Have you tried Appraiso?

[gr8names]

My feeling is most confound value and sell price.

I agree with this 100%.

I said it before, and I will say it again. The value of any asset is the price you can get for it, if you had to sell it immediately, not how much you could sell it for if you had to wait for the ideal buyer. Consider this definition:

Liquid Market - Assets can be sold rapidly, with minimal loss of value. The essential characteristic is that there are ready and willing buyers and sellers at all times.

​

Does this better describe the end user market or the reseller market? And, I don't mean for just the diamonds in your portfolio. I mean for every one. If you had to sell your entire portfolio today, do you honestly think you could find an end user for all or even a majority? I know I couldn't. If I could I'd be turning over my portfolio daily.

I stand by my assertion that the value of a domain is its reseller price. I'm willing to bet most accountants would agree. Now if we could only agree on reseller prices. LOL

These tools use to provide a statistically fair estimation of value of generic domains.

I would disagree that their accuracy is good for any but the smallest faction of names. As others have pointed out, there is just too much deviation in the end user sale prices utilized to create the statistical models. The attribute vectors available right now just aren't able to avoid overfitting.

When serious natural language tools, like those already used by the financial markets and the spooks, get thrown into the mix we will see an increase in accuracy. I guess it's a good thing there is still a lot of red meat in the equity markets for the quants.

 

[katherine]

The bank can appraise the value of my home without knowing how badly I want to sell it, how good my real estate agent is, or whether or not there is someone that absolutely has to have the property at 46 Walnut St. There will be outliers in home sales transactions, but ultimately the value and sale price across all home sales will be statistically correlated but probably not equal.

Domains are often depicted as virtual real estate but it's not a very good comparison.
A domain name is more like a unique piece of art.

- The reseller market is liquid and stable compared to the end user market.

Domain names are a great investment, but liquidity is a problem. There is a stable reseller market for certain types of domains like LLL.com or strong generics where value on the reseller market is predictable. But for pretty much anything else, liquidity is very low. Unless you're willing to liquidate decent domains at very low prices. Domain names are not commodities, not everybody needs one. Even those who need one will most often handregister an available domain.
In domaining supply by far exceeds the demand, in fact the vast majority of domains are worthless in terms of resale value.
If you compare that to real estate, even in the current depressed market every home has a minimum value. Everybody needs housing.

My feeling is most confound value and sell price.
These tools use to provide a statistically fair estimation of value of generic domains.

There is something else that a bot cannot do: estimate the likelihood of a sale.
You can attempt to deliver a more or less meaningful appraisal price but if there are no end users in sight it means very little.
I think that only human experience and analysis of the market can answer that question. You have to know who and where your potential customers are.
An appraisal is just theory, it doe not mean the domain is likely to sell. That is a critical factor that the bots and the newbies ignore.

The point is that in order to appraise a domain, you also need to look at the market as a whole.
You can have a decent domain with encouraging metrics but no end users. For example adult webmasters are notoriously cheap. So you may have a great domain but nobody willing to pay fair value, whatever the reasons: tight wallets, lack of funding or bias against resellers. For the purpose of selling domains you have to pick the right industries and niches, and avoid those where demand is probably limited. Value and demand go hand in hand.

There is a real need to can quickly estimate the value of domains

I know that some people use appraisal tools to filter through droplists. But it's a very raw form of filtering that is completely different than an accurate appraisal of a given domain. Perhaps it's the only valid use for a bot. I would never use a bot to buy, sell or even renew or drop domains.

 

[gr8names]

Katherine,

I am still unclear as to whether or not you think there is a distinction between current value and a predicted sale price at some arbitrary future time?

 

[brian1234]

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Katherine,

I am still unclear as to whether or not you think there is a distinction between current value and a predicted sale price at some arbitrary future time?

I know you're not asking me but the question is moot,
because with automated valuations you may as well be
plucking a number out of thin air!..

 

[gr8names]

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I know you're not asking me but the question is moot,
because with automated valuations you may as well be
plucking a number out of thin air!..

Actually, I'm more than happy to hear from anyone. But, my question doesn't have anything to do with automated appraisals.

 

[brian1234]

Actually, I'm more than happy to hear from anyone. But, my question doesn't have anything to do with automated appraisals.

