Midascode | Buy & Sell Websites

Buying and selling websites has become a huge industry in 2008, but it can often be a confusing and scary process, so today we are going to shed some light on the top 10 things you should do to ensure you are successful.

1 - Thou Shall Buy a Business NOT a Job

If a website requires the new owner to work on it on a regular basis, then you are buying a JOB not a business.

For it to be classed as a business, it needs to be self-sufficient, it needs to be able to run without the regular input of the owner, and it needs to make a PROFIT without your input.

In other words, could you go to the beach for 6 months, return, and have a nice chunk of profit in your bank account? If not, then you are buying a job.

Additional Reading: Buying a job vs a business

2 - Thou Shall Not Neglect a Website or Blog

Neglecting a website is the worst thing you can do to it. Traffic will drop, visitors will lose interest, and the value will suffer.

3 - Thou Shall Be Realistic With Your Valuation

We have spoken to so many website owners who would be lucky to get $50 for their site, yet demand hundreds of thousands of dollars.

Additional Reading: The Webmaster Delusion

4 - Thou Shall Check The Compatibility

You would be amazed at how many websites look great in one browser, and then look like dogs backsides in another. Always check that a website works on the major browsers before you make a bid.

Additional Reading: Browser Compatibility Tools

5 - Thou Shall Do a Financial Check-up For Large Purchases

If you are buying a large and expensive site, then you may wish to do some background research on the owner. Better safe than sorry.

Additional Reading: Background Research Tools

6 - Thou Shall Not Consult Friends or Family

We all know that making business decisions based on what friends and family think is dangerous. So avoid making this mistake when buying and selling websites.

Additional Reading: Myths of Starting a Business

7 - Thou Shall Not Focus On Pagerank

There was a time where all people were interested in was the Google Pagerank of a website. I have seen awful websites sell for huge sums of money, just because they had a pr7. Luckily it seems that this virus is slowing down, but make sure you don’t make the same mistake.

Additional Reading: How Much is My Website Worth?

8 - Thou Shall Not Buy Hosted Domains

We all know someone with a website like joeblogs.blogspot.com - but if someone cannot afford the $7 to buy a proper domain name, why are you doing business with them? Remember, you don’t legally own a hosted domain name.

Additional Reading: Buying Websites On Hosted Domains

9 - Thou Shall Beware of Scams and Fraud

Like any marketplace, buying and selling websites is filled with people who are looking to make a quick buck. Here are some tips to help you avoid them:

1) Use archive.org to see the history of the website. Avoid any adult or potentially unsafe material.

2) Go to Alexa.com to get a rough idea of the site’s traffic. Compare this to the stats the buyer has published.

3) If you are buying from a forum, look at the members previous posts or sales. Also be aware of any negative feedback he/she may have had.

4) Always use Escrow for larger payments and Paypal for all others.

5) For larger purchases, ask the MidasCode.co.uk to do the due diligence on the site for you.

10 - Thou Shall Have Fun

Buying and selling websites is a serious business, but it can also be a lot of fun. You can own websites based on your passions and hobby’s, you can turn your past time into a serious money maker. The options are endless, but remember, have fun.

We have bought many websites in our time, but looking back, the sites that we got the best deals with has one thing in common… today we are going to share that magic factor with you, and perhaps you will be able to buy some great sites at low prices too.

We are not psychologists, but we are good at sales, online selling in particular, and there is one simple yet consistent formula we have noticed:

If the website owner contacts us then we often get a good (low) price, if we contact them, we often get high prices.

Like we said earlier, we are not psychological experts, but somehow we feel that the above swings the balance of power and control dramatically to one side. The fact that they contact you means that they need you, they want something from you… this is a powerful position to be in.

So this begs the question: how do you get people to contact you with websites for sale?

What we do is simply put the word out. Via our IM, by telling our friends, by telling our contacts etc… Perhaps write a blog post saying you are looking to buy a website. Once people know that you are looking for a site, they will remember you when they come to sell, even if it is years later. You are planting seeds in their head, and with time those seeds will grow.

Another reason we believe that this is the key to getting a good price on a website, is that often, if the seller has gone to the trouble of contacting you, they are most likely desperate to sell. Perhaps they need the money, perhaps they are bored of the site, perhaps they want funds for another project… so this eagerness to sell will mean they will sell cheaper just to get rid of it.

So if you have ever considered investing in a website, start sewing the seeds today, you never know what might grow.

Midascode

Today I am going to talk about the single biggest problem with the website buying and selling industry: The difference between buying a job and buying a business.

Let’s get straight to the point, if your website requires the new owner to work on it on a regular basis, then you are selling a JOB not a business.

For it to be classed as a business, it needs to be self-sufficient, it needs to be able to run without the regular input of the owner, and it needs to make a PROFIT without your input.

In other words, could you go to the beach for 6 months, return, and have a nice chunk of profit in your bank account? If not, then you are buying a job.

So what difference does this make to the value of a website?

Well, if you are buying a job, then you should deduct your time from the value of the site. e.g if your time is normally worth $20,000 per year (fulltime), and this JOB requires you to work 4 hours per day (part-time), then you should deduct $10,000 from the value of the site.

