months I have had offers from $8,000 to $12,000 for this particular lot. The area is only going up in value and the small tax I pay to keep it is far exceeded by the increase in value. The more I sell this lot for the better it is for the other lot holders.

    This domain was not sold to a newbie with a fresh credit card. I frankly see many of the newbies using their credit cards to register mis-splled domains, domains with obvious potential for TM issues, and in general trying to ride on the coat tails of other companies business models and creativity.

    This just happened to be the name this particular person wanted to brand his business under.

    At the end of the day there is no appraisal nor is there a specific formula to apply to determin how much a buyer is willing to spend on a domain name. I disagree with the poster that said there is no difference between an end-user and a reseller. That is like saying there is no difference between a home-buyer and a realestate investor. There are many variables that go into the formula: How much is the buyers budget, how important is a particular domain for his intended business plan, many considerations including his bottom line of what he is willing to invest in the domain he wants.

    No matter how you analize the sales, I would rather be a part of increasing domain values rather than trying to sell my portfolio off in a year for $50.00 a piece. I believe it was Snoopy that suggested a $50.00 for this particular domain. He also asked if I thought I could sell a 100 of them of similar caliber for the same price in something about a year. Well, I can tell you that if I used the formula of $50.00 and sold 100 domains, the math is very simple, I would have half of what I accomplished with one domain, and I wouldn't have a portfolio left to continue to earn PPC revenue or even have the potential to develop anything.

    You guys should always be thrilled when another domainer catches a good sale. It should only increase the value of your own realestate. If a neighbor sells his house for more than what I thought it was worth, I am always very greatful as that sale just increased the value of my home.

    Not trying to be insensitive to what any of you have to say, but the fact is sometimes you can beat an issue to death, and this may well be one of those instances.

    Have a really nice day, and I will hope that you all catch a really good domain sale.


    Cheers,

    Showcase
    Last edited by showcase; 2007-03-21 at 09:08 PM.

  12. #12
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    At the end of the day there is no appraisal nor is there a specific formula to apply to determin how much a buyer is willing to spend on a domain name
    true - but there is a difference between what is possible and what is probable. If domains were valued on what is possible then every domain would be valued in the millions because its possible to have an end user so motivated for a specific name, no matter how obscure, that they simply must have it and are resourced enough to meet a crazy price. It's just not probable.

    You guys should always be thrilled when another domainer catches a good sale.
    These things aren't mutually exclusive - I'm glad for your sale, but try to not lose sight of the fact that luck plays a part in inprobable sales and that its a false economy to value all domains based only on the ones that do strike it lucky.

    The discussion on appraisals isn't specific to your domain sale - its something that comes up regularly when a domain sells for more than its appraised for because people think an appraisal is the value it will sell for vs a value where the probability of a sale is at its highest point.

    Its a topic worthy of discussion imo.
    Last edited by safesys; 2006-08-05 at 12:30 AM.
    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

  13. #13
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    Originally posted by safesys
    true - but there is a difference between what is possible and what is probable. If domains were valued on what is possible then every domain would be valued in the millions because its possible to have an end user so motivated for a specific name, no matter how obscure, that they simply must have it and are resourced enough to meet a crazy price. It's just not probable.



    These things aren't mutually exclusive - I'm glad for your sale, but try to not lose sight of the fact that luck plays a part in improbable sales and that its a false economy to value all domains based only on the ones that do strike it lucky.

    The discussion on appraisals isn't specific to your domain sale - its something that comes up regularly when a domain sells for more than its appraised for because people think an appraisal is the value it will sell for vs a value where the probability of a sale is at its highest point.

    Its a topic worthy of discussion imo.

    Of course luck has a role. I am lucky that a customer wanted my domain instead of one that did not belong to me.

    As far as appraisals.........I could buy ten of them and each of them would be a world apart. I can go to Network Solutions in their certifiedofferservice.com and it would suggest that I make an offer of between $12,000 and $14775 for this domain.

    As far as luck is concerned.........Godaddy.com is very lucky that so many folks are willing to register domains that are misspelled, make no sense at all, and no potential for branding whatsoever no matter how much advertising is done.

    The fact is that folks that invest in domains are certainly taking a gamble. One hopes they picked a winner. When one pays close attention to the published domains that are selling it is easy to conclude that there is no exact formula. I don't think we are discussing obvious winners such as Golf.com, business.com. sex.com and so forth. I call those domains Ocean front property and they speak value all by themselves.

    IMHO............the gold-rush is over, but pioneering development of businesses on the Internet is still in its infancy. The vast majority of Ocean Front Domain Property is now being held by Venture Capital Groups, major investors, and large corporate organizations. A small organization with a specific business plan in mind will have to expect to spend some dollars to get a domain name that is well suited to their business endeavour.