Oh yes, yr comment about "predicted sale price at some future
arbitrary time"... What does that have to do with anything?!

A 'predicted' sale price, sounds like our dear friend, the Bot,
and "future arbitrary time"?! What does a future price have
to do with anything?

You were saying that you thought a domain is only worth
what you can sell it for today, and Katherine explained to
you that it's not as simple as that...

 

[gr8names]

When your company generates a balance sheet for its stake holders, what value does it place on its domain portfolio under the assets heading? Is that value based on the current market conditions that day, or some ideal market conditions that may or may not ever come to fruition?

 

[katherine]

Katherine,

I am still unclear as to whether or not you think there is a distinction between current value and a predicted sale price at some arbitrary future time?

This is what you said earlier:

The value of any asset is the price you can get for it, if you had to sell it immediately, not how much you could sell it for if you had to wait for the ideal buyer. Consider this definition:

Liquid Market - Assets can be sold rapidly, with minimal loss of value. The essential characteristic is that there are ready and willing buyers and sellers at all times.

​

In practical terms, the vast majority of all domains have no value on the reseller market so by that logic they should be deemed worthless. Except for uberpremium domains or short domains like LLL.com, that are always in demand on the 'immediate' market. Still, a LLL.com domain can sell for 5K on DNF and then be sold for 25K to an end user in the future. So even for that class of domains there is a gap between reseller (immediate) and end user (long term) value. My personal conclusion is that we are talking about two different markets, most of the time.

Domain names are intangible assets like intellectual property, as such they can be assumed to have value for accounting purposes, even if they currently produce no revenue.
But obviously no automated tool can help. In fact they are useful for nothing (other than scanning droplists perhaps).

IAS 38 INTANGIBLE ASSETS

Recognition criteria. IAS 38 requires an entity to recognise an intangible asset, whether purchased or self-created (at cost) if, and only if: [IAS 38.21]

it is probable that the future economic benefits that are attributable to the asset will flow to the entity; and
the cost of the asset can be measured reliably.

This requirement applies whether an intangible asset is acquired externally or generated internally. IAS 38 includes additional recognition criteria for internally generated intangible assets (see below).

The probability of future economic benefits must be based on reasonable and supportable assumptions about conditions that will exist over the life of the asset. [IAS 38.22] The probability recognition criterion is always considered to be satisfied for intangible assets that are acquired separately or in a business combination. [IAS 38.33]

If recognition criteria not met. If an intangible item does not meet both the definition of and the criteria for recognition as an intangible asset, IAS 38 requires the expenditure on this item to be recognised as an expense when it is incurred. [IAS 38.68]

Business combinations. There is a presumption that the fair value (and therefore the cost) of an intangible asset acquired in a business combination can be measured reliably. [IAS 38.35] An expenditure (included in the cost of acquisition) on an intangible item that does not meet both the definition of and recognition criteria for an intangible asset should form part of the amount attributed to the goodwill recognised at the acquisition date.

Reinstatement. The Standard also prohibits an entity from subsequently reinstating as an intangible asset, at a later date, an expenditure that was originally charged to expense. [IAS 38.71]

 

[brian1234]

When your company generates a balance sheet for its stake holders, what value does it place on its domain portfolio under the assets heading? Is that value based on the current market conditions that day, or some ideal market conditions that may or may not ever come to fruition?

If you're asking how a company ascertains the value, it
does so by having those assets MANUALLY VALUED, by
a certificated valuation expert, or if it is allowed, an
industry 'expert' like Sedo.

I am in the UK, and i'm sure the tax authorities do things
a little differently in each country, but as Katherine has
alluded to earlier in this thread, the US's IRS will not
accept automated valuations; they know that they are
meaningless and have no bearing on a true valuation.

The value that is placed on domain assets is usually
reviewed/re-appraised each year, and entered on a
company's balance sheet...

 

[DomainingCom]

The horrible liquidity of domains it's the huge difference between real estate and domaining.
There is clearly 2 markets, reseller and end-user and almost anything between.

Personally I will accept to say the real value for asset valuation is the value for the reseller market.
My experience shows that is at best 5 to 10% of end-user value (except for the best ones).

It's also true that a very large percentage of names have strictly no value in the reseller market like Kathy say.
It's what I call the lottery effect, they have no value but at anytime one of them can sell as it could not sell for ever.

