The Danger of Sloppy Transactions When Flipping Websites

Whether or not we’d like to admit it, our world of buying and selling websites can be pretty sloppy at times. And as it pertains to arbitration and things just going bad in general with deals, nearly ALL of it stems from plain old sloppiness.

I’ll be the first one to raise my hand in guilt to admit that I’ve been too lazy, too trusting, too unorganized, and too uninformed in the past. Every deal I’ve lost money on, (even the ones that were “other people’s fault”), is a direct result of my own informal approach to the deal. Which I GUESS means it was my fault after all.

When you approach a transaction with all your ducks in a row, all your boxes checked, and all the stones overturned, the margin for error becomes very slim and all potential instances of arbitration over the deal vanish. So here’s a few things you should always make sure to do in any deal…

Due Diligence

This one is common sense, but goes at the top of the list. Approach the website (and it’s owner) as though you were conducting a criminal background check. That means you check out everything!

– The domain. I use domaintools.com to check for age, drops, registration matching the owner, etc. Then I use Market Samurai, Open Site Explorer, SEMRush, and SEO Spy Glass, to verify the incoming backlinks, the PR, the rankings, etc…

– The Seller. If you’re buying from Flippa or other online marketplaces, check feedback. Check their previous listings. Check their trust scores. GOOGLE THEM. Ask them LOTS of questions. Get to know them a bit. Is this the first site they’ve sold? Why are they selling it?

– The content. This one has bitten me in the rear before. Check Copyscape for duplicate content. Make sure it’s original. Make sure you have the right to use it. Make SURE it’s included in the sale!

– The Income. More and more, screen shots just aren’t doing it for me. I’m a serious buyer. Could you please take 60 seconds to make a screen recording of your affiliate dashboard, or your merchant account? I’d feel much better seeing it live…Especially if the account doesn’t come with the sale.

– The traffic. Same as income. Login, and show me. But I’m also gonna check sites like compete.com, alexa.com, quantcast.com, etc…I know they aren’t always the most accurate, but they should give me a general consensus as to whether or not the seller is telling the truth.

– The terms. Especially if it’s monetized with affiliate programs. Check out the affiliate programs terms. Check out any special payment arrangements the seller has with the vendor. Make sure those benefits transfer to you. Make sure the site isn’t in violation of those terms, etc…

– Everything you see posted in our Due Diligence category.

Contracts

I’m willing to bet that over 70% of website transactions, especially ones that originate in most marketplaces, don’t even utilize contracts. I suppose I understand why. Who knows how to write a contract? Who want’s to pay a lawyer? Can’t you get in trouble for ‘practicing law without a license?’

Getting a contract in place is one of the most important aspects of any deal. All of your protection (buyers and sellers) hinges upon the contents of this agreement, and it’s ability to be enforced. Having a lawyer that can draw up the contract for a few $100 is well worth it for larger deals. But even deals that are less than $10k need to have some sort of formal agreement.

At a minimum, I recommend you grab a templated contract from somewhere like Legalzoom.com, or Sitepoint.com. I’ve used these templated contracts many times. They’re written by professionals who know legal jargon, and cover most of the basics. It’s not ideal, but it’s better than going commando with nothing at all.

Record Conversations with Other Parties

This may seem a little anal, but having a skype chat, or a recording of a voice chat can come in handy when disagreements arise. When you begin working on a new deal, I recommend you create a file in your inbox to save all email correspondence as well. This little bit of extra work will settle any issues about what has been promised, and what hasn’t.

Third Party Verification of Stats

This falls under due diligence, but is really only necessary for large transactions. An accurate recasting of financial records, tax statements, etc, by a professional tax expert gives an added piece of security and peace of mind to everyone involved.

Listing Agreements with Brokers

If you’re dealing with a website broker, you’ll want to have their services clearly defined in a listing agreement. How long will you give them to sell your site? What commission do you agree to pay them if they are successful? Do they have sole and exclusive rights to sell your site during the term of the listing agreement, or are there exclusions depending on where the buyer comes from during that time frame?

