How To Purchase or Sell a developed Web Site. Tips and
due diligence procedures to insure you know all the facts. By Detective Thomas
Shilling
The
Internet is filled with folks trying to sell or buy developed
web sites. Unfortunately, many of these deals are either fraudulent
or filled with so many untruths it makes you want to scream.
Dispelling
Myths
Their is absolutely nothing wrong or improper about a person creating
a site for resale. Often referred to as "cookie cutter"
or "knock off" sites, eBay
is full of them. This type of commerce has been used in Real Estate
for decades and millions of stock shares change hands every single
day via folks buying and then selling to turn a profit. What you
should pay for these kinds of sites is another issue.
Another myth which is perpetuated is the reason for selling. Specifically,
that the deal is somehow fishy or false because the seller is
tired of running the site, has other issues in their life which
take precedence, or needs funds for other purposes. All of these
reasons are appropriate and mean very little in a sale since their
is no way to verify them. On the other hand, a statement like,
"I'm selling all my sites to devote more time to basket weaving."
can and should be verified and sometimes sends up red flags.
Fact or Fiction?
We strongly recommend a healthy dose of skepticism if you are
the buyer. All sales have pluses and minuses so try and focus
on a combination of many factors. Many "statistics"
which sellers offer can either be manipulated or represent half
truths. For example:
A
great Alexa ranking
like 50,000 - This may be artificially created by using their
tool bar. The reviews are not "vented" and are often filled
with the site owners glowing praise or competitors/malcontents tossing
slander and lies. The "Other sites that link to this site"
data should be examined.
My PageRank
with Google is 8 - First, PageRank is a minor consideration
in the value of a site. Second, lot's of sites can "manipulate"
their sites PR with the Google Toolbar and or other sites or doorway
pages.
My site gets 1 million hits per day - First, hits mean absolutely
nothing when evaluating a site. Second, you are concerned with unique
visitors and Page Views, and perhaps more importantly, the source
of this traffic. Some sellers have other sites which drive traffic
to another site or they use "bots" to artificially inflate
traffic.
My site has high rankings in the major search engines - First,
how long have the rankings been in place, how many unique visitors
do they generate, and were these rankings obtained in an honest
and ethical manner.
I have great content - This is a big issue and always involves
Intellectual Property issues. Some sites have unique content which
they created and own, manny other sites have either stolen their
content from another site or simply can't or won't answer the question.
My site makes $2,000.00 per month - Another big issue and
very prevalent in site sales. Make sure we are talking about gross
revenue per month. Fortunately, it's easy to pierce this pitch.
Require bank statements, deposit slips, and tax returns. We have
found this requirement to always be a deal breaker. We don't care
who or what the seller is or what they say, show me proof or we
walk. Screen captures and or Admin rights can and often are manipulated.
Be very careful if the seller has more than one site since they
often lump income together in an effort to enhance the sale. You
can solve this pitch, require a separate CC Gateway account and
copies of the checks for the site you are purchasing as a condition
of escrow. This usually involves a period of months for you to evaluate
the flow.
My expenses are low - This can and should be used as a cross
check. How much bandwidth do you consume in a month? Answer from
a site that claims to deliver 1 million page views: about 5 gigs
per month. Red flags should go up. This doesn't make sense.
I
bought the site but never got what I paid for
All sales over $1,000 should be handled via Escrow.
Both parties should agree on the designated Escrow company. The
seller should open the escrow as an act of good faith and then
negotiate the cost. This always separates the serious sellers
from those who often say yes, we have a deal, and then they change
their mind.
You also need to consult with your attorney and tax person. Listen
to what they say. All communications between the seller and buyer
should contain a "kill/expire date". Again, this has
been used for decades in the real estate industry and helps move
things along in a faster manner and often insures that either
party will respond in a timely manner. Something like: "The
offer contained in this email expires at 10:00 AM (PST) on January,
23, 2003.
