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How do I do Due Diligence buying a website?

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TheDillon__

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Hey all!

I came across a very promising offer to purchase a website.

They're asking around $1,000 for a website that has netted ~$900/mo. on average for the last year.

Average page views for the last year are ~40k/mo - 11% of that traffic being unique visitors.

The current owner says he's selling off this section of his portfolio in order to focus on other ventures.

____

So far - for me, everything checks out. I'm also new to this and I know it's so possible to get the shit scammed out of you.

How do I do some solid DD on this - how do I protect myself throughout the purchasing process?
 
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TheDillon__

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Update: I know that buying traffic is a way to go about scamming buyers - here is the info for traffic sourcing.

Does this infer anything? What deeper information may I need?

Channel | Page Views | % of total

Direct | 12,634 | 52%
Organic Search | 5,606 | 23%
Referral | 5,548 | 23%
Social | 417 | 1.7%
Email | 292 | 1.2%
 

ApparentHorizon

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Short term website investments start at 3x monthly (minimum).

You can still buy direct traffic by cloaking paid and exchanges.

What deeper information may I need?

Monetization method(s).

1. AdSense - you can 5x that easily with CPA or 15x your own products
2. CPA - is the owner going to pass along your info to his network?
3. Product - do you get distribution rights?
 

TheDillon__

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Short term website investments start at 3x monthly (minimum).

You can still buy direct traffic by cloaking paid and exchanges.



Monetization method(s).

1. AdSense - you can 5x that easily with CPA or 15x your own products
2. CPA - is the owner going to pass along your info to his network?
3. Product - do you get distribution rights?

Thank you for the quick feedback!

It seems like the website is monetized through a combination of:
A) Affiliate commissions
B) Software subscriptions

I will attain the rights to both upon purchase.
 

TheDillon__

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$1000 for something netting $900/mo is screaming scam.

Thanks for the insight!

Agreed - note this price is not final and is a (probably) misguided estimate on my part.

The most recent bid for the website is <$1,000 - and the site says that the reserve limit has not been reached. It also notes that this website has been listed twice previously.
 

TheDillon__

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rpeck90

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Hey all!

I came across a very promising offer to purchase a website.

They're asking around $1,000 for a website that has netted ~$900/mo. on average for the last year.

Average page views for the last year are ~40k/mo - 11% of that traffic being unique visitors.

The current owner says he's selling off this section of his portfolio in order to focus on other ventures.

____

So far - for me, everything checks out. I'm also new to this and I know it's so possible to get the shit scammed out of you.

How do I do some solid DD on this - how do I protect myself throughout the purchasing process?

You'll never get a site making $900/mo for $1k, standard measurement of approx value is 10x consistent monthly rev.
 

rpeck90

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For DD, you need the following:
  1. Analytics (pure visitor data)
  2. You need to break down that visitor data to determine where the visitors are from
  3. From #2, you'll have an idea as to how the site has been marketed - someone selling a site so cheap will probably be doing something dodgy
  4. Proof of domain name ownership (screenshot of their registrar account with the domain name inside)
  5. Proof of website ownership (screenshots of server files / db)
  6. Proof of social media ownership (might be important if these assets are sizeable)
  7. Agreement of transfer to include domain, files and any third-party assets (social media etc)
The key where is their traffic / money coming from.

The value of the site will be determined by how they get visitors & buyers, the rest is irrelevant.
 

TheDillon__

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For DD, you need the following:
  1. Analytics (pure visitor data)
  2. You need to break down that visitor data to determine where the visitors are from
  3. From #2, you'll have an idea as to how the site has been marketed - someone selling a site so cheap will probably be doing something dodgy
  4. Proof of domain name ownership (screenshot of their registrar account with the domain name inside)
  5. Proof of website ownership (screenshots of server files / db)
  6. Proof of social media ownership (might be important if these assets are sizeable)
  7. Agreement of transfer to include domain, files and any third-party assets (social media etc)
The key where is their traffic / money coming from.

The value of the site will be determined by how they get visitors & buyers, the rest is irrelevant.

Very insightful - thanks!

1. What does this look like? I would assume:
  1. Monthly number of visitors
  2. Number of unique visitors
  3. Source of visitors (I.e. Direct, social media, referral, etc.)
  4. Validity of visitors (How are you sure traffic was not bought?)
  5. Location of visitors
  6. Bounce rate
  7. Avg. time spent on site
  8. Avg. # of pages viewed
Thanks!
 
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rpeck90

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Very insightful - thanks!

1. What does this look like? I would assume:
  1. Monthly number of visitors
  2. Number of unique visitors
  3. Source of visitors (I.e. Direct, social media, referral, etc.)
  4. Validity of visitors (How are you sure traffic was not bought?)
  5. Location of visitors
  6. Bounce rate
  7. Avg. time spent on site
  8. Avg. # of pages viewed
Thanks!

The most common way is to gain access to their Google Analytics account (there is a way to do this), which will allow you to look at the daily traffic etc.

Here is a product I made years ago (the guy kept me on Analytics):

FEAYKgF.png


The initial step is to validate the longevity of the traffic (most site sales are due to unsustainable traffic sources).

The second step is to determine how the traffic is reaching the site - paid traffic is not a problem if it's going to stay.

It's your call on how you value it from there. But really - you're trying to find out how the site has been promoted. That's what you're paying for.
 

TheDillon__

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The most common way is to gain access to their Google Analytics account (there is a way to do this), which will allow you to look at the daily traffic etc.

