Website Flipping – How to Buy and Sell Websites
Website Selling Checklist
The process of selling a website has many moving parts. Getting just one part wrong or missing a step can often mean a lower final closing price, or possibly not even making a sale.
Selling a website is usually the culmination of months and months of work. Getting it right is your chance for a “big bang” payday.
Here’s a checklist to help you make sure you have all your bases covered when you list your website for sale.
Systematize & Remove Yourself from the Equation
The first and most important step you need to take to prepare a website for sale is to remove yourself from the equation.
Website buyers aren’t interested in buying a website if you’re a key component of its operations. If the site will fall apart when you leave, your website is essentially unsellable.
This problem can come in a couple forms.
First of all, if you’re the primary or only content creator, that’s a big problem. Start moving your content production to other writers as soon as you can. Establish a system of generating content rather than doing it all yourself.
Any other tasks that you perform yourself should either be outsourced or clearly documented. Simple tasks like approving comments can simply be documented and passed to the new owner.
Complex tasks that require special skills however can make selling your site tricky. Try to have all such tasks outsourced to someone competent in that area. That way you can just pass on the outsourcer relationship to the new buyer, instead of having to train the buyer in complex new skills (or losing the buyer altogether.)
In short, remove yourself from the equation wherever possible.
Website Statistics
There are a few different sources of website statistics you can publish.
The most ideal source is Google Analytics data. Google Analytics is the most trusted data source for website buyers. Flippa also allows you to send Google Analytics data directly to their servers to have it verified. That also increases trust.
Another source of data you can use are server logs. This is traffic data pulled straight from your cPanel, usually sorted with a program like AWStats that turns the raw information into readable form.
Generally, website buyers are rather suspicious of stats generated by systems they’re not familiar with. If you can use Google Analytics, you’ll be much better off.
Try to have at least 60 days of data before trying to put your website up for sale.
Proof of Revenue
Another critical aspect of selling your website is being able to prove every cent you claim to earn.
Remember: If you can’t prove it, they won’t believe you have it.
The two easiest sources to prove are Google AdSense and Amazon Affiliates revenue. Most website buyers are familiar with both of these sources (especially Google AdSense) and know how their interfaces work.
If you have custom revenue streams, such as sales in your shopping cart system or private advertisement deals, that can be a lot tougher to prove. Take screenshots of the payments to your account and do everything you can to document your revenue.
Try to upload month by month revenue, rather than just a snapshot of your website’s revenue to date.
Research Comparable Multiples
What should you price your website at? What should your BIN price be?
The only way to find out for sure is to research comparable prices.
Researching comparables for online websites is a bit tricky. A lot of people assume that “comparables” means “comparable multiples for the industry you’re in,” but that’s often not true.
A solar panel website that makes money via AdSense and is 6 months old has more in common with another young AdSense website than an established 3 year old solar panel website.
Look at websites that share these characteristics with yours; in this order of importance:
- The amount of revenue per month.
- Method of monetization.
- The type of traffic that comes to the site.
- The amount of maintenance the site needs.
- Age of the site.
- Stability of the industry or topic.
- The actual industry or topic.
Often you won’t be able to find direct comparables; instead you’ll have to look at 5-10 similar sales to get a sense for where the market is at for a site like yours.
Describe the Maintenance Process
One of the most common questions buyers will ask sellers is “how much maintenance does this site need?”
Here are a few things you should make sure to address when you’re selling your website.
- How much time you personally need to put into the business every month. Naturally, a business that requires 1 hour a month to maintain is much more attractive than a business that takes 40 hours to maintain.
- Any special skills required to maintain the business. If the new owner needs to understand database programming to run the site, that’s something they’ll want to know about.
- Where the content comes from. Are you writing the content yourself? If so, you can expect a steep discount from your site’s price. If you’re outsourcing the content, describe the outsourcing process. What are you paying? Will you pass on the contact info of the outsource?
- What’s the relationship between your business and your advertisers like? Is there any risk of them losing advertising revenue when you leave the business? Is the business relationship a relationship with you or with your business? Address this concern upfront.
Put your buyer’s mind at ease by making sure they know they’ll be able to run the business even after you’re gone.
Describe the Technology Used
Some of your buyers will be technically savvy, some won’t. In either case, your buyer is going to want to know exactly what drives your site and what kind of skills they need to maintain it.
If you’re running a non-standard system, which means just about any CMS other than WordPress or direct HTML, you need to talk about that upfront. For example, if you’re running Drupal or Joomla, it may be a good idea to put in a short paragraph about how the system is maintained and what (if any) technological skills they need to maintain the system.
