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Domain-Appraiser.org
Association of Certified Domain-Appraisers™  |
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STRAIGHT ANSWERS
Q - I saw a web site that says they value domain names by the number of letters in the name. That didn't make much sense to me, but they're supposed to know what they're doing. Are they right?. Charlie W. A. Sorry Charlie. Can you determine the value of your house by the length of its street address? No, you cannot, and No, they're not right. The word pat has three letters. According to that sites valuation model, a pat.com domain name could be worth up to twenty thousand dollars. The "number of letters determines value" premise is absurd. Q - XYZ web site says they will appraise my domain name for six dollars. The appraisal link at that site says they've appraised over twenty thousand names. That's pretty impressive. But what kind of accuracy can I expect? - Bill A. A - What kind of accuracy could you
expect if your mortgage lender paid six dollars to have your house appraised,
Bill? As a result of your inquiry we did a little research on the owner
of that so-called "appraisal" site. What you have there is a
site owner who is not a licensed real estate broker, not a licensed real
estate salesman, not a licensed appraiser, and apparently not a licensed
anything, as far as we can tell. What he does appear to be however, is
about a hundred twenty thousand dollars richer, if he has in fact taken
advantage of twenty thousand or so people, who sent him six bucks apiece
for a totally worthless guess, thinking they were getting a professional
appraisal. Q. Hi. One of the auction sites has an appraisal section where people write down what they think a domain name is worth. Isn't that a good enough idea of my names' real value? I mean, it's the public speaking, after all, isn't it? - Latisha M. A. Hello Latisha. Unfortunately, the fact that the public is speaking doesn't necessarily mean that it has the vaguest idea of what it's talking about. We went to the site you referred us to and pulled up the "appraisals" of one of their high profile names. The "appraised values" were all over the chart, ranging from $50,000. to $5,000,000. The fact of the matter is, that none of people submitting those appraisals have a clue. They're simply pulling numbers out of thin air. A particularly unfortunate aspect of the appraisal section on that site is the fact that the figures are averaged to suggest a value. Two appraisals, one for fifty thousand, one for five million for example, equals a supposed "appraised value" of $2,525,000. In short, the "appraisal" feature represents little more than statistical silliness. Q. I see some people sending e-mail to an attorney and asking him to appraise their domain names for free. He seems like a nice guy. A lawyer would be qualified to appraise my domain name, right? - Jeannie Z. A. We've spoken with him Jeannie. He is a delightful 26 year old attorney who is currently attending college. He is not an appraiser. The problem is that on the front page of his web site he states that he is an appraisal expert. On a less visible portion of his web site however, he admits that he is; ".....a self-appointed domain name expert. I claim this title because I've spent countless hours over the last three years buying, selling, amassing, admiring, chasing, drooling over, falling asleep thinking about, and lying awake pondering over my hobby... the collection and marketing of domain names." There is also a disclaimer on one of the interior pages which reads: The mere fact of having bought and sold a certain amount of property does not qualify an individual as a professional appraiser. The typical paralegal has prepared a lot of legal documents. That still doesn't qualify paralegals to practice law, or to advertise themselves as legal experts. Let us explain it this way Latisha; when you want to purchase a house,
and you apply for a mortgage, does the lender hire an attorney to
appraise the property, or does it hire a professional appraiser
to tell them what the property is worth? That's right. They hire a professional
appraiser. Attornies generally haven't trained as professional
appraisers. For example; As of the date of this writing, we found an instantly identifiable domain name that we considered egregiously underpriced, buried curiously deeply on a popular domain brokers site. The explanation for burying the listing and permitting the inappropriate pricing might be perfectly innocent, but at the very least, it suggests that the best interests of the seller have not been properly addressed. At the opposite end of the spectrum, there lurks a concern for an appearance of impropriety, on the part of the site's operators. If you are involved in the purchase or sale of a domain name from a stranger, ACDA strongly advises you to engage the services of a professional ATTORNEY, to both draft the contract for purchase or sale, and equally important, to safely escrow the funds until the domain name transfer has taken place. You don't want to transfer ownership and then find out that the check is no good, and you don't want to pay good money, only to learn that the "seller" you've been communicating with doesn't actually own the domain. A good plan of action for buyers and sellers is simply to treat cyberestate exactly the same way you'd treat real estate. A Licensed Real Estate Agent and a Licensed Attorney are governed by strict laws regarding their Escrow Accounts. You will want to make absolutely certain that if funds from a domain sale are being placed in something that is being termed an "Escrow account", that your funds are actually IN a valid Escrow account. Your own attorney will be able to determine this for you. ACDA would like you to be aware that prime domains, like prime real estate, can represent a very valuable commodity. Bottom line, a Certified Domain-Appraiser is best qualified to tell you what a domain is worth, and an Attorney is best qualified to protect you during its transfer. Would we recommend the Attorney we were just discussing to act as your attorney in a domain name transaction? Absolutely. Why? Because has a very strong familiarity with this type of property. Q. Hello. I just got a e-mail from a domain broker offering to do an