Appraisal tool offers impressive insights, but it’s not perfect — AI-powered domain

Appraisals offer good qualitative analysis, but you’ll get a different answer every time.

A number of people have mentioned a fresh automated domain appraisal tool to me this stretch.

Domain investor Howard Fellman created the appraisal tool at OceanfrontDomains using OpenAI.

Let me start by saying I like what Howard has put together. The prompts he created generate excellent qualitative analysis, counting commentary on what makes a domain valuable, possible uses, and discussions regarding scarcity.

I also understand why people like it so much: it tells them what they want to hear when it comes to value.

Domain sellers gripe regarding automated appraisals that they believe undervalue their domains. Create an automated appraisal tool that tells people their domains are worth a lot, and they’ll say they love it.

The final value range the tool spits out usually includes a modifier, such as saying the domain could fetch a certain amount to a motivated end user or a funded startup. The final value for each domain I ran through the tool was indeed significantly higher than other appraisal tools. Unregistered domains received appraisals exceeding $5,000.

Still, some issues may prevent the tool from being used directly to convince buyers of the domain’s value.

First, anyone who has used AI is aware that you receive a different response each time you interact with it. That’s certainly the case with the results you get from this tool.

If you tell a buyer to use the tool, it will pull up different sales comps, and the final number it spits out will likely be different from when you plugged the same domain in. (There’s no way to send a duplicate appraisal to someone.)

Other appraisal tools use formulas for valuations. While formulas can’t account for everything, they consistently yield the same result each time.

Second, I’m having a hard time verifying most of the sales comps. Few of them are in NameBio. When I asked ChatGPT to find a source for the domains not in NameBio, it can’t find any mention of them. When I can verify a comp, the date is often different from what the appraisal states.

It seems likely that OpenAI is hallucinating some of the sales comps. That’s a common problem with AI.

Howard is well aware of these limitations. The tool states:

This evaluation has been generated entirely by AI and is designed to demonstrate educational concepts comparing digital real estate to traditional property. It is not intended as an official appraisal nor as legal, financial, or investment advice. AI can make errors. It’s strongly advised to independently verify information, consult with qualified human experts, and conduct thorough research ahead of making any decision or taking any actions based on this note.

Indeed. AI is very powerful but has its limitations.

My bottom line: this is a great fresh appraisal tool domain investors ought to check out, but they need to understand its limitations.