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Testing Appraiso.com Appraisals On a Parked Domain

March 6, 2012

In recent news as covered by DNJournal, entrepreneur’s Morgan Linton and Daina Burnes launched Appraiso.com, a new automated website appraisal service.

Upon signing up to scope things out, my first thought was to do something unorthodox and test the system by evaluating a parked domain instead of a developed website.

I know the software was obviously not meant for this, but testing a system on something it wasn’t designed for can sometimes reveal useful insights.

Moreover, I’m just curious and don’t like to do things by the book.

Here’s a screencap for the Appraiso appraisal of my domain i-covergirl.com

Appraiso.com

dear Germany, can we get a second opinion on the domain value? ... please?

The domain has been parked with Above.com, and you can see its traffic and revenue metrics which I input in the fields to the left side.

It looks as though Appraiso has given a valuation of roughly four years current revenue.  For developed sites, I believe the traffic and revenue are assumed to be more stable than parked domains, so this may well be in line with what buyers are willing to pay. I’ve read that from 3 to 5 year multiples are in the norm.

Let me stop and say that I am not an expert in the area of buying and selling developed sites, at all.  I’m just going on what I’ve observed generally from following newsletters like Rick Latona, and discussions on forums and blogs.

Having recently advertised i-covergirl.com for sale on some forums, and based on feedback I’ve gotten, I feel comfortable saying that most buyers of parked domains right now are looking to pay more in the ballpark of 1 to 1.5 years revenue, which would be significantly less than the above appraisal (understandably so).

Back to Appraiso: I’m sure the system is more complex than simply calculating revenue multiples.  For example. in trying to reverse engineer the black-box (whatever the proprietary algorithm Appraiso is using), I would be inclined to guess that the parked domain’s having zero overhead (monthly revenue – monthly profit = 0) may have added some weight to this valuation.  It’s just a guess, and may not be correct.

On another note, I would also be curious as to how the Appraiso system evaluates push-button websites like that provided by Epik.com, or the new BankAds.com platform, not to mention hybrid parking solutions like SmartName shops.  All that’s required in these cases is to point your DNS to the platform.  On one hand the output is considerably more robust than pure parking, since they dynamically create sub-pages that populate with content to get indexed by search engines.  Yet they are not traditional websites in the true sense, but more of a hybrid.

Perhaps this illustrates the point as to why there is no one size fits all equation for valuating web properties and why automated appraisals are generally frowned upon by domainers – an obstacle that any such system must surely seek to overcome.

In any case, congrats to Morgan and Daina on the successful launch of their new business.  I look forward to testing appraisals on some of my developed domains proper-wise in the future..

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