appraisal for me. I honestly can't tell if these guys know what they're doing or not. I'm a minority applying for a SBA loan to expand my business (partly online) and when I talk to my lender he says if I want him to be able to consider my domain name as additional collateral, (which I think is a really, really good name, and so does he) that I got to have a real appraisal. Before I spend money, how do I make sure I'm getting what the lender is going to want?. Thank you. - Rosita G. A. Rosita, your broker may have professional appraisers on staff, and may be offering a perfectly valid appraisal service. Then again, that may not be the case. Do your homework. You don't want somebody to take advantage of you, and you don't have time to waste. This is your business you're talking about. What you need is not an amateur's coin-flip guestimate of value, but a professional appraisal, particularly if you believe you own a valuable domain name, your site is already partly developed, and your lender is willing to consider accepting what you believe may be valuable property as additional loan collateral. (That's a very bright lender, by the way). Here's our suggestion. Copy the following four questions, paste them to an e-mail, send them to the broker who offered to appraise your domain. Bear in mind, you generally get what you pay for, lenders have underwriters
they have to answer to, and sound business practice guidelines they have
to adhere to. If you're dealing with a professional appraiser, both you and your lender
will know it, based on the broker's reply. (1) Who are the appraisers who will be evaluating the domain and signing off on the report, and which of the following professional appraisal designations do they hold? MAI, SREA? CPA? CDA? (2) Which professional appraisal valuation methods will the appraisers be using for improved, improved-income-producing, trademarked name sites, and/or unimproved, or under-improved properties, and where can a sample report be viewed? (3) Will there be a signed, sealed, bound narrative with screen shots
of comparable properties, detailed comparisons, along with supportable
adjustments and value conclusions, similar to the real property appraisals
with which a lender must be furnished? (4) Since lending institutions often only accept appraisals from an approved
list of professional appraisers, with which lending institutions are the
professional appraisers currently approved Never be afraid to ask for a straight answer. Q. Hello it's me again, Rosita. I just
took a second look at what the broker sent to me and it says he is going
to charge me $75. but that he is not doing the appraisal, instead I am
supposed to be appraising my own domain. What is going on with this? -
Rosita G. The real reason for doing this is quite practical. If the broker is going to spend his own money to advertise your property in the newspaper, and if he's going to be doing one-on-marketing to potential buyers, your property shouldn't be unrealistically priced to begin with, or he's wasting both his time and his money, to say nothing of your time and your money if you're a serious seller. If you are willing to spend seventy five dollars in order to get a list of sales which might be posted at no charge elsewhere, you can certainly do so, but you will most definitely not be purchasing an appraisal. If a broker is truly interested in earning a commission on the sale of your property, but is doing nothing more for you than listing it on his site, then the very least he should do is provide you with the FREE tools to help you price it properly. He is, after all, going to be charging you a good size commission. Remember however, that if you are selling a property of substantial value,
the buyer is likely to want to see a valid appraisal in order to reinforce
his opinion that it might be well worth his investment. A reassured buyer
is a good deal more likely to pull out his checkbook. Q. I bought a domain name back in 1994. It's a very good one, I believe. Six letters, a name that's going to command some attention. Any recommendation on who should I list it with, once I have it appraised? - Tom M. A. Tom, if you're trying to determine
which broker to list your domain with, the key is to identify which
one offers high profile, regular, weekly, traditional advertising,
both online and in a national publication, in order to help drive
traffic to the site on which your property is listed. Here are some common sense
guidelines for choosing a broker:
If your domain is a very good one, it should be prominantly featured
on the brokers site, and there should be absolutely no charge to you
for them to do so. About that commission Do a common sense assessment of the marketing savvy of the broker. About those services. Online advertising can't be the broker's only only source of traffic.
It needs to be augmented with high visibility traditional advertising. Our recommendation to domain brokers would be to keep ads where you
the seller can easily see their marketing in action. A one-time
ad in a monthly publication that requires anywhere from a month to two
month lead time is not going to do much for you when the online market
is moving at warp speed. Q. I found a great appraisal site. They do real time appraisals for free, and it's at XXX. This solves everybody's appraisal problems, doesn't it? - MJ A. We tried their service on five names which had recently sold, M.J.
Q. I have been receiving offers for
my domain for years. I am interested in selling now as I no longer conduct
business under the domain. There is a company who has made an offer halfway
to six figures that is eager to close. I suspect a professional in the
domain resell business can do much better as the domain name gets LOTS
of daily hits, is a short, easy to remember and popular business name.
I've emailed the company who owns the trademarked name which matches my
domain name and as of yet have not received a reply, but then I am not
a professional in the domain resell business. I am willing to pay a commission
for a professional to manage the sale with the intent of maximizing our
return. If you are interested in representing me, what is your opinion
of the value, what relationship do you propose? John ASK US: I've got a question. |
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