Buying a Website? 12 Elements You Need to Investigate

June 5th, 2010

Once you’ve located a website that you’re genuinely interest in, it will be time to take a closer look. Below are 12 specific elements you want to verify before you decide to purchase a website. While the following are not the only criteria, these are considered the more important factors. Be sure to also check out the third-party resources (listed below) to ensure you’re getting an honest deal. This, of course, will reduce your risk and ensure the Seller is being honest about all the website’s claims.

1. Website Traffic. Anyone who has ever heard the saying ”build it and they will come” has obviously never owned a website. Even over income, the most important factor is traffic because without traffic, it’s difficult to generate revenue. Some may say that income should be listed first but with no traffic, a website is basically worthless.

Anyone serious about selling their site will always provide traffic statistics. They will typically contain a series of statistical metrics to help you analyze the site for sale. The two most important statistics are unique visitors and site referrers.

Let’s take a closer look at each one: You want to always focus on unique visitors and not “hits.” The differences between the two are easy. For example, if a webpage has six graphics and the webpage itself, it would be considered seven hits, one hit for each graphic and the HTML page. Unique visitors are just that, individuals who visit your website — this is what counts when looking at a website’s traffic statistics.

Site referrers, or referrals, indicates how a visitor found the site. For example, if someone came from Google, it will indicate as such and usually the search phrase (also referred to as “keywords”) used to locate the website. If other websites are linking to the site, it will usually display the web address (URL) where the visitor clicked to visit your site. The following are two examples…

From a search engine such as Google, you’ll notice that it indicates the search engine and the keywords used:|

http://www.google.com/search?hl=en&rlz=1B3GGGL_enUS235US235&q=allow+visitors+to

+leave+comments+on+website&start=10&sa=N

From a website where the link is embedded:

http://www.warriorforum.com/forum/pop_profile.asp?mode=display&id=76731

One thing to look out for is if the seller uses paid advertising such as Google AdWords or other search engine advertising. If nothing else, the seller has an obligation to tell you if they use advertising. If they do not disclose this information, I consider it to be deceptive because who is to say they would not be honest in other areas when trying to sell their website. Luckily, it’s
rather obvious in the referrer section of a website’s traffic report. Here’s an example of a referral link from Google AdWords:

http://pagead2.googlesyndication.com/pagead/ads

In another post,  Third Party Resources, I discuss Alexa as another indicator regarding the amount of traffic an established website receives. While Alexa is not 100% accurate, it will help confirm traffic stats.

2. Website Income. The best way to prove income is for the seller to provide “screenshots” of the revenue. Whether it’s though PayPal, Google Checkout, Clickbank or other income source, you want to see proof of a money trail. The further back their history of sales they are able to provide, the better. Another method is to let a seller provide you access to their accounts.

Luckily, PayPal (provided they are the account owner), allows anyone authorized limited access to one’s account. This is another method to let you know if the Seller is being honest about the website’s income. One of the challenges is if the owner has multiple websites that are
controlled by one account. For example, when I was selling one of my beat-a-traffic-ticket websites, I had more than 12 other websites that I funneled income into one account. Obviously this would be a hinderance but you can usually sort transactions by amount or email address.

3. Graphic/images. A very important issue is to make sure all the graphics are original. I’ve repeatedly heard horror stories of companies such as Getty Images claiming that a website used their graphics without authorization. Be sure all images are owned by the current website’s owner and not “borrowed” from another website.

4. Niche. Niche websites are typically small websites (usually less than 100 pages) that are focused on a corner of a particular market. They let you offer your target niche market a product or service that they can’t get from a larger more established supplier. The more specialized a website, the greater chances of receiving quality traffic and meeting a specific need. This is why niche websites are in demand. If you locate a niche website and with a fast
return on your investment, they could be worthy of a closer examination.

5. Link popularity. This is the total number of web sites that link to a site. According to LinkPopularity.com, “good link popularity can dramatically increase traffic to your web site. Well placed links are an excellent source of consistent and targeted traffic. And due to recent developments, they can even generate additional search engine traffic.”

