Midascode | Buy & Sell Websites

Here’s a headsup: People wanting to discuss matters relating to the buying and selling of websites now have a new forum where they can chat with like minded individuals.

The quality of the chat is extremely high and though the forum is only a week old today, it boasts some of the most respected members from places like Sitepoint and elsewhere who advise on the subject. Already signed up are brokers, accountants and lawyers who deal with matters like Accountancy Due Diligence and Contracts of Sale, buyers and sellers. Flippa is there asking questions and getting feedback on how they can improve their service.

It’s a place where you can find out about the best places to buy a site, what scams to watch out for, what’s a fair price, how to perform due diligence, the best places to list a site for sale, how the pros make money from site holding and site flipping …and much more. Head on over and pose them your most difficult question.

If you interested in any aspect of website buying or selling – you need to be there. Go to the Experienced People forum right now and register today.

When buying or selling a domain you are often dealing with a party you don’t know. Do you remit a large sum of money to them and trust them to transfer the domain to you? Probably not. But then again, they don’t know you either, so they can’t transfer the domain to you first in the hope that you will indeed keep your promise to pay them in full.

That’s where escrow companies come in.

An escrow company will take the full payment from the buyer and hold it till the seller transfers the goods. Once the buyer confirms that he’s received the goods the escrow company releases the funds to the seller. Should the buyer reject the goods, the escrow waits for the seller to confirm receipt back before they refund the payment to the buyer. So everyone’s safe.

But it’s important to choose a good, trusted escrow company to handle what is often a large sum of money. Who do you go to for that? The most well known name is escrow.com. Most experts in website buying and selling swear by escrow.com and they do so with the experience of many transactions behind them. But today I’m going to tell you five secrets that you really should know before you deal with them.

Five Things That You Did Not Know About Escrow.com and Which Should Scare You

1. There is no company called escrow.com. The company you are dealing with is IES that rents/leases or has some other arrangement involving the escrow.com domain (I don’t know what it is and you likely don’t either). That’s not a reason to distrust them but you need to know who you are dealing with. Should IES go bust sometime – no company is immune from the laws of finance – the escrow.com name will likely continue and many buyers and sellers will likely be unaware that anything has changed even though they may be dealing with a brand new company with no history! They’ll assume it’s the good, old escrow company they’ve always dealt with. On the escrow.com website, you’ll find bold claims about “services provided by escrow.com“. They flash “escrow.com” all over the site. Even their postal address is “escrow.com” (no mention of IES). You need to go to the small print to realise that it’s IES you’re dealing with and, in their own words, they are only “one of the operating subsidiaries of Escrow.com”.

Disclaimer: I’m not suggesting anything about IES’s current financial position. They may be rock solid for all I know. And do bear in mind that they are heavily regulated (more about that later) so they don’t do a runner with your money.

But “they” are not escrow.com.

2. Escrow.com/IES doesn’t provide an escrow service for websites: Seriously! It never ceases to amaze me how few people know this. Or realise the huge risk involved in putting website transactions through this company. IES has four categories: Motor Vehicle | Domain Name | General Merchandise | Services.

The closest you have to websites is “Domain Name” and people happily choose that as the closest match and think all is hunky dory. It’s not!

Risks for Buyer: You can end up getting just the domain name and none of the files, templates, designs, databases or anything else that is contained in the website you’re buying and, as far as IES is concerned, they’ll release the funds to the seller on the sole grounds that he has transferred the domain control to you.
Risks for Seller: You can transfer all the copyright, other rights, programs, files etc., to the ownership of the buyer and the buyer can then demand IES give him a refund because he’s changed his mind about taking control of the domain.

3. IES/escrow.com don’t give a fig leaf about your contract. In the purchase of a website the buyer and seller often negotiate terms and draw up a Sales Contract. It may say that certain conditions need to be met and that the buyer/seller can pull out of the transaction if there is a material change. Example: You agree with the seller that if his PR9 site suddenly drops to a PR4 then the deal is off. You send your funds to IES for them to hold during the 10 day “inspection period”. The seller changes the WHOIS for the site and sends you the password to take control of the domain. But on the very first day you find that the PR has dropped (or there is something else drastically wrong with the site and it doesn’t match what the seller described). Tough! As far as escrow.com/IES’s terms are concerned your agreement has no value. The seller gave you control of the site and if he wants to complete the transaction then IES is just going to release the funds to him. The contract entered into by the Buyer and Seller is a carefully constructed document designed to protect each party’s interest. IES won’t even look at that contract. They go by their own terms and conditions and it may or may not be in your favour.

