Michael Berkens doesn’t have any prices on his names prior to receiving an inquiry. None. At a lunch I had with Michael and a group of domain investors, one of the guys at the table asked if he kept a spreadsheet and put ranges on his names. Answer “Nope”. Until someone puts in an offer he doesn’t worry about the price. The reason is simple. Its a unique name, therefore there truly are no comps and why worry about pricing until its time to sell.
Elliot Silver had a little fun yesterday over at his blog and let users put up names and welcomed public appraisals of those names. As we all knew it would be, it was like a bunch of monkeys trying to screw a football. Tons of what I thought were lower end names (there were quite a few good names as well) followed by appraisals all over the board. But it was entertaining and I can’t really say that most of them were wrong about their appraisals. Why? Because I am surprised every….single….day..what certain names go for. As an experienced domain buyer and seller (yes I consider myself experienced) I can come up with a range but my range is often wrong, very wrong.
Acro had an understandable post that only qualified people can give domain appraisals and while I agree with this statement for tax and asset use, I bet you they aren’t as accurate as many think. If I had a contest where I took the top 10 names at Namejet and had a professional appraiser and a randomly picked reader guess the final prices at auction, I think the reader has a very good chance of winning. “These aren’t their true value” This is the problem. What is the true value? If an auction in front of the largest group of domain buyers on a daily basis isn’t, what is? Is it what the final end user would pay? If I own it and Michael Berkens own it does it have two values because he always gets higher prices than I do? Herein lies the problem. WE ARE ALL GUESSING.
Here’s how I explained domain prices to someone last month. Domains are like girls. All girls are different, no two are the same, even twins (they have different personalities). There are girls that pretty under the traditional view of pretty. Brokers are like a modeling agency and have a good understanding of what the general public will think is pretty and they choose to work mostly with those types of girls. But among all women are women that other men find attractive because all men have different opinions as to what “pretty” is. There are chubby chasers, tall lovers, guys that like athletic types, and thousands of other “looks” Domains are the same thing. There are names that are obviously nice names but it really comes down to how “pretty” somebody thinks it is. What you are seeing on Elliot’s blog are a bunch of ugly girls waiting for the one guy that will find them pretty.
Yes, I understand that there are names that have higher paying keywords or may be terms in a popular segment that give it more value. But even then, people are making up what kind of multiples should be used from this info. For every 5 people that are using comparables, I’ll give you 10 that are creating their price based on the buyer’s pockets. While I don’t know exactly how Rick Schwartz prices his domains but I can guarantee he could care less about comps or multiples. He’s trying to set the price for which all multiples and comps will be based.
To call somebody’s domain “pigeon shit” is like calling someone a fatty. One is bad for your pocketbook and the other is bad for your health, but neither is really bothering you. I cringe when I see overweight people. Not because they are lesser people but because they really have no idea how much better life would be if they lost the weight. I feel the same way about people who buy what I deem valueless names. It’s a shame that they don’t know better. That they could have spent their money more wisely. But who cares if a person spends $10,000 on junk names? I don’t give a shit. It’s his money. If he thinks they are worth $20,000 I don’t care either. I’m not buying the names so what does it matter to me.
I NEED people that think they know better than me. I need people to buy my domain because they think it is worth more than I paid for it. Most of our domain sales are between ourselves. Final users step in and buy quite a few, but the majority are purchased by someone who is going to try and resell it. To make the picture even more unclear take a look at the Sedo and Afternic weekly sales. Still think you know the value of a domain? You are lying if you thought that many of those domains would ever fetch the prices they fetched. Again, you aren’t appraising a name, you’re really appraising the amount of chances that someone with deep pockets will want that name. DUILawyers.com High, CrackdWindshield.info Low.
In short, every domain appraisal in my opinion is a guess. It’s like the weatherman. There are some guesses that are more educated than others but it’s still a guess. And like the weatherman, nobody is surprised when they are wrong but yet they still get paid to do it.