Most website brokers shoot from the hip, and don’t even use listing agreements. However, most states require that a pre-approved one be used by any and all business brokers that deal in their states. (That means web based business brokers as well). It protects you and them…So if they don’t sign one with you, don’t work with them.

Payment Terms & Financial Checks

This falls under contracts, but is important enough to separate out by itself. Most large transactions need some sort of verification to be done on the buyer to prove they actually have the funds available to make the purchase. Even if they’re only making a down payment on the business, if it’s a substantial amount of money you should make a stipulation for payment in that amount to be made in full within a certain time frame after the signing of the deal.

This is just protecting the deal. You don’t want them to flake out on you half way through the transaction because they didn’t really have the money to back up the offer they made you. Or, worse yet, they were counting on a third party investor to pay for the site and that person wasn’t involved in negotiations. So at closing, they go to their “investor” friend, and to their surprise and yours, there’s no money available.

Ask them to send proof of their ability to pay you before signing the contract. And make sure to put a “payment due by” date in the deal. Not doing so is just leaving the door open for potential problems…aka, being sloppy to the point of hurting yourself.

Introduction to Business Employees & Content Providers

This can’t be done pre-sale often times because of confidentiality, and fear of employees leaving once they find out the business is for sale. However, having some plans to get to know them, or atl east ABOUT them, is only smart.

I purchased a large blog that had it’s content generated by a team of writers in the past. The writers had no clue the seller was selling the site, and when I stepped in, I had to re-staff the entire team because I was left short handed when several of the key contributors jumped ship. They were loyal to the original owner, and I was the new guy on the block. None of them were held by a contract to continue providing the great content they were providing, and because I didn’t have a plan for retaining their services when I became the owner, the business became a burden for me quickly.

GET TO KNOW THE TEAM BEHIND THE PROJECT. I can’t stress this enough. At a minimum, you need to have the selling owner feel out the employees for you to ensure the business’ stability post sale. Are they planning to stay? Will their compensation change? Will their responsibility increase or decrease? If you don’t have a plan, it can blow up in your face.

To wrap things up, a lot of what goes wrong in online business transactions is a result of sloppiness. Plan for the worst case scenario and many times by simply making that plan, you’ll avoid issues down the road. This list is by no means exhaustive, so there my be a part 2 of this article coming in the near future.

What are your thoughts? What do you do before a transaction to make sure the deal goes smoothly? Anything you would add to this article? Leave your thoughts in the comment section below.

Buying Sites With Great Products

The longer I work online, the simpler everything becomes. All the “shiny things” lose their appeal over time, and at the end of the day you find that making money online all boils down to adhering to a few key principles that always work.

One of the most basic things you need to start a good business is a high quality product. While market research, keyword research, copy writing, traffic generation, sales funnels, and the like are all very important components of any online business, I’ve found that they all become a little easier when you’re building off of a solid product you have faith in. It just makes it easier to do all that other stuff when you’ve got confidence in your ability to deliver on the promises you make when selling to your market.

One of the big draws for affiliate marketing is that without doing any product development, or customer support, you can create a website to pre-sell someone else’s product. So rather than creating value, countless thousands of internet marketers have chosen to go for the quick cash as an affiliate, only to fizzle out for lack of having their own audience, customer list, brand, and the like to build off of when major traffic giants like Google decide to slap them.

Which leads me to today’s post topic: Buying sites with great products! Remember those basic principles I spoke of earlier? One of them is that it’s usually better to buy than to build. (not ALWAYS of course). A huge hindrance to becoming a product vendor is its sheer difficulty for most people. In reality, creating products (especially info products) is pretty easy…but creating GREAT products can be very difficult, no matter what format you create them in.

One solution is to buy them! When browsing online marketplaces, I am of the opinion that most website investors think too narrowly…They look at the numbers, and if the site has great traffic and revenue, they’ll look into it further. If not, the site gets passed up. But buying websites is a great solution for more than ROI. It’s also a great solution for acquiring business building blocks, like a great product.