In the real business world, it is possible to get valuations of x5 years, but if you are offering a job, then don’t expect to get more than x12 months.

Remember, next time you are buying or selling a website, ask yourself, is it a job or a business?

Today we are lucky enough to speak to Adrian Cooke who in mid-2007 purchased the famous NetBusinessBlog.com blog. There has been a lot of talk about the sale, and it was one of the most high profile blog purchases of the year, so let’s speak to Adrian and hear his side of the events.

Adrian, thanks for taking the time to speak to me. How long have you had Net Business Blog.com for now?
since June 2007, that is roughly.

And what made you decide to purchase NetBusinessBlog?
I purchased NBB because I saw a possible great future brand (in the world of blogging) not for money at first.

Speaking of money… what has been your overall thoughts thus far in terms of traffic and revenue? (if you don’t mind me asking?)
To be honest, traffic has tailed off because of lack of posting in the last week, overall we hit 10k uniques per month, but revenue as of now is zero.
I was making $1300 p/m three months ago, but lack of marketing and a new structure idea for NBB has made me pull away from monetization this will all change next week though.

Excellent, I look forward to seeing that.

Yes, we have a new theme coming very soon.

Have you purchased other sites prior to NetBusinessBlog?
I have purchased a Facebook app and one other site that is yet to make any money because of lack of commitment, nothing prior to NBB though, all after. I was also part owner of a Digital Memory Store.

Ok, so that must have been quite a daunting first purchase then, considering the reputation of NBB and the cost involved.
It was actually thinking back, but I understood the value of the loyality and content, It was by pure luck I found the auction though.

Perhaps a little fate
yes

You mentioned loyalty there…..
Buying blogs has the risk of losing the core readers once you replace the blogger with some else… what was the reaction from the regular readers?
Some of them gave me a lot of grief I must admit, I have learn’t a lot, but I was a bit put off in the first month, so I decided to hire a blogger who could keep the momentum going daily
I think the audience was much younger than me, and that was something I needed to understand.

Very interesting. I have purchased a few blogs myself, but never one with a large existing reputation. Any regrets Adrian?

None now, I am very driven and need to reach a certain goal with NBB the goal I had in mind when I purchased it. It was well worth the money, the goal is basically to reach $5k p/m

Excellent. A lot has been said about the sale price, did you have a valuation calculation or due diligence blueprint when buying the site?

Although I have blogged about this myself - I did go in head first and only did basic calculations based on readership loyalty, revenue and longevity, I saw an oportunity that suited me at the time, and I needed something after I left my last company.

Excellent, so more of a gut instinct and common sense than a hard calculation in terms of valuation
Yes I think you could say that

Do you have any tips for people who may be looking to purchase or sell blogs in 2008 Adrian?

Difficult question I think as there is so much to evaluate
I would say… an absolute must is to know the market place, content etc… which I did. Also, try and ensure you have had some experience with the back end system which most use wordpress. Realise that blogging is hard work not an easy passive income… the most important thing I think is - understand how to market the blog/site you’re going to buy. There are so many things to consider really

Yes, some great points Adrian. Very useful, many thanks. Final question…

What does the future hold for Adrian Cooke in 2008?
the future… well I have a successful offline Web Development business going well now, I aim to make NBB the best business blog online offering even more targeted content for the readers. Possible forum launch to help other bloggers get started (hosting, content, marketing etc) I want more interaction on the blog and to build the brand name.

Excellent, it sounds like you are set for yet another successful and busy year….
I hope so

Thanks for taking the time to speak with me, and I am sure the readers will really benefit from your advice and experiences.
The new theme is going live later today I hope

Excellent. I will look out for that
Thank you very much Dean, very enjoyable interview

Have you ever bought a website?

If you have, I would be keen to interview you. We are doing interviews with people who have purchased website(s).

It would be good publicity for your site.

Contact us if you are interested.

Best wishes to all over the Christmas period.

If you are planning on buying a blog then you will need to know of something called “the Digg effect”, and you will need to learn how to detect it. If you don’t, you may end up paying a LOT more for the blog than it is worth.

What is Digg.com?

Digg is a social news website that is hugely popular. Blogs and news based websites can get huge bursts of links and traffic if they get on the Digg homepage.

Why does this affect buying blogs?

There are thousands, perhaps tens of thousands of blogs that have experienced the Digg effect, so if you buy blogs, then you are likely to experience this.

Why is this a bad thing?

It is not necessarily a bad thing, but it is something that can artificially raise the value and stats of a blog.

For example,

Site A gets 100 unique visitors per day, then, one day it gets on the Digg homepage and gets 50,000 uniques in 24 hours.

For the next month the site averages over 1000 per day, and then two months later it settles at around 150 per day.

If you were to buy this blog during the 1000 per day period, it is likely you would pay up to 10 times the actual value of the site.

So for example, a blog worth $2000 may be listed for $20,000

The Digg.com curve

Being on digg can have long term and even permanent effects, but it is the short term that it appears most impressive. Therefore, buying a site within 2 or 3 months of a major digg experience is likely to cost you a lot more than the blog is actually worth.