To be fair, you can try raising a dispute or arguing the terms with IES, but there’s no guarantee you’ll succeed, it’s entirely up to them.

4. Many of the “experts” who recommend escrow.com are doing so because they get a commission. Escrow.com is one of the few (if not the only) escrow companies that has an affiliate program. That they are paying people to recommend them is not reason enough to shun their services. But be aware that any recommendation of their service may be driven by expectations of commission rather than a desire to help you.

5. Escow.com is regulated by an authority on another planet. Most experts agree that while the banks took a lot of liberties it was ultimately the regulators who failed in controlling the financial institutions and were responsible for the credit crunch of 2008.

But there is no regulator on this planet quite like the Commissioner in California. He sounds like a cross between Saddam Hussein, Michael Jackson and Imelda Marcos.

He’s power mad and a bit crazy. Nobody – anywhere in the world – can do this business with anyone based in California unless they pay the Californian Commissioner huge amounts of money, bow to his authority, promise to jump when he says jump and sign up to lots of nonsense. But the madness doesn’t end there. If an escrow company in Syndey or Singapore or Sierra Leone decides they can’t be bothered with some jobsworth in California, they need to be aware that he has banned anyone, anywhere in the world, from saying anything critical about him. I promise, I’m not making this up!

That’s just the start. If you read the California Financial Code (div 6, 17000-17305) there’s some pretty serious stuff in there that should dissuade anybody from buying or selling a site if the party they are dealing with is California based. But if the escrow company is registered there it’s even more serious. You will almost certainly lose should a dispute arise. In fact, if they file a court case against you in California, they don’t even need to inform you of the action. In can be all decided in your absence.

Read the full story of the California Risk here.

So even if IES is a very trustworthy company, has a strong balance sheet and great customer service, the fact that they are based in California and signed up to the California Financial Code is reason enough to go look elsewhere for your escrow needs.

Reliable escrow companies that proudly declare they are not registered in California:

Moniker:

Moniker is an ICANN Accredited Registrar and the only company with a special domain escrow account at its registrar to safely hold domains and protect both buyer and seller of domain related transactions. (not registered in California… for the moment)

iEscrow:

I-Escrow, Inc. is Licensed by the Washington Department of Financial Institutions (No. 540-EA-42257) and adheres to its strict regulations, as well as the ordinances put forth by the Revised Code of Washington.

SEDO, escroweurope, Escrow Europa (recommended by eBay) etc., are other alternatives.

Shhh! I’ve got a killer tip for those interested in finding good sites to buy.

Send the owner an email.

No, no, it’s not about searching Google for sites saying “copyright 2002″ to identify abandoned sites and email the owner. Nor does my tip involve crawling through DMOZ listed sites to see which ones look dated. The first is a very hit and miss affair. The second is far too time consuming as well as hit and miss.

It’s where you look and how you time it!

But first, the example: Today I bought a $35K site. It didn’t come through any of the methods described above. It came through a very simple route – something any of you could duplicate (but probably don’t).

And I Got It At Half Price

History: I keep track of sites that I have been interested in but didn’t end up buying. And I revisit those sites after a reasonable lapse of time.

One of those sites listed in Sitepoint a long time ago went for over $60K. I thought the bidding was too high and there may have even been some shill bidding involved. So I took a back seat. Today, over a year from when that site “sold”, I find the WHOIS hasn’t changed, the contact email address for that site hasn’t changed and the appearance of the site hasn’t changed.

Conclusion: The purchase didn’t go ahead (surprise, surprise) and the owner didn’t get to do much with the site either.

So I emailed him out of the blue. Now, these emails don’t normally work. At least they don’t work when people email me. They often get my email address from WHOIS and write to say they want to buy xyz site of mine. Usually they are lowballers looking to pick up something on the dirt cheap. They first express interest and it’s only after a few emails back and forth that they disclose their budget is a paltry $100. I’ve learnt to ignore those emails. And other webmasters do too.