If you’re using any limited-license plugins, you should disclose that as well. Once a CMS system is transferred from one web host to another webhost on a new installation, that usually requires a new license. A buyer needs to know that upfront.
For example, if you’re using a paid content scraper for WordPress, the moment you transfer the site to the buyer’s web host, your old license may become invalid. They’ll have to pay for the new license and potentially go through a complex installation process.
Make sure you explain exactly what technology is used in every part of your business. The main goal of this is to make sure your buyer is comfortable with the systems they’ll need to run if they buy your business. If you don’t describe this clearly, you’ll lose most of your non-techie buyers simply because they’re afraid of touching your systems.
The Traffic Sources & Types
Make sure you give a clear description of where all your traffic comes from. This is especially important if you have any unusual sources of traffic coming in.
If your traffic is mostly from SEO, letting your buyers know that will usually suffice. Make sure you have proof of SEO traffic in your traffic stats.
On the other hand, if you get a lot of traffic from other sites, you need to carefully describe how you get that traffic and how the system is run. You need to reassure the site buyer that the traffic will continue to flow in even after the sale is completed.
Buyers can be very wary with traffic systems they don’t understand. Ease their fears as much as you can with clear descriptions.
Describe the Transfer Process
There are two main steps to transferring a website: The financial aspects of the transfer and the technical aspects of the transfer. Your site description should clearly describe how the transfer process will work on both ends.
The financial transfer usually falls into one of two categories: With escrow or without escrow.
If the sale amount is under $1,000 and the buyer has a fair amount of “reputation points” on the auction site, you can usually just use a half upfront and half after approach. There’s a chance of getting ripped off, but it’s very rare.
Amounts above $1,000 should almost always be handled with escrow.
An escrow service will take the money from the buyer and the domain, along with all files from the seller. Once the buyer has verified that he has everything he needs to run the site, the funds are released to the seller.
This protects both sides from fraud or misunderstanding. Escrow fees vary from transaction to transaction and your site description should address who pays the fees. Often the fees are split 50/50 between buyer and seller.
The technical process of transferring a website should also be addressed.
Who will do the installation? You, the buyer, or a third party? Who’s responsible for the installation?
If you’re using plain HTML, the transfer process is very simple. You just zip up the files and mail it over.
If you’re using WordPress, the process is a bit more complex. You need to send all the files, along with the database information and the buyer needs to know how to install a WordPress setup from a database. If you know how to do this, it often helps to put in your sales letter that you’re willing to do it for the buyer.
If you’re using a third party system, the setup process can get extremely complex.
Make sure you outline the transfer process and who’s responsible for the transfer in your sales letter.
Wrapping Up
These are the most important things you need to cover when you’re selling your website. Remember: The more you tell, the more you sell.
A skimmer might not read through all the information you provide. But a serious buyer who’s considering putting real money into your website is going to want all the information they can get. The more information you provide, the higher the price you’ll eventually get.
Research Tools for Buying Websites
Doing your research is perhaps the most important part of the website buying process.
When you’re buying a website, you need to make sure that you’re actually getting what you’re paying for in terms of traffic and revenue. In addition, you should also do as much research as you can into how much the site can potentially make in the future.
Here are a few of the most powerful research tools you have at your disposal when researching a potential website buy.
Analysing Google Analytics
Google Analytics is the most common type of statistics program used by webmasters. It’s also one of the most common types of reports you’ll see when you’re researching sites to buy.
Here are a few of the most important things you should look for in a Google Analytics report.
Overall Health
The first thing to look at is the overall health of the website. You can get a sense for how much people like this site by looking at stats like the pages per visit, the bounce rate, the average time on site and the percent of new visits.
Traffic Sources
Another important thing to understand is exactly where all your traffic comes from. There is a huge difference between running a forum that’s mostly recurring traffic and a website that gets mostly new traffic from SEO.
Keyword Analysis
The keywords that people type in to get to your website can tell you a lot about the kind of people that end up on the website. It can tell you whether they’re buyers or browsers and what kind of information they’re looking for when they end up on your site.
Breakdown by Countries
One big mistake buyers make is not checking the countries that traffic comes from. It’s not uncommon to see a site listed that gets a lot of traffic – Only to later discover that the majority of the traffic comes from third world countries.
It’s possible to make money from third world traffic, but it’s important that you know where your traffic is coming from before you buy.