Link popularity is a good indicator to how other website owners/webmasters actually feel about the website for sale. Referred to also as backlinks, these are important because you never want to be totally dependent on search engines to deliver traffic. The more backlinks, the better. You can conduct a link popularity check here. You can also search directly on Yahoo or Google by using this example: link:www.websiteforsale.com.

6. Energy. When I state this, it is actually a double-sided coin because there are two areas of energy: (a) the first is the amount of energy or hours you will need to expend in order to maintain the website. For example, it makes no sense buying a website that generates $100/net if you have to spend 20 hours a week to maintain it. (b) The second area is amount of cash you have to fork out in order to maintain a website. For example, a “proxy website”
uses tremendous amounts of bandwidth in order to remain online. This can add up to be an expensive deal if you’re not prepared, so keep this in mind.

7. Age of Website/Domain. This is no-brainer, the older the domain/website, the better you’re off. They tend to have more credibility with search engines and better chances of other sites linking to the the website for sale. You want to avoid a website that is typically under 6 months of age although this is not set in stone. Again, proven traffic and income may trump this criteria.

8. PageRank. I recognize that some potential buyers may be interested in knowing a website’s PageRank. For me personally, I never really considered it a deal maker or breaker since it was the amount of traffic and income that were the most important factors. A few buyers consider PageRank as a virtual real estate appraiser and it could be an important factor if you plan to flip a website. I discuss PageRank further in the next section.

9. Domain Name. For some, the domain can be a key factor in deciding to buy a website. If it’s a strong domain name, this could increase the value of the website but an average domain typically does not affect the overall value. On the contrary, a bad domain name could hurt the value of a website’s purchase price. Here’s an example…

Good domain: WebmasterHelp.com
Average domain: Webmaster-help.com
Bad domain: Webmaster-help-2-assist-you.us

10. Monthly maintenance. Some websites operate on auto-pilot. They generate income day in and day out. Ideally, you want to buy a website that has minimal maintenance. This way it allows you to focus your energy in other areas such as internet marketing or buying more websites. Content sites tend to be the best for those who are first starting out. It makes no sense in buying a website that generates $100 monthly net income if you have to spend 20 hours a month to maintain it. The best way is to ask the seller. You may also want to ask the seller if they will provide you support should you decide to purchase the website.

11. AdSense. Most websites typically use AdSense as one way of monetizing their website. If there are no AdSense ads placed within the site, you want to be sure that Google has not banned that website. If the seller does not have AdSense, make sure you know why. You can also use iWebTool.com’s AdSense checker by clicking here.

12. Custom coding. Some website owners will have custom programming done to their site. It may be because they offer more features than standard “out-of-the-box” software and thus could increase the value of a website. If a website has custom coding, you want to be sure the programming is solid and will not cause potential problems in the future. Also ask if there are any server requirements such as a MySQL database or other needs in order to operate the script or program.

Of course, these are not the only factors when considering buying a website. By using Third-Party Resources, you might be able to locate additional information that may assist in your quest to evaluate a site in its entirety.

Want to Sell Your Website? 10 Tips Before Putting it Up For Sale

June 3rd, 2010

Once you’ve decided to place your website up for sale, you want to prepare your website so you’re able to get top dollar. After all, you’ve probably put plenty of energy into building your website and it makes sense that you want to be able to get the most possible amount for it. Below are a few suggestions before announcing to the public your established website is for
sale.

- Internal Evaluation. The first step is to conduct an internal evaluation of your website. Although it can be challenging, you want to view the site from a buyer’s perspective. By reviewing the previous chapter, there are plenty of valuable tips you may want to consider before placing your website on the marketplace.

- Get your website evaluated by others. One of the greatest benefits of being a part of a forum community is the ability to ask fellow members to evaluate your website. Just don’t expect to drop into a forum and ask. Rightfully so, most forums require you to evaluate other websites for their strengths and weaknesses before asking for an evaluation of your own website. It works both ways; if you want someone to give you a serious evaluation, expect to do the same for others.

- Inventory what you expect to sell. Okay, most may think a domain and the site’s content are obvious but what about other elements which may help increase your asking price? Some of these elements may include an opt-in email list, an affiliate list, license to a classified ad database, membership list and possibly much more. In order to get the maximum, you want to inventory all the assets which you will include in the sale of your website.

