Buying and selling websites is a hobby of mine, and the busiest marketplace is Flippa.

Before you buy any site though you should spend a few minutes auditing whether the site is what it purports to be, and whether its a good deal.  Luckily this can be done easily and for free using nothing more than a handful of tools and your intuition.

 

Can I just use an automated valuation site?

A current example for sale, is a news site which cites a valuation of $247,0000.  To put it in context, the same valuation site, values this blog at over $100,000:

Erm…. no.  

There is zero chance this blog is worth anything remotely resembling that, but it does have some good links and half decent traffic.  This makes the automated valuation scripts score it well, despite there being no realistic value – unless you also happen to be called “Martin MacDonald“!

What should I look out for?

Every site is different – as is every buyer. To establish value in a site you first need to understand where its value lies.

If it’s traffic, you need to work out where that comes from, if it’s revenues, you need to establish its sources and credibility, if it’s pagerank (god forbid) you need to check its not fake.

Finally, as with any business, you should think about how difficult a business model it would be to replicate – which can dent a sites valuation incredibly.

Valuation by Alexa Score

 

This current listing tries to justify a valuation of $2m by way of an alexa score of around 3,000.

For those unfamiliar with Alexa, it gathers information through installed toolbars – and certain demographics are more likely to have alexa toolbars installed which can heavily skew the scores.

The example above however takes it one step further, and just uses a spoofed alexa score from another domain, its a technical trick which I won’t go into, but if you are going to use the alexa score as metric always check it by going directly TO their site at: http://www.alexa.com/siteinfo/martinmacdonald.net (change the domain at the end for the one you are researching)

If the two highlighted domain names do not match, its a spoofed alexa score.  Walk away now.

Penalised Domains

If a domain isnt disclosing recent organic traffic, its always worth checking out its SEO visibility score using a tool like SearchMetrics.

The graph above is of a site that was recently for sale on Flippa, advertising a PageRank of 7, but no traffic.  The particular site in question was a free wordpress templates site, these have traditionally been able to attract high numbers of backlinks (in the millions) by using footer links on every template it distributes.

Problem is, the Penguin updates over the last two years have really hurt this practice, so its always worth checking for obvious penalties.

AW Stats vs. Google Analytics

Its important to understand the difference between the two stats packages.  AWstats works by analysing raw server hits, but Google Analytics does a far better job of showing “real” human traffic.

As AWstats records every hit, the numbers are (often highly) inflated by bot traffic and webcrawlers.

The below example comes from a site that claims to not have GA installed:

To cross reference that, all you need to do is view the source of the site in question, then press CTRL-F and search for “UA-” – if a website has Google Analytics installed, you’ll see code like the below:

 In this kind of case, I’d really advise that you ask yourself why a site owner would want to obfuscate its analytics to potential buyers.

Google Analytics vs. Verified Analytics

A rather fantastic feature of Flippa is the sellers ability to upload verified Google Analytics files.

You should always look for these files as annotated below:

The example on the left with the ‘verified’ icon can be trusted, the printout has gone from Google straight to Flippa through their API integration.  The example on the right where the vendor has called it “Analytics Traffic Proof” has been uploaded, and might have been manipulated.

Copyright and Trademark Issues

Owning a website is the same as any other business venture.  If a domain or website has unique branding it often can add significant value.

At the same time, if its infringing on another companies copyright or trademark, walk away immediately.  You’re just opening yourself up for future legal issues.

Luckily it’s easy enough to work this out, even if you haven’t any experience in the vertical or niche.  Just google the brand name of the website and you’ll soon find out if it is potentially infringing another company.

Individuality, and ease of replication

Just how tough it is to enter into a market is a huge issue for any potential online business.  If a concept is unique, and the site is backed up by unique code, then its certainly more interesting than something that can be replicated in minutes on a new domain.

There are a lot of vertical in Flippa that are heavily populated with identical template driven websites.  Hotel sales is a great example, building a complete end to end XML hotel booking website is extremely difficult, and can cost tens of thousands of dollars.

If you look around though, you can soon work out that these are all driven by templates provided by HotelsCombined, and you can start your own in under 20 minutes, including buying a domain name for as little as a dollar.

Unless the site in a niche like this has pre-existing traffic, and a good brand, you would be better off just building your own.

So what kind of sites should I buy?

There are loads of bargains available on Flippa, its certainly not all doom and gloom or scams.  Some tips that I suggest:

1) Keep an eye on domain name only listings – Flippa is NOT a strong domain marketplace, and you can pick up some bargains compared to other sites that have higher numbers of relevant buyers.

2) Look for sites with high traffic figures, and no earnings.  There are always ways to monetise sites with good visitor numbers.

3) Active community sites always have a value.  If a forum with a genuine following is for sale, even if it posts no revenue its often worth a serious look.

4) Seriously aged websites are often good value, especially if they have been constantly in use.  You can filter by age on Flippa, but only so far.  Luckily you can “hack” the URL quite easily. For instance add “?age_min=120&page=1&type=website” onto the end of a search results page to view websites over 10 years old.

if you’ve any other hints or tips please leave a comment below!