Buying and Selling Basics
Believe it or not, buying and selling websites and blogs for a profit was a fairly foreign concept to me before deciding to sell Blogging Experiment. Since then however, I couldn’t help but learn a few things about the subject. Today I’m going to cover a few of the basic premises of flipping a website. Don’t worry, this won’t be too in-depth (I’ll leave that to Max, if you haven’t yet watched his video you should) but hopefully this will get the old juices flowing and maybe even give you an idea or two.
The Search
This can be easy or hard depending on the market. The internet does go through little spells of ups and downs and in the process some good websites get sold quickly at a bargain price. This would obviously be an ideal choice for the flip. You buy it, hold it for a bit, get some revenue on record, and then sell it when the market gets stronger. Unfortunately you will not find this too often. You’ll have to fight some of your base instincts and look for a bad website.
The Exam
This doesn’t mean you should buy complete trash. You’re going to have to look for a website that has some horrible mistake, one that just jumps off the screen and makes you want to close it. This can be a poor design choice, an awful color scheme, an incomplete menu, etc.
If you find this then take a minute and examine the content to see if it’s any good. In general you won’t find it worthwhile to fix bad content. Adding new information to a half-decent website makes sense, so don’t be turned off if the website doesn’t have enough. Rewriting the entire website is going to be incredibly time consuming though. Unless the domain name is golden then you would be in almost the same place as if you just started from scratch. In all honesty, there isn’t an ugly site or blog out there that can’t be repaired with some tender loving care. So, if the content is decent and the domain name is workable the next step is to start working the math for it.
The Math
Doing the math will help you to figure out how much the site will actually cost. I can’t really work out a scenario that will apply to everyone. Different problems require unique fixes with unique costs and no two websites are going to present the same problems. You’ll just have to work out the estimates as best as you can. The important step is to etimate the damage the last owner has done to it and decide whether you can fix it yourself, and if not, how much the proper coder will cost. You’ll probably want to have a better design and make the menu look more stylish. The header and logo almost always need a revamp on flipped sites too. Also include the cost of any marketing you plan on doing as well as any operating costs (paid authors, hosting fees, licenses etc) and you’ll have a pretty good flip estimate.
The Finish
Use your estimate to decide what you’ll bid and set a firm cutoff in your mind. While you’re at it see if there is a similar finished site for sale somewhere else and get a realistic idea of the possible sale price once you’re done with it. Flipping depends on selling the website at a good profit. This is obviously much easier if you don’t pay an arm and a leg for it in the first place. All that’s left for you to do at this point is watch and wait for the auction to wrap up. If you lose, just move on to the next opportunity. If you win, throw your plan into action and let the flip begin.
As I said, this is a VERY basic overview of site flipping and I’m far from an expert. But if this sounds like the type of thing you’d like to try, consider signing up for the course Max is offering. A small investment early on will save you a lot of time and money in the long run.
Comments
Andy - Mr MultiVar June 18th, 2008
I hope domain squatters read these kinds of posts and realise that they will not sell their domain names unless they offer value in terms of some kind of website that is built and established.
devjargon June 18th, 2008
Selling websites is always harder than buying. For some reason people will never want to give you a fair price. A lot of people don’t understand bartering. Both sides need to give a little to get to a price thats liked.
On a separate note, Good to see a post from you Ben.
Max June 18th, 2008
I disagree devjargon,
I think selling websites is much easier. The reason people have trouble selling their sites and getting the price they are asking is because their site is not as valuable as they think. If you build strong websites that have nice traffic, good profits and good rankings, you will have buyers fighting over the chance to buy your site.
If you want to get $20,000 for a website that gets little traffic and makes $300 per month, then yes selling will be difficult.
On the other hand, if you have a site that gets tons of traffic, is steadily making over $20,000 per month in profit, you’ll have no trouble finding a buyer willing to pay more than $550,000 for your site (speaking from experience)…
Make Money June 21st, 2008
Interesting. I have been doing some research on this subject lately. I “wholesale” houses so the concept is pretty much the same.
Find a bargain and pass it on to a bargain hunter.
Just a different product.
Cool. And I agree with the argument that max made above. If you have a desirable product and market it right, you’ll sell it.
Kenney
trexpenn June 22nd, 2008
I guess the challenge is to get to $20K a month on a site?
Porsche Cars, Products and LifeStyle June 22nd, 2008
@trexpenn,
Exactly, but isn’t that why we all read this site.
@Andy,
As a former and current “domain squatter” (I prefer investor by the way) I have had and continue to own plenty of names that are valuable for their name as a generic term all by themselves (no content needed). That’s not to say I couldn’t make more if I didn’t develop them, but in some instances there is no need.
Cath Lawson June 23rd, 2008
It sounds interesting Ben. Is it really as simple as just making the site look better, or are there other things to consider – eg. doing things to increase the profits etc first?