But this email was different because of timing. I worded my email carefully and, importantly, offered him a decent price. I quoted $35K for a quick deal via escrow. Voila! It worked!

Why Did It Work?

What was different was that I had identified someone who was motivated to sell and had been motivated for a long time. Further, he may have been disillusioned with the sale process as he spent a lot of time trying to sell his site and it didn’t work. So when a half decent offer came up, he grabbed it.

Can You Do It Too?

Yes, you can. Let me give you an example. webmasters.org came up for sale here. It raised quite a lot of interest because of the domain name. And it sold for $50K about 15 months ago. Apparently. In the thread you’ll find the owner signed his replies with the name “Chad”. If you do a WHOIS on that domain today, it’s owned by a Chad and the email address is chad@xxxx. Coincidence? Hardly likely.

The site has dropped in PR, from a PR7 to a PR5 – a good reason why there is extra motivation for the owner to sell and why he may be even more open to a lower price. This isn’t a recommendation to go buy that site but to demonstrate that sites where the owner expressed interest in selling, went to the trouble of listing and actually sold… may not be sold. And he may still be interested in selling, even if it’s at a lower price! It won’t always work, but the success rate is a hundred times better than for a completely blind approach.

Have you got website listings you’ve ever bookmarked or added to your shortlist? Have you tried re-visting those sites or checking on their progress? Are you doing it with just Flippa listed sites or all the main site selling forums?

Does it take a bit of work? Sure. Is it worth a shot? You tell me.

As someone who bought a house a few years ago and has since watched it drop in value faster than an athlete who just lost an leg, I am well aware that the property market is really struggling, and is set to continue to do so.

So this begs the question: If property is no longer the solid investment that it used to be, could websites be the new boys in town?

There are of course, many factors at play, but I was recently looking at an apartment in a tourist area in Europe, it cost $200,000

I am told that I could rent that out and if I do it right, I could cover my mortgage.

In other words, I could break even.

Now, on the other hand, I could purchase a large entertainment website which also can be bought for $200,000

However, this site is making $7,000 profit per month.

Let’s assume the mortgage on the apartment is $700 per month, and the re-payments to finance the website are $1,000 per month, that is still a $6,000 per month advantage to the website.

I would love your opinions on this, considering the current climate, if you had to choose, would you rather invest your money into property, or into a website?

Midascode

They say a good workman never blames his tools, but having great tools on the Internet can save you a lot of time and hassle. Today we are going to look at 6 kickass tools that will help you find websites to buy, and research the quality of a website.

Hub Finder

Hubs are known as authority sites by the search engines. Owning one of these sites can be hugely valuable. But how do you find them?

Simple, use this hub finder tool

Trend Finder

Here is a common scenario. You buy a website because it made $2k per month in the past three months, but now it seems to be making only $100 per month. Why is this?

A common reason is because there are trends in any market, and it is best to be able to detect those trends.

You can use this trend finding tool by Google.

As an example, I used the search term “halloween gifts” and it gave the following trend patterns:

Duplicate Text Checker

Are you looking to buy a website with a lot of content on it?

If so, it is vital that you know whether the content was created, or stolen from another site.

Copyscape is a tool that will let you know whether the site owner has been a bit naughty.

Creative Commons Content Source

Have you purchased a website but it looks kinda plain and boring?

What better way to spice it up than with some images and perhaps a video?!?

However, you don’t have the money to create your own, so instead, why not try using content that is free to use under the creative commons license?

Here is an amazing resource for creative commons content.

Source Viewer

Have you ever wondered how Google views a website?

This tool will show you.

This is vital to check for spam. Especially if you are buying a Wordpress blog, as even the authority sites can get hacked.

URL Research

If you are buying a website, the last thing you want to do is spend the next 6 months fixing problems with the code.

This tool will check the site and give detailed information on a number of key areas.

The single question that we get asked the most here at Midascode is “How do I value my website?”, it is a question that had no simple answer, and often it would take a 500+ word reply just to cover the basics.

We all secretly longed for a solution, and authorative, definitive answer that the website buying and selling industry could use as it’s very own declaration of indepence-esque guide, we waited, and we waited, and we gave out snippets of information to keep the dogs at bay.

