Tips on buying a new website

1. Avoid eBay at all costs

eBay should sell websites with the words “Caveat emptor” (let the buyer beware) is flashing bold writing across the top of every screen. 99.99% of all websites up for sale at eBay are essentially attempts to sucker in people who know no better into buying crappy websites with no real value for an inflated price. There’s so much crap on eBay that it’s nearly impossible to discover anything of real value. The best places to buy websites and blogs from at DigitalPoint Forums (DP) and Sitepoint Forums (SP), with DigitalPoint providing better value at the lower end of the market

2. Avoid Impulse buying

I’m guilty here, I’ve bought websites in the past on the basis that they sounded cheap only to find that once I take possession I know nothing about the market they are servicing or even how to implement affiliate codes.

3. Do your homework

This is related to point 2 to some extent. If you’re looking to buy a website or a blog take the time to study the market. In my case I regularly take time out to read listings at DP and SP, even with websites I would probably never end up buying, just so I can get a feel for what’s available, going rates, interest in the sites and revenue and traffic potential for such sites. Most good listings include revenue and traffic screen shots: they’re a great way to learn about sites in each niche, where traffic comes from etc…

Also if you’re looking at a particular niche, look at the origin of a site, for example an Arcade Site might be based on a script that costs $97 to buy, or is available for free. I’ve seen Arcade Sites sell for $100 + with no revenue and traffic that were tweaked versions of a free script. If the buyers had known what they were looking at it would have been cheaper for them to set up the site themselves.

4. Know your multiples

Perhaps I’m a little obsessive on this point, but multiples are everything when you’re buying or selling. An average site sells for roughly 10-12x revenue, but different sites have different multiples, for example proxies generally sell for between 2-4x monthly revenue due to the high risk factor in them being banned. Web 2.0 sites with great coding often go for 20x monthly revenue and even higher, particularly when it’s difficult to replicate the site. Indeed uniqueness is a factor that increases multiples, turnkey sites are low, unique sites are higher. When you’re looking to buy a site, the lower the multiple on revenue, the better value the buy.

5. Reputation

Digital Point has an eBay style reputation system called iTrader that gives points based on being a good trader on the forums. Generally speaking someone with a higher iTrader score is more reliable, although having said that, such systems are a double edged sword, after all we’ve all got to start from 0 and there’s nothing worse than being told you cant bid on something because your iTrader score isn’t high enough.

6. Ask questions

Whilst you should have done your homework per point 3, don’t be afraid to ask questions. Admittedly you don’t wont to sound stupid either, for example I regularly see people ask questions like “how much space do I need to host the site on a shared server” for a proxy auction: proxies need VPS minimum but realistically a dedicated box. Sounding stupid makes you look like a sucker and unscrupulous sellers will take full advantage.

Often you see that sellers make claims relating to traffic and revenue that aren’t backed up with proof. By all means ask for proof, often they are happy to PM (Private Message) you the details. If they won’t provide proof you should avoid their auction.

Ask questions such as how long has the site been making $X. How old is it, where is the domain at, is there a backend CMS, how hard is it to update…all of these type of questions are relevant if the seller hasn’t detailed them in the listing. When I am a seller I try to cover all bases, but not all sellers have that level of experience and they are all questions you need to know when buying the site.

7. Closing time/ BIN

This isn’t an issue at Sitepoint as the auctions are listed with a closing time, but it’s a regular issue at DigitalPoint. If the seller hasn’t listed it ask when the auction will finish, and what the BIN (buy it now) price is. Also if the BIN in unrealistic (and it usually is in say 25% of auctions) ask if there is a reserve, or whether they will take private offers. I’ve picked up sites before by making a direct offer for a site that I thought was reasonable and to which the seller agreed, after all, who wants to go through a 4-10 day auction when you receive a good money now!