Here is a product I made years ago (the guy kept me on Analytics):

FEAYKgF.png


The initial step is to validate the longevity of the traffic (most site sales are due to unsustainable traffic sources).

The second step is to determine how the traffic is reaching the site - paid traffic is not a problem if it's going to stay.

It's your call on how you value it from there. But really - you're trying to find out how the site has been promoted. That's what you're paying for.

Dang, you're really taking me in-depth here - thanks!

When you say "validate the longevity" - am I meant to look at the average session duration and bounce rate // or to look at the quality of the source of the traffic? If the latter, could you expand?

And determining how traffic reaches the site - whether the source is good or bad depends on the answer to the above question correct?

Many thanks!
 

rpeck90

Gold Contributor
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Nov 26, 2016
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Dang, you're really taking me in-depth here - thanks!

When you say "validate the longevity" - am I meant to look at the average session duration and bounce rate // or to look at the quality of the source of the traffic? If the latter, could you expand?

And determining how traffic reaches the site - whether the source is good or bad depends on the answer to the above question correct?

Many thanks!

NP, I've done this a lot.

The longevity of traffic is whether those people will keep returning / reading the site after the first hit, so yes the quality of the traffic source.

An example would be a single webpage site with a naked picture of [latest hot celebrity]. The picture goes viral and people look over for it - they find your site from Google. The site records traffic of 5,000,000 views but the likelihood of them coming back is nil. Any ad revenue the site made from those initial visitors will dry up in 3 months.

Good traffic sources are where people are genuinely interested in the topic... YouTube videos, Google rankings, etc.

You basically get 3 "levels" of website:
  1. Google whore
  2. Youtube whore
  3. Facebook whore
Google whores get great rankings and sit there for years. Owners remain anonymous - traffic driven by latent demand ("how to fix small penis" etc)

YouTube whores put their face on the site, and have a Youtube / Instagram channel - traffic driven partly by latent demand, partly by self-branding ("Jack's guide to growing your penis naturally" / "Jack's 3 foods to a bigger penis"). Their YT presence gives them Google whore points

Facebook whores are generally reputable local businesses who have a large audience in the "real" world - traffic driven by local events & community ("Latest event pictures for small penis club"). Their facebook presence gives them YT whore points & also google whore points.

Obviously, there are many in-between.

When buying a site, your primary concern is where it fits on the whore spectrum. Many sites for sale are small-time Google whores where the owner didn't use their name / face for anything. Not that it's an issue; the best traffic is from a real local business because they have real connections with their audience.
 
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TheDillon__

Silver Contributor
Read Fastlane!
Speedway Pass
Apr 11, 2016
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NP, I've done this a lot.

The longevity of traffic is whether those people will keep returning / reading the site after the first hit, so yes the quality of the traffic source.

An example would be a single webpage site with a naked picture of [latest hot celebrity]. The picture goes viral and people look over for it - they find your site from Google. The site records traffic of 5,000,000 views but the likelihood of them coming back is nil. Any ad revenue the site made from those initial visitors will dry up in 3 months.

Good traffic sources are where people are genuinely interested in the topic... YouTube videos, Google rankings, etc.

You basically get 3 "levels" of website:
  1. Google whore
  2. Youtube whore
  3. Facebook whore
Google whores get great rankings and sit there for years. Owners remain anonymous - traffic driven by latent demand ("how to fix small penis" etc)

YouTube whores put their face on the site, and have a Youtube / Instagram channel - traffic driven partly by latent demand, partly by self-branding ("Jack's guide to growing your penis naturally" / "Jack's 3 foods to a bigger penis"). Their YT presence gives them Google whore points

Facebook whores are generally reputable local businesses who have a large audience in the "real" world - traffic driven by local events & community ("Latest event pictures for small penis club"). Their facebook presence gives them YT whore points & also google whore points.

Obviously, there are many in-between.

When buying a site, your primary concern is where it fits on the whore spectrum. Many sites for sale are small-time Google whores where the owner didn't use their name / face for anything. Not that it's an issue; the best traffic is from a real local business because they have real connections with their audience.
Thank you for the wonderful information - very much appreciated.

I don't know why I bother on /r/entrepreneur when all of the knowledgeable people are on here!
 

DaveC

Bronze Contributor
FASTLANE INSIDER
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Oct 15, 2012
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263
Chicago, IL
My two cents....avoid auctions for buying websites. I'm assuming this is Flippa, and its very much full of scams. As you can see, the DD is very difficult, and stats can be faked.

If you are looking at a small website, look at Empire Flippers, although they tend to have a lot of affiliate and FBA businesses, which I'm not a huge fan of. They will at least do some initial vetting though of the stats. Realistically, you'll need to look at spending at least $20K to get something even halfway these days, and maybe earning $10K-$15K year. Also, consider using Centurica for website DD.
 

TheDillon__

Silver Contributor
Read Fastlane!
Speedway Pass
Apr 11, 2016
421
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DFW
My two cents....avoid auctions for buying websites. I'm assuming this is Flippa, and its very much full of scams. As you can see, the DD is very difficult, and stats can be faked.

If you are looking at a small website, look at Empire Flippers, although they tend to have a lot of affiliate and FBA businesses, which I'm not a huge fan of. They will at least do some initial vetting though of the stats. Realistically, you'll need to look at spending at least $20K to get something even halfway these days, and maybe earning $10K-$15K year. Also, consider using Centurica for website DD.
Thank you for your insight!
I'm very quickly coming upon the thought that my available cash reserves might be better invested in building my own site.
 
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