Part 2: Where to Buy Websites? (+checklist)

websites for sale

by nhussein · 0 comments

The first step in looking for your ideal website is to establish just what it is you’re looking for. You might get lucky and stumble across the site of your dreams, but you’ll save a lot of time if you go about it systematically.

Decide what you’re looking for

There are two elements you need to consider in deciding what websites are right for you. The first is: what do you want out of the website? The second is its flip side: what are you willing and able to put into it?

We may as well start by looking at what you want out of the website. After all, investing in a website is normally something that people choose to do, not something they do out of duty!

Define what you want out of your website

Why do you want to buy a website? There are several valid reasons why you might want to:

  • as an investment – a piece of virtual real estate that you can develop, lease, let, or maybe sell later for a profit
  • as an online business – a revenue stream that can help you maintain a lifestyle or provide a living for you, your family and any employees the business may have
  • out of interest – something done as a hobby for sheer pleasure, possibly for no financial gain at all
  • as an add on to your offline business to get extra customers/sales/exposure/authority/etc…

If you’re a hobbyist, then chances are that you’re not that interested in paying for a website at all – there are plenty of free alternatives. So we’ll concentrate on buying as an investment and as a source of income.

Buying a website as an investment

If you’re buying as an investment, you may not necessarily be very concerned about the current profitability of the website, or indeed how well the website works. In fact, you might welcome it if the site is somewhat run down, as that gives you scope to improve it and possibly sell it on at a profit. And since you’re not depending on the site as a regular source of income, a little bit of risk may be attractive to you. (Of course, you may be planning to set up as a serial investor, in which case you will depend on your websites for your income. But in that situation, any individual website is just part of your portfolio.)

However, you will need to consider whether you intend to keep the website just long enough to make a few cosmetic improvements (or even none at all!) and then remarket it for a quick profit, or whether you want to develop it more intensively to increase its value substantially. More work on improvements may lead to substantially more rewards! On the other hand, if you spend a long time on a site whose theme is rapidly becoming yesterday’s news, you could end up with a wonderful site stuck on your hands because there are no longer any interested buyers.

Buying a website as an online business

If your intention is to buy an online business that will generate income over time, then your approach in looking at the site will be slightly different. You’ll still want to look at how much scope there is to improve the site and its earnings, but you may be happier with a well-established site that  shows consistent earnings of the amount you’re looking for. Chances are, the more you plan to depend on the site for a regular income, the more important long-term reliability will be for you.

You’ll also need to be realistic in your income expectations. Setting your sights too high as a buyer is crazy. It’s like the other side of the coin in an online dating example. Imagine an advert which read along these lines:

Beautiful Partner Wanted for Homer Simpson Clone

Must be a warm, sensitive, talented, giving person willing to fulfill my every whim so I can spend all day on the beach doing nothing.

I don’t have much money and therefore don’t expect to pay more than the price of a pizza to cement our relationship. I don’t want to spend any time on meeting your needs. I’ll just lie back on my sunlounger and pay you attention only when you bring me another cold beer.

There’s a widespread belief among newcomers to online business – unfortunately, one that’s fostered by “make money online” (MMO) gurus – that the gold is lying there in the streets of Web City, and that all you have to do is pick it up. Sadly ( or perhaps luckily), it just ain’t so. The B&M business adages about hard work and luck, and inspiration and perspiration, are just as true online. Yes, it’s possible to make passive income, but you have to prime the pump before the money will flow.

What can you bring to the table?

This brings us neatly to the other part of the question. What are you willing and able to put into your website?

If you’re looking for a business, then you might find a site that perfectly suits your needs in terms of reliable income – but find that it requires skills and experience that you simply don’t have. Perhaps it involves providing online support to owners of a piece of technology you’re not familiar with. Or maybe it’s a suite of software tools that requires intensive marketing to generate sales, but you’re not comfortable with high-pressure sales techniques.

If you’re looking at an investment for resale, then this may not matter so much – although you’ll probably need to be able to master the website’s subject matter enough to be able to maintain its momentum. But you will need to have the website design and development resources to be able to add value for the next buyer (even if it’s only perceived value).

Whatever you’re looking at a website for, you will certainly need to think about these four things:

  • Skills – do you have the required skills to take on management of the website (and the business), or access to someone who has?
  • Time – will maintaining the website (and the business) take more time than you’re prepared to give?
  • Funds – how much are you willing to spend, and have you weighed the risk against the possible rewards?
  • Exit strategy – how will you end your involvement with the site? Do you have a strategy to maximize your gains (and, if it all turns sour, minimize your losses)?