    What is your formula for probable, possible, or improbable? DogPile.com meant nothing until it was developed. For that matter the same would have applied to Google. The fact is, it is no longer the early to mid 90's and the economy has changed respecting domain names. Just three years ago you could not have given a three word domain away, now we have started to see some significant sales for some meaningful three word domains.

    Also, what market is the formula targeting for probable, possible, or improbable? I ask that question because I see certainly more than one purpose and market for domains.

    Vision is probably more important than luck in my estimation. Look at the guy that registered Business.com. He had the vision to reg it, but not the vision to realize the long range potential. I believe the story went something like this: He sold it to an investor for $150,000. The investor held on to it for a period of time and ultimately sold it for 7.5 million. I'm certain there were folks that thought it was over priced at the time. Today it would go for far more.

    I would be very interested in a formula that determines what the actual value of a domain should be. I just haven't seen it presented at this point. What you have not sold in your portfolio certainly should not be a factor. If what is in your portfolio are dogs not maintaining themselves, they probably shouldn't have been registered in the first place. Sex.com sold for about $14 million this year. I will not be shocked if it sells again for even more. If the owners are holding FatWomenGrowHair.com in their portfolio I do not see where it has any bearing on the value of Sex.com.


    I will be interested to hear more from you.

    Regards,

    Showcase



  14. #14
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    Respecting domains such as DogPile, MySpace, Google, and too many others to mention, I think what is missed is the fact that these domains were acquired when the pickens were abundant. We are now in a market where that is not the case.

    As far as vision is concerned...........the domains that are dropping today are not representative of folks who had vision. What is presented on the hot lists today would never have made the hot list 18 months ago, yet even domains that are dropping are being auctioned off at Snapnames, Pool, Enom, and others, for rather significant prices. Let's not forget the number of domains that are being registered off the expired lists that are not worth catching by the drop auctions. Certainly all of these domains do not really have value. Look at your appraisal board. How many members present a domain that they just registered and the response as to value is zero dollars. Vision requires more than just registering a domain.

    Respecting the domains such as MySpace.com and other sites of this caliber and value..........the original owner and registrant of the domain had vision. He didn't just register anything and brand it. The domain had relevance to his business plan, with the added value of easy to remember, and broad enough to allow growth. Today, if the domain MySpace was not developed it is my opinion that it would fetch a nice penny. It has too much potential. The fact that it is already developed is not what gives the domain the potential, it is the possibilities for revenue generating development that give the domain its potential. BadCreditMortgage.com just sold on Sedo for $35k. Personally I would not want a company with that label because it is limiting and does not allow for growth and expansion. I think it is a great domain for redirection to a Mortgage company that welcomes customers with bad credit for consideration. I would not pay $35k for that domain, but whoever bought it believed the domain was worth it to them. At the end of the day that is what matters, the value the buyer is willing to place on the domain.

    As far as what Snoop says, I never stated that every domain of similar quality would sell for $5k, 12,k or whatever. Snoop was the one that came up with such a silly question. Just because I have a stock that jumps 20 points in one day does not mean that all of my stocks will do the same. It also does not mean that the stock that jumped 20 points shouldn't have happened. There are too many variables that can be involved to make such assertions. I remember not too very long ago when the three misspelled variations of Download.com sold for a package of $68k. Because that niche does not interest me of course the price seemed very high to me. The buyer obviously had interest that merited the 68k value to him. I don't think you can leave out of your equation an individual or corporation's desire to acquire a particular domain for whatever their reasons are.

    We are not discussing the value of premium Ocean Front Property, so once you step down from the best I would think valuation becomes more difficult. Once you hit the caliber of domains likeFatWomenGrowHair.coim the valuation process probably becomes much easier again.

    Regards,


    Showcase

  15. #15
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    Respecting the domains such as MySpace.com and other sites of this caliber and value..
    You really have to distill the original domain value from the developed site value for that to have any bearing on comparative domain values as in reality, the calibre of the raw names just isn't that great at all - but as a part of the developed site they certainly do. But in the same way as ignoring unsold domains skews, so does fixating on the miniscule percentage of brandable names that have become household names.

    I remember not too very long ago when the three misspelled variations of Download.com sold for a package of $68k. Because that niche does not interest me of course the price seemed very high to me. The buyer obviously had interest that merited the 68k value to him. I don't think you can leave out of your equation an individual or corporation's desire to acquire a particular domain for whatever their reasons are.
    thats a very different transaction - the names were bought on the basis of the traffic value - which is a formulaic purchase..
    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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