 

[gr8names]

Katherine,

Thank you very much for the thorough reply. I am pleasantly surprised that most of the confusion may just be the result semantic confusion. We may not be as far apart on this issue as it would appear on the surface. I would've used the term intangible earlier if I thought anyone else was thinking GAAP.

I'm still a little unclear about how you value your portfolio still. (By all means, if you don't want to tell me just tell me it isn't any of my business, because it isn't.)

You said,

Domain names are intangible assets like intellectual property, as such they can be assumed to have value for accounting purposes, even if they currently produce no revenue.

But your bold sections of the IAS 38 standard, and your earlier comments make me think that you are expensing domains and not reporting them as intangible assets, since "The probability of future economic benefits must be based on reasonable and supportable assumptions about conditions that will exist over the life of the asset." Or am I wrong?

If you are reporting them as intangible assets then you must have "reasonable and supportable assumptions about conditions that will exist over the life of the asset." While this valuation can never be exact, it's going to be an educated guess (made by an expert) based on those two key words ""reasonable and supportable" evidence. This does not mean "gut feelings," the seller's sales skills or an individual buyer's motivation. These latter things clearly influence a domain's final sale price. I'm still not convinced they should be factored in the value.

Of course if you don't think there is a difference between the two, then the discussion is pointless. (But always fun. )


Brian,

I'm sorry if I wasn't clear earlier. I have not been arguing the merits of automated vs. manual appraisal for some time. I'm trying to determine if there is a distinction between a domain's value at a specific point in time and the price you predict it may ultimately sell for.

 

[David G]

Since you don't really own the domain but just pay a yearly renewal fee to control it I can't see how it could be considered an asset beyond reg fee regardless of how premium it may be.

Maybe that is incorrect but it makes no sense to me how something owned by a third party can possibly be considered your asset especially since ownership can be legally stripped away from you by Wipo or by the registrar agreement over various legal or rule violation issues. How can it be an asset in view of that?

 

[Domainster]

Currently Estibot values the following Domains as so:

Sedo: $17,000 USD
Appraiso: $5.00 USD

Valuation/appraisal might be off a bit on at least one of those .. Eh ?

What values does Appraiso calculate for these 2 domains (I have not signed up) ?
---------------------------

EDIT: I totally realize that Sedo & Appraiso are businesses (with one much bigger & established than the other) and not just domains in the big picture... but still.......

 

[katherine]

Maybe that is incorrect but it makes no sense to me how something owned by a third party can possibly be considered your asset especially since ownership can be legally stripped away from you by Wipo or by the registrar agreement over various legal or rule violation issues. How can it be an asset in view of that?

A car is an asset too, it's even property. But if you use it to sell dope downtown and get busted by the cops it will be seized too

 

[gr8names]

I would compare it to leasing a building or a vehicle. To summarize the rules in the US:

If a lease effectively transfers the “risks and rewards” of ownership to the lessee, then the applicable accounting rules dictate that the lessee account for the leased asset as though it has been purchased. The lessee records the leased asset as an item of property, plant, and equipment, which is then depreciated over its useful life to the lessee.

Source: http://www.principlesofaccounting.com/chapter10/chapter10.html#Equipment


For the record, my corporation has been expensing domains for the last 13 years. We have been reporting other intangible assets this entire time, but until recently every domain we purchased was intended for internal development and not for resale.

 

[David G]

A car is an asset too, it's even property. But if you use it to sell dope downtown and get busted by the cops it will be seized too

Like comparing apples and oranges since you own the car but do NOT own the domain but merely rent it on yearly basis..

 

[George Verdugo]

i tried it with Casas Baratas .com i put in what the site is making and how much uniques i receive and it said my site is worth over 546,000 for it!

 

[David G]

The horrible liquidity of domains it's the huge difference between real estate and domaining..

That's for sure and a giant negative to this business. Domain liquidity is almost zero with even ultra premiums having no liquidity at any given time.

 

[silentg]

i tried it with Casas Baratas .com i put in what the site is making and how much uniques i receive and it said my site is worth over 546,000 for it!

My site was worth $300,000. I don't know what multiple it uses. How can he seriously expect someone to pay to get a ridiculous appraisal?