8. Timing your bid

This is the hardest part of buying by far, because you never know how quickly a site will reach BIN (presuming there is one). Look at the time the auction was listed and the interest in the auction in terms of bidding to date, and the value of those bids relative to what the seller is seeking for the site. Doing your homework per point 3 helps a lot with this. I recently missed out on buying 20 sites in a particular niche because I procrastinated. I noticed the auction just before I went to bed, thought I’d sleep on it. Next morning I decided to buy the sites, but just before I logged on, in came the Sitepoint auction notice email stating that they’d reached BIN. The price being asked was a total bargain and I should have bought them the night before. General rule of thumb is that you don’t bid too hard until near the end of the auction. Bidding early can cause a bidding war and you end up with a price that you didn’t have to pay. But then again, if you see a bargain, knowing what you’re looking at, go for it.

There are probably a whole pile of other tips I could share but I’m not paid enough to continue this post -) If you’ve got any tips, feel free to share them in the comments, and good buying!

The Advantages of Buying A Website

The big advantage of buying a site is you don’t have to establish an audience and wait for the site to be indexed within search engines. Most webmasters, even those that don’t know their SEO from their XML, will understand the benefit of link exchanges. Even the most poorly managed sites should have some form of backlink network developed and return a result in the major search engines. It may not be a top ten search result but it will be a result ready for you to optimize and improve.

Taking over a mature site (at least 12 months old) will mean you avoid the Google sandbox, a significant perk of buying established web property. Of course it really depends at what stage you take over a website as to how much of a step-up you gain and will no doubt reflect how much the owner will expect to receive for it (traffic for cash in simpler terms, but there are other variables to consider when selling a website).

Top 7 Website Acquisition Strategies

Before undertaking a search for a website acquisition a smart web entrepreneur will stop and have a good think about what she wants the site to do and how it will fit within her overall web business strategy. Here is a list of the top 7 strategies to consider when buying a new website:

  1. Buy a site that has targeted traffic for a product or service you already produce or sell. You can direct traffic from the new site to your products/services through advertising, email lists or sales pages. This is a great way to establish a customer base very quickly but you have to be confident that the traffic is quality, targeted traffic. Don’t fall into the trap of buying a high traffic site that consumes lots of bandwidth but doesn’t have the type of user you can leverage for revenue, otherwise you might be buying a liability, not an asset.
  2. Buy a site to generate advertising revenue. In this instance you might not change the site other than by working to increase the amount of traffic and improve the performance of advertisements on the site. Sites with lots of good content but are poorly optimized are perfect for this strategy. Once you own the rights to the content you can then further leverage it by repacking and republishing the content in other ways – perhaps information products, article marketing or as free give away enticements to join an email list.
  3. Buy a site specifically to flip it quickly. This is perhaps the most risky venture (day-trading!) because you need to find sites that are clearly underperforming with the potential for a big upside result after you complete your renovation. Ideally you should locate e-commerce sites selling a product that has an established market that is only just starting to take off online AND the current owners are not good at search engine optimization or online marketing and are willing to sell.The theory is that you can quickly implement your changes, tweaking a few percentage point increases in multiple areas, resulting in a good double figure increase in sales in a short period of time. If you can complete your work just before the general marketplace catches up you can make a mint by selling the site at a premium before the Internet becomes saturated and your early mover advantage is eroded or the market slows.The web is one of the fastest industries in terms of competitive action due to the very low barriers to entry. To execute day-trading style website buying and selling requires an entrepreneur with their finger on the pulse of the web. They must be in tune with what’s new and willing to gamble on what’s going to be new tomorrow in order to have success.
  4. Purchase a community driven site. A site with a massive forum filled with a nice target niche audience can be a gold mine to a entrepreneur. Often these sites were built by hobbyist fans, not aimed to profit in any way. Their website might have ballooned in growth to the point where the bandwidth is costing them a lot each month and since they are not skilled in website monetization they will be willing to sell the site at a bargain price. This can be a great strategy to make advertising revenue but be very careful with audience selection. Some forum communities are very difficult to make money from and may end up costing you more in ongoing hosting fees. Ideally choose a community demographic that has established high keyword prices in AdSense/high value to advertisers (electronic gadgets for example), has a good selection of affiliate products you could market or suits some products or services you already sell yourself.
  5. Look for a site operating in a highly popular keyword niche or one you expect will become popular in the near future. Keywords drive search engine traffic and if you can pick the trends before they become trends you may own some valuable property. Consider if you could guess what tomorrow’s “blog” or “podcast” will be and buy the sites with established keyword rich content before they become mainstream topics and overpriced.
  6. Remove the competition or merge with the competition. In this case you buy competing websites or negotiate a merger to combine with them to create one large enterprise. Depending on the industry you operate in this can be a very smart strategy to create market dominance. One of the best examples is website hosting. Often smaller hosts are bought up by larger hosting businesses with the result increased stability and professionalism.
  7. Purchase a site strictly for the domain name. Obviously in this case you don’t care too much about what is already developed in terms of website content, you just want the street address (URL). Imagine a few years ago if you purchased mp3.com or blog.com. In this case the address itself is of significant value regardless of the website, or if you are good at picking trends, you might see the future value in a domain name before the market realizes it.