Well, I can happily announce that our prayers have been answered, an expert has taken up the challenge, and not only achieved the desired result, but grealty exceeded it.

Now, before your spam radar starts spinning, I should point out that this was not done by one of our team, In fact, we are not connected to this at all.

It was actually developed by a guy named Clinton Lee, and you can read the full guide over at Sitepoint.

The guide, dubbed ‘The Ultimate Website Valuation Guide’ is 6-pages long, and covers every main aspect of valuing a website.

Many myths are debunked, many records are set straight… and the upshot is that finally, the website buying and selling industry has a guide, a bible, a series of guidelines etched into stone for us all to benefit from.

So how can this valuation guide benefit you?

Quite simply, it can prevent you from being ripped-off. It can also ensure that you don’t sell for less than your site’s actual value. It can save you money, as you may no longer need to go to an “expert” who will charge you for 38-pages of jargon.

Website Valuation Tool

If reading a 6-page comprehensive guide is not your thing, fortunately there is a new valuation tool that takes all those 6-pages and crams them into one shiny, new tool. What’s more, this tool is free, and for the first time EVER, it is accurate.

But wait! I hear you cry, there are already numerous free site valuation tools on the market.

No there are not!

There are site valuation gimmicks, designed to inflate your ego and trick you into linking back to them. These tools are for fools, and they are severly damaging and confusing in an already noisy industry.

In fact, I decided to test out this new tool on my personal blog… the tool asked a lot of sensible questions, such as:

Domain name,

Monthly Profit,

Cost to maintain,

Expertese required to run it,

& a lot more…

When it finished, I hit submit, and got my valuation… and you know what, for the first time ever, I found myself nodding in agreement.

Actually, it was a little lower than I had hoped, but I couldn’t disagree with the valuation at all. It seemed to know the true valuation better than I myself did.

So today is the day that the website buying and selling industry can breathe a sigh of relief… the weight has been taken off our shoulders, there is now in my opinion a definitive overview of the site valuation procedure, and hopefully the industry will use it and we can all benefit from it for years to come.

That said, it is more than likely people will stick with the stupid gimmick tools, and continue to pull valuations out of thin air… but hey, at least now we have an alternative.

Thanks Clinton for boldly going where no man has gone before, this is one giant step for Internet businesses, one giant leap for the site buying and selling industry.

Midascode

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.

San Francisco based HotOrNot, founded by James Hong and Jim Young in October 2000, has been acquired.

The buyers are investors connected with Avid Life Media, and paid somewhere around $20 million for the site. Hong and and Young have been taking money out of the very profitable business all along the way – which we reported was another $20 million or in May 2007. HotOrNot never raised outside funding.

At a whopping $20 million it is clear that the web business was certainly a HOT property

That is the shamefully bad pun out of the way, so let us know your thoughts on this deal.

Welcome to the Website Purchase Review of Just-Pooh.com with Keith Mander.

The goal for this exclusive interview is to give you a deeper look into buying websites, we are using actual case studies as the basis of our interviews, and this will give you a real life insight into buying websites. The site in question is Just-Pooh.com. Keith’s personal blog is at KeithMander.com

Keith, thanks for taking the time to speak to us. How long have you owned this site now?, and if you don’t mind sharing the juicy details? How much did you pay for it?

I stumbled across the site several years ago, but only made first contact with the owner in September of last year. After some lengthy negotiations and analysis, the site was finally in my hands by mid-December. I’d prefer not to share further details of the transaction.

You mentioned due diligence there… what did this entail for you? Do you have a set checklist or procedure for this?

I was new to the process, but had a good intuition as to what I needed to check. I asked the owner for details of current traffic volume and verified this by analysing the site’s ranking for the most relevant keywords. Simple searches also helped me gauge the volume of advertising inventory on the topic, indicating how well the traffic could be monetised.

Very interesting. I am sure there is a lot of info there for readers who may be looking to purchase a website….. Also, I noticed that you used rankings and traffic tools to not only confirm the site’s existing traffic, but also to view future growth potential. That is a great idea!

Yes, Google Trends is also an excellent way to get a snapshot of the industry growth for the site. I could see that Pooh’s popularity was starting to plateau, but picked up whenever a new movie was released. It’s important to use common sense in additional to the data tools might provide.