So, what makes a great product? Here’s a few of my own thoughts…

1.) Great products over deliver on any promises their sales messages convey. Which means the product should make writing your sales letter EASIER! You should be able to confidently look your prospects in the eye and tell them your product will fix their problem or they don’t pay.

2.) Great products come with everything the customer needs. In other words, all inclusive…nothing else needed to buy to achieve the desired end result.

3.) Great products are easy to use (or follow if it’s an info product). When buying a website for it’s original product, sometimes this is where the fix needs to happen. The product could be amazing, but if it’s a 500 page PDF file, think about converting it to video.

4.) Great products create traffic. The product should cause the customer to tell their friends and family how awesome their experience was, and create viral traffic from satisfaction. If a site you’re looking to buy has the above characteristics, but little viral traffic, perhaps you just need to build in mechanisms that make it easier to share via facebook and twitter that aren’t already there.

5.) Great products are mostly evergreen. They are tried and tested, and aren’t going to be obsolete in 3 months. You’ll be able to sell it for a long time to come.

A lot of things go into making a product great, these are just a few I had off the top of my head. Perhaps being a vendor is the missing piece in your online business? If so, I’d encourage you to look for sites with high quality original content you can use as your own.

What do you think? Tell us what makes a great product…

*closing tip*

One place a lot of people look to is CBengine.com. Look for clickbank products that have expired due to lack of sales. Contact the owners and make them an offer. Ask to see the products. You may be pleasantly surprised.

Beware of The Recycled Stats Website Seller Scam

A few months ago, I purchased toprankedhosting.net from Flippa.com for $1300. ($1250 + $50 for paypal fees) from a user that has since had their account suspended.

At first glance the site looked like a great buy. $350/month in net revenue, 2,000 unique visitors, pretty good domain name, with room for improvements in the SERPS…So I bit! After all, he had revenue proof in the form of screen shots from his Paypal account from Hostgator’s affiliate program, and traffic stats from his server.

My first mistake: Rushing the deal in order to win the auction

Normally (especially for larger transactions) I’d spend some more time doing my due diligence on the site before buying. But there’s something about the public auction format that causes us to act hastily some times. The level of competition can drive you to place a bid faster than you should in order to snag the deal, especially when it’s a smaller amount of money like the one in this example.

Take a look at the auction for yourself: Auction for TopRankedHosting.net.

I broke so many of my own rules on this one, it’s no wonder I got scammed! Thankfully, justice has since been served, and I did get all my money back after about 3 months of detective work and legal action. So instead of highlighting the obvious red flags I ignored, like his lack of feedback, not checking copy scape, etc, etc…I wanted to show you how he initially got away with it.

The Re-used Stats Scam

After purchasing the site and installing my own analytics, I began to get a little worried after 3-4 days because the site got zero visitors. Not a single one…And the seller claimed 2,000 per month.

I tried to contact the seller, and had no response for several days. Egg on my face! Did he Photoshop the screen shots?  How could this have happened to me? How could I have been so careless and not seen this before buying the site?

While digging through the various pages in wordpress, I stumbled across an internal link to another site I believe was owned by the seller. He forgot to change it out. The page wasn’t published inside wordpress so it was impossible for me to have seen it prior to purchasing the site.

I clicked through to check it out, and low and behold, another hosting affiliate site with the exact same content and page structure!

I WAS HOT!!!!

I attempted to contact the seller dozens of times with no luck. After reporting him to Flippa, and contacting my bank (because Paypal doesn’t insure digital goods), I was able to get it taken to court, and got my money back.

But how did he pass it off as a legit project?

My personal belief is that he took screen shots of earnings and traffic from his other affiliate site that actually was making the money and attempted to pass off the copy cat site as the real thing.

I’ve seen several other scam artists attempting the same thing lately. Be wise and learn from my mistake! NEVER buy a site in haste to beat out other bidders. If it goes before you have a chance to perform all the normal due diligence you would regularly do, let it go! And double check all screen shot “proof”. Make sure you verify it’s for the site you’re purchasing before placing a bid.

– Lesson learned….Justice served….And I live to buy another day.