There are many other options available for how to use a new website acquisition and of course what you do with a new website and what type of website you search for will depend on your skills, the industry you operate in and your cash to spend. Remember to take some time listing a few goals you want your new website to achieve and strategize exactly what you will do with the new website before you buy it.

Investing Time And Energy Into Your New Website

Make sure you have the time to manage your new investment in web property. Remember just the transfer process and daily maintenance of your site will take time and energy and if you don’t have it available now then maybe you should hold off making the purchase. It would be a shame if your good intentions to improve a website result in you instead killing it because you don’t have the time to maintain the status quo. Remember a new website comes with new responsibilities, for example support emails and phone, server maintenance, SPAM control and the usual day-to-day activities of a webmaster. Don’t get caught up in the excitement of the purchase making you blind to the reality of how much additional work will be added to your daily activities.

Where To Locate Websites For Sale

I could point you in the direction of a few good website trading sites (this article has some links – How To Sell A Website) but you will be very lucky if you find a bargain there. To find good sites you have to search deep into the web. Use the main search engines to find websites operating in an industry you feel confident buying into. Don’t look for the big sites, the sites on the first few pages of search results unless they show clear potential – perhaps in industries with low competition so “bad” sites show up in the first page of search results. Professional or popular keyword sites are usually too expensive, well managed (they wouldn’t appear in the first few pages of the search results if they weren’t) and the owner likely won’t be interested in making the sale or will be looking for six figures if they are.

You must look deep in the search results. Find the solo-webmasters that perhaps don’t take their site too seriously but have been diligent over the years adding content consistently, if not in large quantities. You need to find the good sites with potential, not great sites already optimized or poor sites going nowhere. The more research you do during the search phase the smarter buy you will make. No matter how much time you put into the search it’s going to be gamble when you do decide to buy. There are just too many variables to consider and control, but by being smart and patient you reduce the risk.

Buying The Website

Once you find a good site that meets your criteria start monitoring and researching it. Check backlinks, investigate it’s history (try the Wayback Machine) and if the site has a community (forums, chatrooms, comment system, helpdesk, etc) see what goes on there. Check the site design, the structure of the links, headings, titles and keyword density. Check the site statistics if they are available (look for those little webstat icons or try Alexa rankings).

Once you get a good feel for the site and you are interested in buying it’s time to contact the owner. You should be able to find an email address for the website owner somewhere on the site, if you can’t do a domain name lookup in the WhoIs database where you will find the email address for the person that registered the domain. Remember some websites will simply be hobbies for the owner which will make the purchasing process that much easier, while others will be fully fledged businesses making the transfer process just that little bit longer (think about business registration and incorporation detail transfers – now consider you may not even be located in the same country!).

