How to buy and sell for profit – Article #2

Posted by: Rea Maor In: Making Money Online - Thursday, April 5th, 2007

After last time we’ve learned how to select the best niche site for you
And learned about all the different kinds of sites you might be interested to buy
(In a nutshell of course). It’s time for us to learn how we actually find the website
Itself we might want to buy and how to estimate its value best.

As a rule I would suggest trust no one, I’m not really a paranoid but in general
I trust no one with my money, for every good deal there are 100 bad deals out there
that you should be ready to spot and blacklist, your best friend in those cases
(Especially if it’s your first transaction) is time. usually, the longer you watch the Auction or Sale the better chances you have to spot the scammer, let others
Do the initial digging for you, let them ask all the important questions and see
If the market is right. If a site is worth the money there would always be someone out there who will offer money, Auction without bidders should always warn you ‘“ if no one wants to bid on the site, does it mean that the price is too high? Is the marker flooded with those kind of sites (which might turn this into a bloody competition over visitors) or does it all smell too fishy for other bidders… those are questions you should always ask yourself before taking the first step. On the other hand, keep in mind that Good site
Might reach their BIN (Buy it now) price very fast, and you might lose them if you wait too long, my best suggestion is always watch, as soon as something catches your eye
Follow it and when you feel the time is right, Strike! (Or just bid…)

There are many places you might be able to find sites for sell,
I always tend to prefer SitePoint Marketplace as listing your site there costs money,
And payment will always be the best filter out there. If you’re a faker or not serious enough you wont go and pay 30 ‘“ 60 USD just to list a site you don’t want to sell or doesn’t worth the money invested, but sometimes it’s worth to check all the other sites
As well, as sometimes people might try to sell their sites on several other websites
Before posting any paid ad.
Feel free to check the following list of websites that among other features
Also run a successful marketplace

SitePoint Marketplace
Namepros
Digitalpoint
BizBuySell
WebHostingTalk
WebsiteBroker

As soon as you’ll get used to those sites and their listings you might prefer to use bizmp, this site might save you a lot of time running round webmaster forums as it picks up
Listings from all around the web and ReIndex them, making it much easier source to look for whatever you want.

The second method, might be considered as SPAM, but I prefer calling it Aggressive marketing.

The method itself is simple enough, go on with your daily life, and carry on browsing the net.
If you see an interesting site that you wish was yours, just mail or calls the webmaster.
Again, it’s little bit unorthodox but it helped me with some of my best projects ever’¦
Don’t be shy’¦ the worst that can happen is that you call someone in a different time zone in the middle of the night and wake him up and cause a huge fight between him and his wife
(True story… it happened to me’¦ but I actually bought the site in the end).

When doing this you always have to remember then the webmaster or website owner didn’t actually ask for you to bid or offer a price tag, he might find it insulting.
Always approach slowly, make sure you greet him nicely, explain who you are, tell him how you found his websites and ask him (politely) if he ever though about selling the website.
This might not grantee you a sell, but it might just tip the odds in your direction.

This actually leads us to our Second step:
Evaluate, Negotiate, and Complete the Sale

The easiest method to evaluate a site would be multiplying the monthly revenue and see how many months will it take you to get your money back (without any extra work) this may make great sense to you, but it’s not always applicable.
Usually, with small sites you can expect to see prices that equate to 10 to 20 times
The monthly revenue and even that could easily turn to be very trick
As sometimes a site would earn 1000 USD per month while its net profit turns to be less then 100 USD, if such a site has a price tag of 4,600 USD you might think that it’s a great price but you’re actually paying an estimate of 46 months in advance, which is BAD. Always make sure you know ALL the numbers before bidding.
Don’t be shy, ask to know what are the Monthly costs of the website
(Hosting, Advertising, Programming, Toll free numbers to the service… anything…)
Feel free to ask for Poof of the revenue and expenses, it can be screenshots of Advertising revenue, Referral to hosting package or anything else who can back up his words, and even then’¦ keep in mind that it might be fake stats / screenshots’¦
Always check, trust no one’¦ I’ve been saved several times by the fact that I emailed
The site’s hosting company to see if they can back up the details the site owner represents.

Remember the following key points.

– Check for Proofs (screenshots, actual access,
External 3rd side Stats program that you ask him to install)
– Crosscheck with as many sources as you can, if for example Google adsense screenshot
shows you 100,000 page impression per month and the stats program shows only
10,000 ‘“ ask where did the extra traffic came from, it’s possible that he uses
the same channel of advertising on several sites.
– Check the person; if it’s a forum see if he has any rating, previous sells or posts might
indicate about the personal reputation.
– Try to digg him up on the web, see if you can find more information about him using Google or any other search engine you like.

Sometimes, especially when considering Blogs or very small sites,
You cannot set a price according to the monthly revenue as there’s NO actual revenue,
But the site still has very good potential in your eyes (you might have a great idea on how to give it some great SEO boost or own several high traffic related sites that can
Drive good traffic into that site), those sites are the hardest to estimate but usually
Generate the best revenue (compared the the investment).
I always find it good to try and estimate how much money YOU can make from it,
If the main source of income would be from Google Adsense then you should estimate the approximate eCPM (effective cost per thousand impressions) for the site, you need only know the traffic figures in order to work out your revenue projections. You can reach an eCPM by knowing the CTR (clickthrough rate) and multiplying that by the projected average earnings per click.

The last rule and one of the must important when dealing with Websites and Sellers ALWAYS let the seller set his price,
Go ahead, ask him for his price ‘“ it might turn up to be much lower then what you had in mind, the worst that can happen is a high bid and you negotiating with him over the price.

With all that said make yourself an iron rule when dealing with websites.

– Learn to value web sites.
– Verify documentation.
– Act quickly.
– Be exceptionally courteous.
– Let the owner name the price.

This was longer then I have expected, hopefully you found interest in it,
Next time we’ll learn how to actually ADD VALUE to the site before you sell it again for more money. Stay turned!


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One Response to “How to buy and sell for profit – Article #2”

  1. webjourneyman Says:

    Staying tuned 😎

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