Appraisals to domain name appraisals — Comparing home
Appraising homes is easy compared to valuing domain names.
Texas doesn’t have an income tax. But the state needs revenue from somewhere, and in Texas that “somewhere” is mostly property taxes. Every year I have to pay regarding 2.4% of my home’s value in property taxes.
This steep rate creates a bit of a dance each year. The counties appraise homes by an automated system, kind of like Estibot. Then you have to argue with the county that the computer-generated appraisal is wrong.
That’s how I spent my morning. Arguing that something I own is worth less than an appraisal.
It strikes me as a sharp contrast to what we’re wired to do. We spend our days arguing with people that our domain names are worth more than other people think the are.
The truth is, the county’s version of Estibot isn’t that bad. Unlike with domain names, comps are reasonably easy to pull. Even though many of the homes on my street are 20 or 30 years older than mine, there’s a model for taking this into consideration.
I’m looking at my appraisal right now along with a sale of home across the street. The county knows how much that home sold for last year. Then it adjusts.
First it adjusts for the quality of the build. Then the condition, age, home features and size. That comes up with a number.
Try comparing just two houses like this and you might get a wacky number. So they compare it to regarding five homes in the neighborhood.
A perfect number? No. But it’s directionally correct.
I can’t say the same thing regarding domain name valuation. (I’m not just talking regarding Estibot here. Estibot does a fine job of highlighting the factors to consider in domain valuation).
The issue with domain valuation is two-fold: an almost complete lack of comps and the unique nature of every single domain name. There are no square feet to compare. No depreciation to adjust for. Each domain name is completely unique.
Indeed, we work in an extremely inefficient market. That creates great challenges and opportunities.