- Website metrics. Anytime you place you site up for sale, there will be two obvious questions that a serious bidder or prospect is going to request: (1) your traffic metrics and (2) proof of income. It’s best to have this data prepared, if not already included in your marketplace ad or post.

- WHOIS database. If you use a proxy service to mask your identity, be sure to remove that service so your contact information is displayed in the public database. This also may be a good time to make sure all your contact data is current and up-to-date.

- Anticipate 3rd-party resource scrutiny. If you read the last chapter showing sellers how to use third-party resources as a mean to verify a seller’s claims, you may want to do your own investigations to make sure no “surprises” are brought up about you or your website.

- Quick improvements. There’s no doubt every seller wants to get top dollar for their website. In my special report Flipping Established Websites, I discuss 10 different means of improving the value quickly. Some improvements suggested include search engine optimization, upsell opportunities and improving AdSense click-through rates. I explain these and other ideas in the special report after this portion of the eBook.

- Timing of your sale. They say that in some businesses, timing is important. It’s no different when selling your website. If you live in the northern hemisphere, summer tends to be a slower time because families are taking vacations or enjoying other leisure activities. December is also considered a challenging month due to the holiday shopping season.
most ideal time is to sell your website at the beginning of the year, early spring and in September when kids return back to school.

- Using a broker. Unless your site is worth hundreds of thousands of dollars, or perhaps millions, there really is no reason to hire a broker to do what you can do for yourself. Obviously, there is much more involved when you’re talking those type of figures. In that situation, a broker is (hopefully) far more skilled at developing transactions that are six-figures plus and the negotiating process. Just be sure you get references of other past transactions before signing up with a website broker.

- Post-sale financial plan. It may seem premature but I always recommend that you have a “plan” to use the money you make from the sale in a constructive manner. I cannot tell you how many webmasters I know who go “hog wild” and spend their money foolishly, that is why having a plan and sticking to it will help you avoid any potential problems. Obviously, you’ll
need to discuss your sudden income with your tax consultant as well.

Buying a Website? Financial Considerations

June 3rd, 2010

Like with any investment, being prepared is paramount. Before you break out your credit card or checkbook, let’s look at some important issues when you consider buying an established website.

- Establish a budget. Like anything where money is involved, you want to develop a budget to help you stay financially focused. This should not only include the amount you wish to spend on buying an established website but also any expenses for maintenance and improvements.

- Don’t go overboard. Just because you have a credit card with a zero balance and a $25,000 limit doesn’t mean you should use it all on your first transaction. In fact, if you’re new to buying and selling established websites, I would recommend you minimize your risk by only investing a percentage of your total budget until you are familiar with the process and learn from your experiences.

- Have an improvement plan. By having a plan of action to improve the website, you will be further ahead than one who buys a website based on a whim. A plan can help guide you to recouping your investment at a faster rate while increasing a site’s value.

Buying a Website? Here are 12 Free Tools to Help You Out!

June 2nd, 2010

To minimize your risk, the following resources are free and could provide some helpful insight when you consider buying an established website. Any time you decide to investigate a website, be sure you utilize these third-party resources.

WHOIS Domain Database
The first thing you want to verify is if the seller is the person authorized to sell a website. By visiting a WHOIS database, you’ll be able to see who is the owner and administrator of the domain. Beware though, sometimes a domain owner may use a Proxy service to mask their identity. This is increasingly common to protect the owner from unnecessary solicitations or spam. However, any legitimate Seller will be aware of this and have their contact information in the public database so you’re able to confirm their identity. Once located, be sure to send them a message based on the Owner’s listed email address and have them reply as an extra security precaution.

Copyscape
The next thing is to check and make sure the website’s text (copy) has not been plagiarized. This service locates sites that have duplicated content, as well as those that have quoted you. According to Copyscape.com, “the free service makes it easy to find copies of your content on the Web. Simply type in the address of your web page, and Copyscape does the rest.” Copyscape also offers a paid service for more extensive search capabilities

Name/Email Address via Google Search
Although not a foolproof method, you can always do a Google search by typing the owner’s name in quotes. There is a chance you may find other individuals with the same name but if you’re able to locate information about the Seller, this may provide you greater insight into the Seller’s past online activities. If there are concerns, you can always bring this to their attention. Be sure to check with Facebook as well.