Start casually by introducing yourself to the owner, state you like the site and then slowly gauge how much interest the owner has in their web property. Eventually you are going to have to express your interest in making a purchase and you can spend as much time as you like communicating with the owner to negotiate a deal. Like with buying anything, the negotiation process can be laborious as you gather the information you need to calculate a price. This process can be swift and easy or slow and painful depending on your attitudes and the willingness of the owner to make the sale and release private information about their website. You will need to know details like website statistics, revenues, and costs, all information that the current owner may be hesitant to give out (see How Much Is Your Website Worth? for a discussion of important website metrics when determining the value of a site). Demonstrating your sincerity at this point will go a long way in helping you to divulge as much information as you can order to properly evaluate the website.

If you are lucky the owner of the site may simply be so excited that their website will make them some money that a few hundred dollars will seal the deal, others, the more savvy owners will realise the value of their asset and you might have more difficulty negotiating and will pay a higher price. Remember you are never under any obligation to buy so don’t force yourself to offer too much because there are plenty, literally millions, of other sites out there.

Don’t Forget The Little Details

When you finally agree on a price don’t forget to look after the little technical details as you manage the transfer of ownership. Here is a list of some important factors:

  • Transfer of the domain name registration details, the business name, incorporation information, hosting ownership and any third party software or subscriptions to your name. Check that everything, absolutely everything, has your name on it by the time the deal is done.
  • Get a contract made up outlining the deal and have all parties sign and date it. Also consider creating a clause stopping the previous owner starting up a competing site immediately after the sale.
  • Download the email lists. Download the email lists. Download the email lists. There is nothing more important in a web business then the mailing lists so make sure you have these safely in hand with backups.
  • Outline how much support, if any, will be provided by the ex-owner for a transition period. Having the owner available for questions for a few months after the sale can make the transfer less stressful.

Buying A Website Is A Very Effective Entry Strategy

Given the time it takes to get a new website off the ground because of issues like the Google Sandbox and the amount of work and effort it takes to create a site, produce content and build backlinks, the prospect of buying a ready established domain and website is very appealing. If you have a sound understanding of search engine optimization and the industry you work in online, you should have no problem finding under optimized websites, or perhaps fully fledged web e-commerce businesses to buy. By adding content, fixing title tags, linking structure and all the other good search engine marketing practices you can very quickly start reaping rewards. Sites with quality traffic but no monetization strategy are huge opportunities ready for you to step in, stick some advertisements up, use your AdSense optimization skills and boom, start profiting immediately. Alternatively you might look for sites that augment your existing web enterprises and purchase the targeted traffic to effectively “buy customers”. No matter what your strategy, the web is ripe with opportunities for smart investors and you don’t have to have a wallet the size of Rupert Murdoch’s to start buying and profiting.

