January 3, 2008
If you are in the market to purchase a website it is extremely critical that you do your homework before purchasing otherwise you could be in for a rude awakening once the transfer of ownership is completed. It is my experience that sellers tend to overvalue the sites that they offer for sale, while buyers tend to leap before they look.
I have been doing a lot of research on the subject lately and I thought I would share some of the information that I have found with you. Read the article below and you will find a number of tools that should help you Inspect What You Expect when buying a website.
Market research is a fundamental area of research that you should be doing on your competitors. Do not take the seller at his/her word when the tell you the facts about their website. They will paint the best possible picture that exists without mentioning the warts. The collection below will allow you to inspect what you are buying without having to depend on the seller. It’s almost like being able to complete your own “home inspection” before buying.
I have gathered these tools from around the web from multiple sources and compiled them here and on my blog.
Spyfu is a web scraping tool that will show you what a site spends on Pay Per Click adverts. A site can generate 1000 dollars a month in revenue but if it spends 900 dollars in PPC to do it then the REAL revenue figure is 100 dollars per month.
URLtrends – gather SEO data, Pagerank, links, rank trends and more.
Backlink Checker – See who is linking to a specific website. Incoming links increase pagerank..at least allegedly.
Yahoo Site Explorer – Check to see what Yahoo shows for inbound links and indexed pages.
Market Leap – Test the rankings of web pages. Great for testing competitor’s sites.
WebTools – Check to make sure you aren’t buying a banned domain. Critical if you ever expect to be indexed in Google or drive search engine traffic to your site.
If you’re buying a fan site, celebrity site or any site with a potential trademark or copyright issue then you could be in for a rude surprise if you are served with a cease and desist from a law firm representing the trademark owner. The best time to find out what trademark issues you might face is BEFORE you pay for your site.
Trademark Electronic Search System – Use the Trademark Electronic Search System (TESS) to perform basic and advanced searches for trademarks.
Patent Electronic Business Center – Search the patent office’s records for full-text and full-page image returns on your competitors’ issued and published patent applications.
Research done here now will make sure you have no nasty surprises down the road. If the purchase amount is sizeable enough then you should surely consult a lawyer if you have reservations.
Would you like to know how to see which host a specific website is using? This doesn’t really matter much although it does give you a way to provide a “security” check on the seller. Some unscrupulous sellers will actually try to sell sites that don’t belong to them. An easy check up to make sure they are who they say they are would be to ask them who hosts it. If they aren’t the seller, chances are they won’t answer correctly.
Don’t rely on this as your only means of security but it’s another check.
Who is Hosting This – This will show you is hosting the site currently.
Website Pulse – Website pulse will show you the speed of a web host. It shows response time, sizes and more.
Would you like to know how much traffic a specific website is getting? Sellers will tend to flaunt their traffic count in the For Sale listings and it can sound impressive but you need to look more closely. Inspect the incoming URLs and see where the traffic is coming from. If it is paid traffic coming from “buy traffic for cheap.com” then tread carefully.
Look for trends or spikes and don’t be fooled by a 3 or 6 month average. One front page Digg article can give a website a good monthly average for the year, even though these visitors are likely never coming back. Inspect the traffic month by month and even day by day.
Google Analytics – Google Analytics is one of the best tools around and a little known fact is that if the seller is using Analytics on the site you are considering, they can allow you access to their Analytics page. No secrets there.
Compete – Compete give a great overview of a site’s traffic. It shows visitor info, growth, traffic counts, and you can put multiple sites in a portfolio as well.
Alexa – Alexa is the most commonly touted service there is, however it is definitely not the best choice in my opinion. There is concern out there that Alexa is heavily biased towards certain kinds of sites. Tread softly if this is the only valuation of traffic that you are offered.
SEO Analyzer – This tool will analyzes the weaknesses on a website allowing you to fix them and enjoy a resulting traffic increase…..at least that’s the plan. You could use this to gauge how quickly and significantly you might improve traffic post purchase.
Statsaholic – This will show stats about a sites rankings, page views etc. I have very little experience with this but it is a popular tool.
Website Valuation Tools
You’ve probably seen those little widgets on blogs and websites that give a value of that site, did you notice how grossly inflated the price was? I am not aware of any service out there where you can plug a URL into it and it give you any idea at all what the site is worth.
The only way to accurately assess a sites value is using good old common sense and many of the tools that I have listed above.
I hesitate to even say this but a very rough calculation that is often used as a starting point is 12 times current revenue. This is NOT an accurate method but is widely accepted to be used as a basis for a starting point. There are so many other factors involved on website valuation that it will take another complete article to even begin to discuss tthe topic.
In the end the real value of the site is no different than anything else…. it is worth exactly what someone is willing to pay for it. It’s no different than your house, your car, your timeshare etc…if a buyer isn’t willing to pay the amount that you ask then the site isn’t worth that much. Period.
If you have a website you are interested in selling or you have a comment on the website flipping craze then I would like to hear from you.