Google PageRank
PageRank is what Google uses to determine the importance of a web page in their search results. PageRank is measured on a scale of 0 to 10 and is assigned to individual pages within a website, not the entire website. To find the PageRank of a page, either download the Google Toolbar or utilize a faster option: PageChecker. You can improve your PageRank by increasing the number of “back-links” and having quality content. For some established website buyers, PageRank is very important while for others, it’s the amount of quality traffic.

Alexa Ranking
Alexa ranks websites based on visits from users of its Alexa Toolbar for Internet Explorer, Mozilla, and Netscape, among other sources. The lower a website’s ranking, the more traffic it receives. For some sellers, this is a valuable determination if a website is receiving high traffic. To see a site’s ranking simply visit Alexa and enter a web address into their search box. Please keep in mind that while a site may be ranked, the site’s traffic details may not be present because Alexa only tracks the top 500,000 websites.

Search Engine Optimization

For any webmaster, having your website optimized is critical to bringing quality traffic to your website. Webconfs.com is a great spot to see if a site is fully optimized. They offer a variety of free SEO tools including a Search Engine Spider Simulator, Backlink Anchor Text Analysis, Backlink Builder, Keyword Density Cloud, Reciprocal Link Checker and more. Should you find a site poorly optimized, this may be to your advantage because you could make some minor improvements, see better traffic and increase revenue.

Way Back Machine
If the website is at least 6 months to a year old, there’s a good chance that a copy of the site is in the Way Back Machine. Located at Archive.org, they may have previous copies of the site’s appearance stored in their database. This will allow you to review how the site looked in the past. Not all websites will be listed since owners can request to be deleted from the Archive.org database but it never hurts to check.

Yahoo and DMOZ.org Directory Listings
During the beginning years of the web, it was important to be listed in both the Yahoo and DMOZ.org directories. Unlike a search engine, staff members review a website to determine if it will be listed in their directory. They don’t seem to carry as much weight as in years past but it can also be a plus if a site you wish to buy is listed in either one or both directories.

U.S.P.T.O. Trademark Search
According to AllBusiness.com, “a trademark is a distinctive name, symbol, motto, or design that legally identifies a company or its products and services. Your domain name—the word or phrase that identifies your website —may qualify as a legal trademark if you use it in commerce or notify the U.S. Patent and Trademark Office (PTO) that you intend to use it in commerce.” In reality, you don’t need to register a trademark but it’s still a good idea when it comes to a domain name. And while this may not be applicable to all established websites for sale (or domains for that matter), it’s always best to make sure the site you wish to purchase does not have the potential to violate an existing/pending trademark. If it’s trademarked, you want to be sure to also obtain the Trademark registration when buying an established website.

Evaluating a Website Seller

June 2nd, 2010

In all candor, we would like to think everyone has a good heart and wants to be honorable when selling their website, unfortunately that doesn’t always happen. And sometimes an anxious buyer may be burning of excitement to make a deal but not realize that they may be getting themselves in over their head. Below are a few tips to help you evaluate a website seller.

• Consider using a marketplace where sellers are rated based on their past transactions. For example, on eBay, every seller has a “feedback rating.” The higher the rating, typically the more trustworthy they become. Other marketplaces such as DigitalPoint.com, DNForum.com and Flippa.com offer a similar rating system.

• In marketplaces where prospective buyer’s can ask the seller questions, notice the responses. Is the seller answering a direct question or avoiding a specific question all together. Are the answers one or two words or does the seller respond with thorough answers?

• You may want to avoid a seller from another country. My comment may come off as being cruel or intolerable but I make that from a legal standpoint. Should you have a dispute with a seller and they live in another country, it can make it more legally challenging should a problem arise. That doesn’t mean that everyone from a foreign country is a scammer but you
should be more cautious when dealing with someone who is not from your own country.

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