The Piece by Piece Website Flip

Have you ever seen the movie “Pretty Woman?” It’s the one with Julia Roberts and Richard Gear. My wife was watching it the other night and it got me thinking about website flipping.

If you’ve seen it, you’ll remember that Richard Gear plays a billionaire business takeover guy that preys upon struggling businesses, buys them out, and sells them off piece by piece to other companies.

In today’s post, I want to talk about doing the exact same thing when it comes to websites and group auctions. Let’s call this a Piece by Piece Website Flip.

One type of auction I see passed over by so many people in online marketplaces is the “group of 250 adsense sites” type auctions. Usually, there’s 1 or 2 sites in the bunch that make up the majority of the claimed income, and the owner is throwing in his collection to inflate the perceived value.

If you’re like most people, you don’t even give these auctions a serious look. I mean, who wants to pay to renew 250+ domains every year?! Who wants to go through with the hassle of transfering 250 sites to a different hosting account?

Sometimes, if you’re lucky, you can get the owner to sell you just one of the sites in the bunch, but more often than not they aren’t willing to separate the wheat from the chaff for fear of not being able to sell the chaff.

So, what’s a website flipper to do? Become Richard Gear!

When I see these types of auctions, I like to take a look at each site to sniff out ANY potential value in them. Even if the sites have zero traffic or revenue, the domains, content, and designs may be worth something. Even if only $25-$50 each.

Lets use the above example. You go to Flippa.com, and come across a listing that says “Network of 250 Adsense Sites for Sale”. The network of sites collectively earn about $350 per month, and over $300 of that is from less than 5 sites that are the real winners in the group.

The BIN is $3,000.

Also, the seller is absolutely UNWILLING to sell you the 5 money makers by themselves. They want you to take the whole bunch of them, or nothing at all.

After browsing through the 245 duds, you see that most of them have 5-10 quality original articles on them. They each have a decent looking design with a unique header graphic. In fact, the only reason they don’t make any money, is lack of traffic and ad placements.

So, with the domain names, site designs, and original content, you figure each site is worth about $30 to you.

You quickly place the BIN for $3,000, (primarily for the $350/month in adsense income from the main 5 producing sites), and you devise a plan for extracting that $30 per site from the rest of them.

Instead of being blindly optimistic, we’ll assume that  we can only successfully extract that $30 per site from about 40% of them. So 40% of 245 sites = 98.

The plan is twofold:

1.) List the sites at eBay, digital point, and other cheap marketplaces where these types of sites will sell for $30 without much cost to you.

2.) Create a special offer at Warrior Forum or to your own marketing list to create “unique, high quality adsense sites with 5 + articles, graphics, & domains for $30 each”.

Between these two strategies, you successfully sell 98 sites times $30 for a cool profit of $2,940.

Your new income stream has paid for itself, and you still have 147 sites you can use for link building or whatever you want.

Perhaps this will give you a new perspective on monetizing auctions you normally wouldn’t give a second thought to.

Have you ever done a “piece by piece” flip? Have you ever broken down the assets of a larger site and sold them off piece by piece to other people? Better yet, have you ever bought a business and sold off chunks of ownership to 2 or more parties to recoup the initial spend?

Comment below with your thoughts on Richard Gear, piece by piece website flipping. We’d love to hear your thoughts.

Fake AdSense Earnings – Why I Don’t Trust Video Proof

When it comes to purchasing websites, there’s no such thing as too much information (or verification of that information) before closing a deal.  It’s unfortunate, but there are a LOT of dishonest people out there who are constantly on the lookout for the easiest way to separate you from your cash.  That’s why I’m reluctant to accept screencasts as legitimate proof of AdSense (or any other program) earnings.

Many people seem to think video proof can’t be faked, or that it’s too much of a hassle to do it.  Their assumption is that it takes post-production magic — a video-editing wizard works new numbers onto the screen.  I’m here today to prove that wrong, with a screencast that shows just how easy it is to fake Google AdSense earnings in a video: Continue reading “Fake AdSense Earnings – Why I Don’t Trust Video Proof”

Anatomy of a 5-Figure Flip: Make Your Money When You Buy

This is the first article in a series, documenting the step-by-step approach I took to turn a $300 initial investment into $10,000 in 3 months, working only a few minutes a day. In a later article, I’ll also share the mistake I made that cost me at least another $8,000 on this same flip.