Detecting Link Types
Many of the sites you’re considering buying will get most of their traffic from search engines. Link building is the most important component of search engine optimization – Unfortunately, a lot of people take shortcuts.
When you’re buying a website that gets traffic from search engines, it’s important to do at least a basic analysis of its link structure. This will give you a good idea of how links were built to your site and what the risk of losing your rankings is.
If you’re buying a website with a lot of spammy links, there is a real danger of being delisted. On the other hand, if you’re buying a website with strong, relevant backlinks, you can afford to pay a bit more as the rankings will likely improve in the future.
Two tools you can use to analyse the backlink structure of any given website are Open Site Explorer and Majestic SEO. These two tools both use their own web spider engines to build an index of the web on their own servers. They can then use this index to find backlinks back to a specific website.
Here’s an example of what an Open Site Explorer search result looks like:
Here’s an example of what a Majestic SEO search looks like:
Generally, Majestic SEO will give you more results than Open Site Explorer.
However, Open Site Explorer has a unique feature called domain or page authority. This figure is designed to mimic PageRank. It takes into a large number of factors and gives you a number on how authoritative a specific domain or page is.
This figure is logarithmic. That means it’s much easier to go from 30 to 40 than from 70 to 80. This number is usually a lot more useful than PageRank, because it’s constantly updated while Google only updates PageRank a few times a year.
Other backlink checking tools include Yahoo’s Site Explorer (very outdated,) Google’s backlink checker search (very few results) and Bing’s Webmaster Tools (jury is still out – the system is very new.)
Overall what you want to look for are legitimate backlinks to your website from other sites in related industries. Try to avoid sites that are linked to from many spammy, low quality, unrelated sites.
Is the Industry Trending Up or Down?
When you’re buying a site, you need to evaluate the industry it’s in. Avoid buying sites in dying industries or topics and invest in sites that are on the up and up.
One good way to demonstrate this is with the iPhone 3G. When the iPhone 3G was released, the very quickly got a lot of hype. People built sites around the iPhone 3G, and some buyers even paid as much as 30x the monthly income for those sites.
Of course, the iPhone 3G’s hype quickly died down over time to be replaced by the iPhone 4. You don’t want to be buying a 3G website based on the peak’s traffic, hoping it’ll continue to rise.
As you can see, the traffic in 2011 is about one fourth of where it was in 2008 when the iPhone 3G was unveiled.
Point “B” would be a great time to sell a website but a terrible time to buy.
Using Google Trends, you can easily identify whether an industry or topic is picking up or going down. If you’re in a dying industry or a short-term industry (as shown above,) you probably shouldn’t invest.
Predicting AdSense Income
If you’re buying a website that you plan on monetizing with Google AdSense, it can often help to try and predict how much you’ll earn by placing AdSense on a website.
First, take a look at the types of ads that might show up on your site after you put AdSense on it. You can do so using the AdSense Sandbox Tool.
Just type in the keyword or URL you want to check potential ads for.
To get an estimate of how much you might earn per click from Google AdSense, use the Google Traffic Estimator. To access this tool, you need a Google AdWords account.
Log into your Google AdWords interface, click “Tools” then “Traffic Estimator.”
Type in the keyword(s) you think people who’re targeting your site might type in. The resulting CPCs will give you a ballpark of whether your site will get high CPCs or low CPCs.
Keep in mind that these estimates are for Google AdWords, not Google AdSense. There isn’t a tool that can accurately tell you how much you can get per click from AdSense. Instead, using the AdWords Traffic Estimator, you can just get a sense for whether you’re in a high paying or low paying category.
If you really want specific numbers, you can use 30% of the Google AdWords bids as a rough guesstimate of your CPC. If the CPC is $1, expect to earn about $.30 cents per click on AdSense.
These are a few of the tools you might want to use to evaluate both the validity of the website’s traffic stats, as well as the earning potential of the website in the future.
Flippa
Flippa is the largest small to mid price range website marketplace on the internet. If you’re selling or buying a website that’s worth between $100 and $50,000, chances are Flippa is a good place to do it.
If you’re looking above the $50,000 price range, you should probably talk to a business broker who specializes in online websites. For most flippers however, there is plenty of fish in the sea on Flippa.
Let’s take a look at Flippa from both the buyer’s side and the seller’s side.
Buying on Flippa
The first step to buying a website on Flippa is finding your ideal auction. There are a number of pre-sorted ways you can browse Flippa auctions that you can easily access on the left hand side.