In the case that you are building a site to sell, then you might want check how the best way you can prepare yourself before selling a website

The question of skills is particularly relevant if the site is particularly sophisticated and/or complex, as maintenance can then become very time-consuming indeed if there’s a major overhaul of the software that the site’s based on. It’s also important if the subject matter is in an unusual niche;  website users much prefer sites that are run by knowledgeable enthusiasts.

Buzz words

When choosing a website, don’t be taken in by buzz words and phrases.

“Buying a website” is itself a buzz phrase – major auction marketplace Flippa have marketed the idea of buying a website as being a desirable and attainable way of making money. It’s in their interests to do this, of course, as a ready supply of would-be buyers encourages sellers to churn out template websites – which they then list on Flippa for a fee.

Other flavors of the month crop up from time to time, such as “niche websites”, “exact match domains” and so on. A little research will usually reveal that several MMO courses are on sale to show you how this particular flavor of the month can earn you thousands. Needless to say, there are no easy pickings to be had – except by the “gurus” whose courses are being sold.

Don’t be distracted by buzz words. You’ll end up competing with everyone else who follows that particular dream.

Where to buy

There are several places where you can look to find websites for sale – marketplaces, brokers, forums, classifieds, direct contact. Each have their own pros and cons.

Auction marketplaces and forums

Auction marketplaces and forums are perhaps the easiest place to start out when buying.

The big thing going for them is their convenience. The larger ones can list hundreds or even thousands of websites for sale at any given time. They may often give feedback from buyers on the websites they’ve purchased, which may offer you some confidence in bidding – although you shouldn’t place too much credence on the feedback, as it may be possible to game the system, eg by establishing a good track record with low-value sites.

However, as we’ve already seen in Part 1, auction marketplaces tend to lose their advantage for higher-value sales, as the time constraints of an auction make it difficult to carry out due diligence with the extra thoroughness that the high price tag demands.

There’s also the risk of conflict of interest. The auction marketplace makes its money by encouraging sellers to list their websites for auction – so they’re going to be aiming to keep sellers sweet. This conflict of interest may be exacerbated if the marketplace branches out to offer other facilities like brokerage, escrow or in-house “due diligence”.

Brokers ( Send me an email and I will send you the list of all brokers I use)

If you’re looking to spend serious money on a website, then a broker may be your best bet.

Brokers match up people wishing to sell a website with potential buyers. Mostly brokers concentrate on a specific price range, and typically charge fees of up to 20% for their service.

Although brokers will often have a list of preferred buyers with whom they’ve dealt before, most brokers are sell-side – in other words, they’re acting for the website seller. As you’d expect, then, it’s in their interests to secure as high a price as the buyer is willing to pay, and to do so they will be sure to talk up the website’s best selling points and downplay the weaker points. Caveat emptor – let the buyer beware!

On a more positive note, a professional broker will recognize that it’s in his interests to be seen as honest by both sides, will be keen to maintain his good reputation, and will work hard to keep everyone happy in seeing the transaction through from start to finish – including by providing the buyer with the information needed for proper due diligence.

Direct contact

If you’ve decided on a particular niche, you could even try approaching the owners of websites that you really like the look of in the niche – even if the sites aren’t advertised as being for sale.

On the plus side,  you likely won’t have any competition to buy the site – it’ll just be between you and the site’s owner. Who knows? He/she may even be flattered by the attention. You’re less likely to be dealing with the kind of website sausage-machine that dominates the large listings like Flippa, so you’ll be buying something that doesn’t have a lot of competition from clones. And there are no middle-man fees to pay (unless the website you’re buying is so valuable that you engage an escrow service for the transaction).

The downside is that you’ll be taking a shot in the dark most of the time. You may find yourself sending a lot of emails to owners and getting irate responses, or no response at all. And the seller probably will not have experience of selling websites, let alone a track record, so conducting negotiations may be far harder than with an experienced seller.

Update february 2014: I have did a test by emailing a specific niche and had a much bigger return than just emailing anything I find on the internet, so if you like this direct approach strategy, I would target a specific niche.

What’s next?

You’ve identified the sort of site you prefer and decided where you want to start looking. Unless you’re after something very niche indeed, you’re likely to find yourself spoiled for choice. A bewildering amount of choice!

Don’t let yourself be bamboozled, though. Although there are thousands of websites listed for sale every day, an experienced website buyer can exclude 90% or more of them as not worth further consideration, just by glancing down the listings. How can you similarly cut the dross out of your search? That’s the subject of our next article: Potential pitfalls.

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nhussein

Managing Partner at VRETycoons

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