My heart started to beat a little bit faster and I could feel my palms get sweaty as my double-take confirmed that I wasn’t looking at a typo.  There it was on the NameJet pre-release list, with a marvelous “0” in the “bidders” column next to it: BetterParenting.com.  Its scheduled release was still weeks away, but it had gone unnoticed so far, and I had no desire to alert potential suitors to its presence.  An early bid would push this name out into the spotlight, so I just wrote myself a note: Keep track of this domain.

Continue reading “Anatomy of a 5-Figure Flip: Make Your Money When You Buy”

The First Bite Is With The Eye

The first bite is with the eyeThis is a guest post from Kevin Muldoon of WordPress Mods.

If you have kept an eye on website flipping over the last several years you will have noticed one thing – looks are important. Sites with good designs tend to sell for much more than those which use plain generic templates.

As a seller, it’s your job to make sure your site has a high quality professional design. In many respects, selling websites is no different to selling cars or houses i.e. you need to make your product ‘buyable’. It can sometimes make the difference between selling the site and not selling the site. Continue reading “The First Bite Is With The Eye”

I’m Perplexed – How Does This Guy Sell So Many Websites?

I saw a listing on Flippa today that has me thoroughly confused and perplexed. I’m not going to give this seller’s profile because I don’t need the headache of the potential complaints and legal threats from the seller. I don’t think it’s necessary to know who the seller is anyway to appreciate this post. And if you really must know, you should be able to figure it out.

At the time of this writing, the seller had 127 ended auctions on Flippa. That amount of activity immediately caught my attention, but what really jumped out at me was that they all used the same title. Here are just five titles I copied:

SEO Optimized Site- $990 Guaranteed Amazon and Adsense Income Monthly
SEO Optimized Site- $2970 Guaranteed Amazon and Adsense Income Monthly
SEO Optimized Site- $810 Guaranteed Amazon and Adsense Income Monthly
SEO Optimized Site- $972 Guaranteed Amazon and Adsense Income Monthly
SEO Optimized Site- $2430 Guaranteed Amazon and Adsense Income Monthly

Literally every auction had the same title. The only thing that was different from one auction to another was the amount of the guaranteed income. When I checked out these auctions, they were all startups with no traffic or revenue. The idea any seller can guarantee a buyer guaranteed income is a joke in and of itself, but to guarantee the astronomical income this seller is claiming on startup websites is even a bigger joke.

Continue reading “I’m Perplexed – How Does This Guy Sell So Many Websites?”

When Is The Best Time To Buy And Sell Seasonal Websites?

I got an email from one of my loyal newsletter subscribers that wanted to sell a seasonal website – specifically a Halloween costumes website. He wanted to know when would be the best time to sell it. I thought it was a great question so I thought I would write a post about it.

Seasonal websites can be tricky because it’s all about timing. The key to successful buying or selling of these websites is to know the cycles of the seasons. Once you know the cycles, you can time the buying or selling of these websites perfectly.

Continue reading “When Is The Best Time To Buy And Sell Seasonal Websites?”

The Nuts and Bolts Of How To Buy And Sell Websites: Part 3 of 3

In Part 1 of this series of how to buy and sell websites, I detailed Steps 1 and 2 of the process. Those steps involved buyers and sellers coming to an agreement and the payment methods that are available to both parties to complete the deal. In part 2, I detailed step 3 of the process: getting the domain to the buyer and determining the hosting arrangement. In this final part of the series I will be covering the fourth and final step: handing the keys of the site to the buyer or transferring the site.