You can also click on “Advanced” to sort your search results by a number of more sophisticated parameters.
Each listing in the search results will have a number of important things displayed.
These are some of the most important things you can see at a glance in a search result:
- The date the site was established
- The amount of visits per month
- The site’s PageRank
- The revenue the site generates
- The seller’s positive rating percentage
- How much money the seller has transacted on Flippa
- The time left in the auction
- The number of bids
- The number of comments
- The price and BIN price
Browse through the various listings and open up the ones that meet the criteria you’re looking for.
When you open up a site profile, you’ll be presented with the basic stats along the top.
You’ll also be able to see claimed traffic and claimed revenue stats on the right.
The most important thing to pay attention to is the auction’s attachments. Here is where you’ll find proof of traffic, revenue and other details.
As a rule of thumb, it’s much, much safer to only buy from sites that have verified Google Analytics data.
Make sure that for whatever auction you’re considering, you read thoroughly read through the entire description, all the comments and browse through the site to see what you’re actually getting.
Selling on Flippa
Flippa is one of the best ways to sell a small to mid sized website. You have literally a horde of qualified buyers, all vying to give you the best price for your website. Instead of having to decide yourself how much you think your website will sell for, you can simply let the marketplace and the auction system decide how much your website is truly worth.
You start the selling process by going to https://flippa.com/sell and typing in your site URL.
Flippa will present you with a list of required steps and recommended steps for selling your website.
Simply click on each of these steps to setup your site auction. For example, if you click “Site Age,” the age box will popup. Fill out the date your site was created and the information will be added to your auction.
Rinse and repeat for every step.
Adding verified Google Analytics data is an optional step, but is highly critical to a successful sale.
Start by clicking on the “Add Verified Google Analytics Stats”
Get the code provided by Flippa.
Then follow the on-screen instructions to have Google email a copy of the analytics to Flippa.
Once you’ve filled out all the required information and launched your auction, all you need to do is sit back and wait. If you get questions from your potential buyers, make sure to answer them in a timely and efficient manner.
That’s how to use Flippa to buy and sell websites. If you’re looking for a massive marketplace to both buy and sell websites, there’s no better place than Flippa.
DigitalPoint
DigitalPoint is one of the largest online marketplaces for buying and selling websites online. It’s kind of a wild wild west of online marketplaces: You’ll find a very wide range of websites for sale, from total junk to hidden gems.
The trick to making money on DigitalPoint is to be able to find the bargain deals, as well as get top dollar for your own websites.
Here’s how to use DigitalPoint. The main section you want to be in is the Buy Sell Trade (Sites) section at: http://forums.digitalpoint.com/forumdisplay.php?f=52
Buying on DigitalPoint
Start by going all the way down to the bottom and clicking “Prefix.” Click “WTS,” which stands for “Want to Sell.” This will sort all the threads so you’re only seeing listings of websites for sale.
You’ll then be presented with page after page of websites for sale. This is an example of what the forum might look like:
To learn more about any specific site, just click the thread title.
Once you’re in a specific listing, you’ll be presented with the site’s description. Sometimes you’ll have a lot of information, including proof of traffic and earnings data, while at other times listings will have scarcely any information at all.
To make a bid for the site, type the amount you’re willing to pay in the Bid Amount. You can also setup an auto-bid at the same time.
If you’d rather just snatch up the website then and there, you can use the “Buy it Now” feature right under the “Sale Data” segment.
Those are the basic mechanics of buying a site on DigitalPoint. The challenge in DigitalPoint is that you have to go through many, many listings to find a good deal. That said, there are definitely good deals to be found at bargain prices.
Selling on DigitalPoint
To sell on DigitalPoint, click the “Post New Thread” button.
Select “WTS” for the prefix and choose an attention catching title.
Select when you want the sale to end. You can also choose whether you want buyers to pay instantly after the sale.
Setup the pricing for your auction. Set your starting bid, reserve price, bid increments and BIN price.
Put in a few additional details about your site, such as the unique visitors, page views, revenue and whether or not the content is unique.
Answer a few basic technical questions, such as where your domain is registered, your Alexa ranking and the number of backlinks you have.
Finally and most importantly give a detailed description of your website. Make a strong case for why your site is a good business.
Attach as much proof of traffic and revenues as you possibly can.
That’s how to use DigitalPoint to buy and sell websites. DigitalPoint is not as streamlined as Flippa, but there are definitely diamonds to be found in the rough.
Source: The Social Guide