How to avoid this?

Simply check the stats for any Digg referrals. Also, check Alexa and look for any big spikes in the past 6 months. If you see one, then ask what caused the spike and check the stats to confirm.

Summary

I am not saying you should deduct all factors from the Digg effect, overall it is certainly a positive. But you have to know that you may be paying for something that has already finished. It would be like paying full price for a 2006 Superbowl final ticket.

My Favorite WHOIS service - or should I say, my NEW Favorite WHO IS SERVICE

This is a new WHOIS service to me - like most domainers and website buyers, I have developed a relatively short list for favorite WHOIS and Domain Suggestion tools over the years.

Well here is one - that appears to go some way to combining both of these options: http://who.is

This is A WORLDWIDE Whois service - it does the usual look up - including many international domains. (Searches 364 extensions)

I was doing a WHOIS on a .to domain when I found it.

In addition it also gives the ALEXA ranking and number of page views per visit (On the tests I did page views per visit looks pretty accurate - so a very useful tool when trying to evaluate a website you might buy.

It gives you a list of Available Domains - related to your search

For example on a WHOIS of NewYork.com - it suggests: NewYorkRoundup.com - which I thought a pretty decent suggestion.

GO ON - YOU KNOW YOU WANT TO: Digg this

Favorite WHOIS service - my NEW Favorite WHO IS SERVICE

One of the major factors in the value of a website is how well that sites performs in Google, Yahoo and to some extent MSN.

Today I am going to teach you an insiders trick that I use to find potential bargain websites.

Let’s presume that you are looking to purchase a website in the “celebrity” industry. In particular you decide that you would like to purchase a celebrity forum. One technique would be to check websites like Sitepoint.com to see if there are any celeb sites for sale, but this can often be a very long process.

The more aggressive site buyer could go to Google.com and type “Celebrity forum” and then contact the owners of the top 20 sites.

But let me save you the time and effort…… if you want to purchase a website that is ranking highly for a powerful search term, then you will have to pay a LOT of money. Often more than the site is really worth. So here is a trick that I use to find great bargain websites.

Step 1: download a SERP tracking software or use an online version.

Step 2: Monitor the top 100 results for your search term

Step 3: Ignore the top 10, but monitor closely the sites from 11 to 100

Step 4: Look for any sites that make a large, fast jump in rankings. E.g 90th to 36th within a week.

Step 5: Contact the site owner and make a bid

This works because the site owner won’t have realised that they are climbing the SERPS, and therefore won’t realise the site is growing in value.

Also, the fast jumps in rankings can often be due to Google Sandbox related filters, so it is the perfect time to buy the sites. To give you an example of this… I once had a site that got around 200 visitors per day, then, within 4 days it went to 2,000 per day and stayed that way until I sold it 4 months later for a LOT of money. This was due to the Sandbox effects. Had someone contacted me during the 200 per day stage, I would have sold for a lot less.

It is a very powerful way of getting high value sites for low, low prices, and is one of my biggest website buying secrets.

Enjoy.

When buying a website….

Keywords equals profits.

What does this mean?

Well, we know that search engines are by far the biggest traffic referrer on the Internet. So therefore it is vital that we have good positions at places like Google.com in order to get a lot of daily visitors.

However, some sites rank higher than other sites, and ideally we want to purchase sites with high rankings….

Sounds easy enough, but there is one major problem.

Not all keywords in Google are equal.

For example, being number one for “Web hosting” is far better than being number one for “Web hosting services in the south of Texas”

The first will provide tens of thousands of visitors per day, the latter may provide one per year.

So when we buy a site we must first ask the current owner to show us the main keywords the site gets traffic for.

Here is an example:

web hosting 7890234
Internet hosting 35433
Hosting online 3434

With these sorts of rankings we know that the site in question is clearly hugely powerful in Google, there is no way a weak site could rank for such competitive terms.

The next area we need to look at is are the keywords profitable?

By this I mean that some keywords are hugely valuable, whereas some are virtually worthless.

e.g

Buy Cars Online - what does this tell us? Well, it tells us that the person is looking to buy a car or cars online.

Firstly, this is hugely valuable, as the cost of cars is high (i.e better to sell one car than one pen), also, we know from the word “buy”, that the person is towards the end of the buying cycle.

e.g if they had typed “photos of cars” then that would suggest the research stage, and you are unlikely to make many sales from the term “photos of cars”. At best you may be able to sell a few photos.

So look at the types of keywords and ask yourself, could I make money from these?

This should be done prior to buying and website.

When buying a Website……..

Check the Stats for the Facts.

Many site sellers love to how shall I say this….. bend the truth a little. But the stats do not lie. So ensure you get access to the stats.

The best way to do this is via Google Analytics, but you can also ask for screenshots of any other program they are using.

In particular you will want to see the main sources of traffic. For example:

Google 70%
Yahoo 10%
Buy-Crappy-Traffic.com 9%

In this example we can see that the site is doing well in Google (always a plus), but we can also see that the site owner is buying traffic from a suspicious looking website (not good).

You can learn a lot from these stats.

In the next edition we will look in more detail at the search engine keywords stats.