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?

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.

At Midascode we have been amazed by the number of website offers we receive each month.

However, we have noticed more and more that a trend is occurring where people are selling sites on hosted domains.

e.g let’s say the owner is called Jim: jim.wordpress.com or jim.blogspot.com or jim.freewebhost.com etc…

The problem here is obvious… you don’t really own the site, and you certainly don’t own the domain. The only thing you really could potentially own is the content, but even then I am sure that in many cases you won’t even own that legally.

As you can see, this makes it a VERY risky business proposition. It is like buying a car that has no engine, no wheels, no suspension etc.. in fact, it is not even a car, it is just a set of keys. You are essentially selling the keys, but not the actual car.

One person contacted us recently with a site that was on a free host, and had zero traffic. What were we supposed to be buying in this instance? There was nothing of any value, certainly nothing that the seller actually owned, and personally, I feel ownership is an important factor if you are selling something 😉

Don’t get me wrong, there are some BIG sites that are hosted on free hosts and are worth a LOT of money, one that springs to mind is the hugely powerful Seth Godin blog, or the Google Webmaster blog at Blogger.

But generally, the types of sites that are hosted on free hosts share one resemblance… they are not worth paying the $7 for a real domain for. Hence why the owner put it on a free host in the first place.

Also, even if you do find a gem. How do you value it? Who is to say that the free host won’t accidentally delete your account? Or ban you? Or shut down? There are so many liabilities involved.

Have you heard of Squidoo.com? Everyone and their dog decided to create squidoo mini sites… but then some people started spamming, and Google penalised the entire domain. That means that people have worked hard creating genuinely useful sites, and the actions of others destroyed their traffic. Would you be comfortable buying such a delicate business?

As a general rule, I would value a site on a free host as 10% of the normal price, and I feel that is generous. Also, 10% of the price is what I would use if it was on an authority like WordPress.com or Blogspot.com if it was on something like crappyfreewebhost123.com then I wouldn’t go anywhere near it.

So if you are looking to create a site, if it isn’t worth paying $7 for a domain, then it probably isn’t worth doing.

I would love to hear your thoughts on this… would you buy a blogspot blog? Do you own a site on a free host?

Midascode

As humans we have numerous amazing abilities, one of these great abilities is imagination… don’t get me wrong, I am not claiming that other animals and insects DON’T have imaginations, I am sure that millions of dung beetles around the world are currently imagining being in a field full of cows who have eaten too much.

So on that note, I want you to remove any images of cows with bowel problems from your mind, and instead, I want you to imagine you are walking down the high street on a rainy Thursday afternoon.

Imagine yourself coming out of the rain and into a clothes store.

You flick around a few of the t-shirts on the “Everything is $35 section”, but your focus is drawn to one of the t-shirt price tags that says $13.

At this point you are a like a child who has found grandpa’s dirty magazine collection, your heart is beating and your palms are getting sweaty… can you feel it?

You take the t-shirt off the rack and spring to the counter to pay for said clothes item.

Don’t make eye contact, stay cool, you think to yourself. But the young lady in the ill-fitting staff uniform notices the in-correctly priced label and tells you that the actual price is $35.

Now at this moment you go from mr cool to Simon Cowell, you say in a loud and arrogant voice that the label shows $13 and therefore it is legally binding that you MUST sell it at that price.

ok, you can stop imagining now. The question here is what is the ACTUAL law on such a scenario? Are they legally required to sell you the product at the advertised price?

Do you want the answer?

Of course you do you handsome reader!

The answer is that they DO NOT have to sell it at the lower price. In fact, they can sell it at any price at anytime. The labels on products are not contracts, they are guides, or offers. They only become contractual once you have paid for them. If it was contractual, then you would HAVE to pay for anything you took off the rack, regardless of whether you liked it or not.

So what has this tidbit of retail gold got to do with buying and selling websites?

Once you scrape away the back stories, imagination explanations, and dung beetle scenarios of this article, you are left with one simple but hugely important nugget of advice: a deal is never done until the payment has been made!

I was contacted recently by a reader who was in talks for a site purchase, he agreed on a price of $25,000 and he got the seller to confirm that it was a done deal numerous times via email. However, the seller sold the site for $40,000 to someone else the day after.

Bear this in mind when buying sites, no deal is ever done until the site has been paid for.

Dean