Excellent advice. So to confirm, this was a private deal, and not done via any marketplace? Have you had any experience of a market place like Sitepoint.com?

Yes, the deal was conducted privately. I tend to avoid marketplaces such as SitePoint and eBay. Sellers using one of these platforms tend to have a better understanding of their site’s value, and therefore have higher expectations. My approach would be to directly contact site owners who are unaware of their site’s value and who’ve never experimented with online advertising. They’re usually surprised when you contact them with an offer and this eases the negotiation process. The potential with this approach is far greater.

Yes, that would be an ideal scenario…. how do you go about finding such sites though?

Using information on popular search keywords is a good starting point. I think it’s wise to concentrate on topics that are not immediately commercial in nature as you’re more likely to discover a site created out of passion, rather than for profit.

Superb advice, and I am sure an eye-opener for many readers. I suppose fan sites and hobby based sites spring to mind.

Absolutely. I’d suggest these sites represent the best opportunity. Don’t forget that you’ll need to find a site where you’re comfortable in adding further content to.

I agree. My girlfriend actually purchased a fan forum earlier this year, and I will throw out a quick warning to the readers: monetizing these sites can be very tricky. Even with high traffic, so some creativity and knowledge in this area is going to be required. It is certainly worth the effort though, and the rewards can be huge

Yes, forums are notorious for being difficult to monetise. But if you can nail it, there are high rewards to be made without much effort.

Yes, personally I feel the key is to use the forum as a feeder site, both to feed traffic into a site that will make sales, or to use that base to launch new, related sites and create a network.
Anyway, back to your site – Have you made many changes to the site since you purchased it? And have there been any unexpected obstacles?

Yes, just this month I outsourced the complete redesign and restructuring of the site. The aim was to create a more structured and more appealing site. The results are impressive; average page views are up 25%, the average time users spend on the site increased 35% and bounce rate dropped 20%. I’m now using analytic tools to make further improvements to the site’s navigation and content. The largest obstacle I’ve faced is finding a balance between user needs (pictures and games) and what will generate traffic (quality content).

Excellent. What does the future hold for you in terms of purchasing or selling more sites? Is this something you would like to do again?

Absolutely, I’d love to build a small portfolio of sites that bring in a stable secondary income. For the moment, I’ve decided to concentrate on maximising the potential of Just pooh before moving on. Cash flow and time management are significant hurdles to expanding.

Very true. Ok, one final question…. any regrets Keith?

Not starting sooner!

Better late than never I suppose. Keith, thank you so much for your time….. this has far exceeded my expectations, and there are some real gems of information here. Best of luck with Just-pooh in 2008, and we wish you continued success.

It is often difficult to be creative with gifts at Christmas. Often we just buy gifts and hope for the best, knowing that a few weeks later these gifts will be put in a cupboard and left to gather dust.

But what if there was a gift that was not only fun, and uber-cool, but was also a gift that could be used for many years, and could generate tens of thousands of dollars?

Today we are going to look at buying websites, and our 5 reasons that they make a killer gift for a family member or loved one.

1 – It is what they love – does your son love Football? Is your brother passionate about street cars? There are websites on almost every subject on the planet. If your father likes antiques, perhaps buy him an antiques and collectibles blog.

2 – They rise in value – ipods, cars, toys, computers, video games, mobile phones… they all have one thing in common: they drop in value very quickly. Websites can grow in value, and with a little love and care they can become very valuable very quickly.

3 – Longevity – Even the latest mobile phone will be worthless in 18 months. But websites generally become more valuable with age. How many other gifts could provide entertainment and value for decades?

4 – Give them a business – Once a website starts making money it is technically a business. You can buy web businesses for as little as $20 and this gives people invaluable real world experience, business lessons and a look into a possible new career option.

5 – Meet new people – There is no better way to meet huge amounts of like minded people in a short period of time than owning a blog or website. I have met hundreds of inspirational people and contacts from owning websites.

Ok, so now you want to buy a website, but where do you get them from?

Sitepoint.com is a popular choice.

Alternatively, contact us and let us know your budget and let us know your areas of interest, and we will keep an eye out for a site that matches your criteria.

Remember, a website is for life, not just for Christmas.