Step 4: Handing The Keys Of The Site To The Buyer
Or Transferring The Site

Once the domain has been transferred to the buyer the, seller needs to get the actual website in the buyer’s possession. The seller can do this by handing the keys to the buyer or by transferring the site to the buyer’s web host. The specific options available to accomplish either one are:

Option 1: Seller Hosts The Site Via A Reseller Account
Option 2: Seller “Hands Over The Keys” To A Shared Hosting Account
Option 3: Seller Transfers the Site To The Buyer’s Web Host

Let’s take a look at each option…

Option 1: Seller Hosts The Site Via A Reseller Account

Most people that flip websites have a shared account or a reseller account. I’m not going to get into the nuts and bolts of shared vs. reseller accounts because it’s beyond the scope of this article (although I will likely write about that topic in the near future so stay tuned). Suffice it to say, a reseller hosting account gives you the opportunity to “resell” hosting services through your own account.

In this arrangement, you basically share your hosting account with someone else and pass along the hosting costs to the person you are hosting for – and you can charge anything you want. The person you are hosting for has their own account within your account so the person doesn’t have access to any of your websites or files. For this hosting arrangement then, the seller would offer to host the website for the buyer and would give the buyer access to the hosting account immediately. The buyer then pays the seller a hosting fee that the two parties agree on.

The advantages of this arrangement are that the buyer doesn’t have to obtain hosting elsewhere and doesn’t have to deal with having a website transferred to another hosting account. There is also no downtime of the site at all since nothing is being moved from one hosting account to another – and the name servers don’t have to be changed either. It’s truly a painless and turnkey option for both the buyer and seller. There is also the added benefit for the seller to have a small residual income by providing hosting services.

Option 2: Seller “Hands Over The Keys” To A Shared Hosting Account

Some people who flip websites regularly will create new shared hosting accounts for each website they develop to flip. For example, a website flipper might own 10 websites that are each hosted on their own shared hosting account. In this example, the seller will be paying for 10 separate shared accounts on a monthly basis. This is the most expensive way to setup the hosting as a website flipper. The main advantage, however, is that this setup makes it incredibly easy and painless for both the buyer and the seller.

In this arrangement, the seller will hand over the shared account to the buyer. The seller will simply change all the information over to the buyer’s name, contact info, billing info, etc. and give the buyer access to the account. The buyer will literally take ownership of the account moving forward and will be responsible for the billing.

Unlike the arrangement in option 1, the buyer will not pay the seller for the hosting. The buyer will pay the hosting company directly and will pay whatever that company charges. This option is just like the buyer going out and creating a new account at a web host. The only difference is the seller doesn’t have to transfer the site to another hosting account so there are no delays or down time – and the name servers don’t have to be changed. The buyer just takes ownership of the existing hosting account and has immediate access to the site.

Option 3: Seller Transfers the Site To The Buyer’s Web Host

This is the most common arrangement between buyers and sellers because typically buyers will have their own hosting accounts already. Unfortunately, it is also the most complex and time consuming option – particularly if the site is large with any kind of database (i.e. most WordPress sites).
In this arrangement, the website and all the files associated with it are literally moved from the seller’s hosting account to the buyer’s hosting account. This would be analogous to moving computer files on your computer to someone else’s computer. This option also requires that the name servers be changed with the domain registrar.

The details involved in the process of transferring a site are beyond the scope of this article. I will, however, be writing on the topic in the near future and I will also be providing a step-by-step video of the process. Until then, the basic steps involved are:

1. Backup all website files (and database if applicable)
2. Download all website files (and export database if applicable)
3. Add the domain via an addon domain (shared hosting) or create a new account with a separate cPanel (reseller hosting)
3. Change name servers at domain registrar to point to the buyer’s web host
4. Upload all website files to the buyer’s web host (and import database if applicable)

After all the files and the database are in place, the buyer will have full control and possession of the domain and the website. Any funds that are in escrow will be released to the seller, or if any money is owed to the seller (doing a direct payment deal), it will be sent at this point. The deal will be officially over!

This concludes the three-part series on how to buy and sell websites – specifically the process of the deal itself. I hope it helps you newbies out there. As you can see, the process isn’t as difficult or overwhelming as it might seem at first glance. Now get out there and start flipping websites!