Dont Use Flippa Until You Read This…Warning

Last Updated August 2012

Since Prosperly’s inception, I have been a proponent of Flippa, formerly Sitepoint Marketplace. Flippa is the main website where people go to buy and sell websites. Whenever I have sold websites in the past I have always dealt directly with the buyer and never used Flippa to sell before. I finally decided to try them out in selling a website to see how it would turn out for me. That is when I realized they have many flaws I couldn’t overlook.

Let me just say that I think you can use Flippa to find websites to buy if you know how to filter through all of the garbage.

Before I go into those flaws let me just report that I did reach an agreement on a purchase price for the site only to have to deal fall through over the next several weeks.

1. Buyers on Flippa expect to get a steal on a website. The seemingly going rate on the site is 10 months of net revenue. I’m not sure where or how this came to be but in the real business world that ratio is laughable. Most businesses sell for 2-3 years net revenue. I sold a website last year for a 7 year net revenue. Why 10 months? Because you don’t want to have to pay for a business what it is worth?

I think the main problem is sellers are putting their site out on display showing everyone exactly how your website makes money and exactly how much money you’re making. This is a problem because in the internet world the barrier to entry is almost non-existent. Any Joe Shmoe can buy a domain for $8, then go get a free WordPress template and be up and running in 10 minutes. Their thought process is since it is so easy why should they pay a 2 year multiple for a website. Inevitably most people that start these quick websites never achieve the traffic nor the money that the site for sell is doing but it just creates a problem where the market of buyers at a real business price is not there.

2. The fee structure gets you on the front end and back end. One of the problems I had with Flippa was the bookend fees they charged. They charge you to list your site for sale with all kinds of listing upgrades. You can easily end up spending $40-$50 to list your site for sale. I have no problem with them doing this. It is normal for businesses to charge listing fees.

On top of the listing fee is the purchase price fee. I can’t remember what that percentage is (I want to say 5%) but they cap you out at $499. That is where my site fell, the $499 cap. So I had to pay $40-$50 to list and then they wanted me to pay $499 once the deal had gone through. I agreed to this reluctantly because I knew Flippa could provide me with an audience. I just think you should make it one or the other. Charge me a listing fee, charge me a final sale fee, but don’t be greedy and charge me both.

Warning About Some Buyers On Flippa

3. Beware of buyers on flippa that bid on your auction and then never pay. After I reached the agreement with the buyer he kept assuring me that he was going to pay me for the site. Since I had never sold on Flippa before I had no reason to question him. He kept asking for more time.

Meanwhile Flippa was emailing me asking for me to pay the success fee and letting me know that if the buyer had backed out I could file a dispute. I didn’t file the dispute because the buyer kept saying he was going to pay me. Now to their credit they did give me several reminders to file a dispute but the timing just didnt work out for me.

So Flippa assumed that I had sold the site and wanted the success fee. They told me they would suspend my account if I didn’t pay, which eventually happened because I didn’t receive any money and therefore wouldn’t pay the success fee. Seems like a simple Whois lookup could have solved the problem. As long as you file a dispute in time you shouldn’t have any problem.

If the buyer drags you on for more than 2 weeks just file a dispute. It is not worth the hassle of being lead on forever just to not get paid.

A previous version of this post indicated that Flippa charges a success fee on when a sale falls through. Flippa does not charge the success fee in this case.

Flippa Alternative

If you want to find out where I go to find websites to buy click here.

So where do we go to find good buyers of websites. I have a few suggestions.

The first Flippa alternative I would suggest when you are looking to sell a site is to contact your competitors. Remember, your competition is not your enemy. They can be some of your most valuable assets. If one of my competitors contacted me about buying their site I would be very interested. I have even tried to buy out my competition before.

Another option is to go directly to a business broker. I would only do this if your website is making over $3k a month. Their fees are high but they will also get you top dollar for your business.

The best option is to wait for someone to come to you. If you build an awesome website with great SEO rankings it won’t be long before people are contacting you about buying your site. This puts you in the driver seat. For example, on the site I sold for the 7 year multiple I had already received an offer for just over a 1 year multiple. The amount didn’t excite me so I passed. I fixed up the site more and got even higher rankings and then sold it for the 7 years of net revenue. That did excite me.

I know that none of these are real alternatives of flippa because they are not marketplaces. I am going to find a good one. This industry deserves something better.

Update March 28, 2012

So I had another flippa account that I had been using long before this ever happened. I recently logged in with it to check a private auction that was happening. About a week ago they contacted me and notified me that they are shutting that account down too because it was a duplicate of my suspended account. I laughed because I hadn’t used that account since they were Sitepoint but I just thought it was interesting that they would come after that account too 2 years later.

As I have thought more about trying to buy websites on Flippa I decided to pay them the $249 success fee from 2 years earlier.

When I went to pay I emailed them and asked them to confirm that I would get the refund of the $249 in flippa credits. This was their response:

As you did not enter the Formal Dispute Procedure, we have no way of verifying that the site transfer did occur after the Sales Completion Date. If you had entered the Dispute Procedure, we would have been able to waive / credit your success fees and allow you to relist the item for free. Now that over a year has passed, we are not able to offer you a credit.
The Suspension has been removed from both of your accounts.

Please let us know if you need further information or assistance.

Kind Regards,

Flippa Customer Support.

But my account is in good standing again so that is good.

Update June 7, 2012 – They Paid Me Back!

I just wanted to give a quick update. This post has gotten a lot of exposure both in the search engines and also in forums as well. Well it finally got the upper management at flippa’s attention. Of course they contacted me and told me that I never should have had to pay the fee for the failed listing and that they have all of these new policies in place to ensure that doesn’t happen anymore. Then they gave me my money back.

How do I feel about all of this? I appreciate that they swallowed their pride and gave me my money back but there is just this prideful part of me that can’t help but think that I got a refund because I am causing them a lot of negative publicity. If this was a true gesture of caring for their customers then good on them. I guess I will give them the benefit of the doubt.

Posted in Buying Websites, Featured, Flipping Websites, selling websites
51 comments on “Dont Use Flippa Until You Read This…Warning
  1. Dan Stojadinovic says:

    Great post and thanks for the warnings about Flippa. I sell from time to time and am starting to look for alternatives, especially with some "idea" websites. I’m also making a my list as I go along, so far nothing as good as flippa. Here’s the list I got so far if anyone want to see it or sugest some other Flippa alternatives. Thanks.

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