http://www.stuntdubl.com/2006/02/20/website-valuation/

When buying a Blog

  • Domain Name: There is something in a name and the name means money. If your domain name is easily recognized and remembered, it will add to your blog’s value. Does the blog title match the domain name? Buyers take these things seriously into consideration.
  • Date Blog Established: The age of the domain is important to Google PageRank.
  • Google Page Rank
  • SEOMoz.org Pagestrength
  • Technorati Ranking
  • Alexa Ranking
  • Yahoo and Google Top Keyword Search Results: Which search terms bring in the most traffic consistently.
  • Branding: Name recognition and value.
  • Transferable Revenue from Ads: Include information on ad contracts and arrangements as well as amounts.
  • Web Traffic Statistics: Averages for the past week, month, three months, six months, year, and farther if available.
  • Recent Traffic Spikes: List recent heavy traffic spikes from mentions in Digg, Slashdot, Wired, Engadget, etc.
  • Consistent Return Traffic Levels: How many consistently return for more?
  • Feed and Feed Subscriber Statistics: How many subscribers? What type of feeds and how many are offered. Does the blog include category specific feeds?
  • Unique Visitors Statistics
  • Market Specific Content Description: Is the blog industry or marketplace specific, serving a focused group?
  • Number of Posts/Articles
  • Number of Comments
  • Demographics: Who needs this blog and returns frequently?
  • Google Inbound Links: Be honest. This is easily checked. Do not include intra-site links as inbound links. Only external sites linking to the blog.
  • Incoming Link Sources: Where are the most links coming from?
  • Inclusion in Blogging Networks and Social Bookmarking Networks: Is such inclusion transferable?
  • Email Lists/Subscribers: Does the site come with any subscribers via email? How many? How often are they contacted?
  • Newsletters: Does the blog offer newsletters? How many, how often, and what is the content? Does it soundly integrate with the blog or totally separate?
  • Forum Included: Is there a forum or discussion/chat area included in the blog? What are the statistics and assets associated with the forum?
  • Press Coverage: Some blogs and bloggers are now becoming sources for news as well as news themselves. Have the blog been featured in recent news stories or reports? Is it frequently quoted or listed as a resource in news stories?
  • Events Associated With the Blog: Are there any special events, conferences, or regularly scheduled events associated with the blog and expected to continue? Has it consistently participated in the Blog-a-thon or reported on an annual technology conference?
  • Sponsorships: Has the blog sponsored events or programs or other business entities or blogs? Is it affiliated through promotion, reputation and business relations with other commercial entities?
  • Inventory of Assets: Web page design, Plugins, comments, written and image content, audio and video files, programming files, downloadable content, archives, and related content and code are included in the sale or not?
  • Inventory of Intellectual Property: Copyrights, licenses, customized programming code, trademarks, etc., are included in the sale or not? What are the agreements for transferring the licenses? Handling renewal fees, etc.?
  • Host Server Agreement Transferable: Is it included or not? Describe hosting agreement and features.
  • Syndication Rights and Agreements: How syndicated and to whom.
  • Your Participation After Sale: Will you stay or leave, share control, give up control, continue to participate in some way. Outline specifics for your involvement, if any.
  • On-site Content Used and Referenced by Off-Sites: Does the blog host images, Plugins, scripts, tools, or other content for use on external blogs or sites? How is this maintained?
  • Unique Content: Is the content unique and original or mostly link lists and blockquotes?
  • Current State of the Blog: Is posting ongoing and current or old and dated? What is happening today with the blog?
  • Posting Frequency: Has a pattern been established for post frequency? Do readers expect content published on a regular basis? When?
  • Content Freshness: How “timely” is the content? Does it go out of date quickly or is it long lasting?
  • Competition: What is the blog’s competition and how does it measure up?
  • Blog Authors: Is there only one blog author or multiple bloggers contributing. How will the sale impact them? Do they come with or not? What are the rights to their content? Are the copyrights transferable?
  • Non-competition Agreement: Will the blog seller be restricted from creating a similar blog in the near future after the sale? If so, how long is the restriction? Or no such agreement will be made?
  • Use of Inventory After Sale: Can the new owner use the same program, programming code, and content? What are the long time permissions, fees, and agreements that need to happen to permit such use?
  • Blocks or Blacklists: Has the site ever been listed on any spam blacklists or blocked in any way? Explain why and how it was removed from the blocks and lists.

http://deanhunt.com/buying-a-website-rant-part-three/

18 Comments »

  1. [...] very nice post on buying websites as well as an interesting article on successful domainers – hat tip to kid disco the [...]

  2. [...] very nice post on buying websites as well as an interesting article on successful domainers – hat tip to kid disco the [...]

  3. Wow, just found you via Todd’s friday links… a pretty impressive post that will go into my “TO READ” for a long time… guess i’ll switch back to this post a COUPLE times again in the future :-)

    cheers,
    presellpageman

  4. http://www.intelligentmarketinvestor.com

  5. funny said

    Had some thoughts about this a couple of weeks ago, but..as always i tend to forget things like this.

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  7. anastasia said

    Dear Sir., Madam

    My name is Anastasia, I am a manager of a business organization which provides advertisement in Internet . As far as our firm is quite young so we need to increase a number of our clients. To have more clients we would like to by one of your news letter services or even to buy a website with newsletters if it is possible. We would be really glad to have a business with your organization. You are welcome to choose your price. If you decide to sell us your service answer my letter, please. If you are not interested in it answer too, please .May be you know organizations that can sell us a website if you can not , please tell me.

    Best regards
    Anastasia.

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