I'm scarred to buy. Where or how do I verify these seller statements
Relax. We don't mince words and intentionally painted a fraud
filled web site sale to gain your attention.
1.
Start with Whois.
Is the data accurate and are you dealing with the owner or an
authorized agent. Business names should be verified. Additional
Reading & Resources: The
Whois Records | Business
Name - Traffic
2. Carefully examine the site. Continue to do this for at least
a week. Examine the HTML code. Does all the content look original?
Do you see other sites names in the Meta tags.
3. Spend a significant amount of time in Google.
Including the Images and Groups search feature. Sellers often
preach with "I have 25,000 back links" At face value
this means absolutely nothing and can and often is manipulated.
Spot check 20 or more sites per day to see how they are linking
or even if they still have the link up and who owns the site.
Ask for keywords from the seller and run your own searches to
determine rankings. Additional Reading & Resources: Google
Search Engine Research
4. Traffic statistics should always be examined via access to
Admin. Screen captures and HTML documents can and often are manipulated.
Next, you need to understand what you are looking at. Many of
the major stat packages are very hard to understand. We always
look at the keyword traffic and referrer sources first. Then Page
Views and unique visitors. These procedures often expose the sellers
other sites driving traffic to the single site you are buying
or "bot traffic". We often cross check this data with
Admin rights to the script which serves adverts. In this case,
we are talking about "impressions" and remember, a single
page with 2 banner regions generates 2 impressions every time
the page loads.
How much should I pay or sell my site for?
That's a difficult question to answer. First, if you are a buyer,
perform your due diligence in this article. Next, the final price
is always subjective and only involves the buyer and seller. We
do have some hot spots which always raise the price and provide
a high level of comfort which insures the deal is legitimate.
Many of these hot spots are impossible for a fraudster to manipulate.
1.
How long has the seller owned the site and how long has it been
online. Longer is always better. Use the WayBackMachine
for confirmation.
2.
Is the site a strong "brand" and one which can not be
easily replicated in a reasonable length of time. It can take
years and thousands of hours to establish a brand. Other sites
can be replicated in hours and have no brand.
3.
What technology and rights are included in the price and will
the seller help with training and or migration. Some scripts are
free and other cost lots of money and require extensive training.
4. How much money would it cost me to replicate the sellers site
and traffic? Time is money gang. Some sites take hours and others
can take years.
5. Does the buyer see "potential" in the site? Many
sellers often preach "great potential" which is sometimes
true but often a statement which should be ignored.
6. Be realistic in your initial sales price or your first offer.
We are currently in a buyers market for most sites. An acceptable
ball park formula for a starting price is:
Monthly Gross Revenue x 12 months. Example: Verified gross
revenue of $2,000 per month x 12 months equals a starting price
of $24,000
Notes to this formula: Lower the starting price for developed
sites which have been online less than one year and raise the
starting price for sites with three or more years of a verifiable
track record.
7. Evaluate the domain name. Dot com is best. Carefully examine
the sites neighbors for problems. For example, a registered
trademark on funkyduck.com and the site for sale is funkyduck.net
Is the domain name reasonably short and brandable or key word
rich with hyphens. Lower the value for "typos" like
a developed site named geekvillages.com or gooolf.com.
Final thoughts
Insure that all your communication is respectful and civil. Especially
in public
Forums like our own geek/talk Forums. Read these communications
at least twice and consult with others more experienced in these
issues for help. Don't waste your time responding to communication
full of street slang, profanity, or unrealistic offers.
Sellers should carefully prepare some fact filled "boiler
plate" text to use for the first response. This will save
you a huge amount of time and significantly help narrow the field
of offers to those that look realistic and legitimate. For example,
my ask price is $25,000 and email number 1 arrives from a buyer
who doesn't have all the facts but offers $6,000. Ignore the dollar
offer and respond with your boiler plate email for $25,000 which
also includes all the facts which a seller is likely to need and
most importantly, verify.
