|pros • per • ly|

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 to see how it would turn out for me. That is when I realized they have many flaws I couldn’t overlook.

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 is ridiculous. 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.

3. If a deal falls through your out of luck and money. This one is the flaw that inspired this post. After I reached the agreement with the buyer he gave me the run around for a couple of weeks. During this time Flippa kept emailing me reminding me that I needed to pay the final transaction fee. I ignored the emails because I was still waiting to get paid for the site. It soon became apparent that the guy was not really going to put forth the money and so I moved on with my life.

Well I still kept getting emails from Flippa saying I needed to pay the final fee. I finally emailed them back saying the deal fell through and I never sold the site. I realized that I had taken the risk to pay the money to list the site for sale and since the deal fell through I was out the listing fee. I had no problem with that. But you can imagine my surprise when they emailed me and told me that even though the deal fell through I was still obligated to pay the final transaction fee (in this instance I had set it up to be split between me and the buyer) of $250.

So Flippa was demanding that I pay $250 for essentially nothing. I told them that it was ridiculous to ask me to pay the fee when I never received any money for the site but they kept demanding it and threatened to suspend my account. I told them to go ahead and suspend the account because I had and have no intention of ever paying the made up fee.

Congratulations Flippa! Not only did you lose one customer with your horrible fee policies, but I’m a guy with an audience and I will make sure they know about it too.

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 is a forum I recently found out about called Experienced People. I’m not sure why it’s named the way it is but it is a forum of people with money that like to buy and sell websites. It is a much more mature crowd than at Flippa.

The next 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 have decided to put together some simple, easy to follow tutorials on starting a website from buying a domain to getting web hosting all the way to getting WordPress installed on your site. I hope these can be a real help to those of you who are beginners in the internet marketing world.

Check out the series links below to get everything you need to get started in the internet marketing world.

Once you have your list of favorite sites, the contact information, etc. you begin reaching out to each seller.  It’s okay to be fishing multiple offers for the same niche simultaneously.  You obviously are not contractually obligated to purchase if two sellers come back at the same time.

Here’s where you can use your negotiation prowess.

A few quick tips re: negotiation:

• If possible, get the person to name a price first.  Since you’re likely soliciting the purchase, the odds of that happening are slim (unless you’re dealing with a complete nitwit).  I love when people contact us to purchase one of our sites:  “How much would it take for you to part with yourdomain.com?”  Yeah…right.  BUT, if you can get them to show you a card, go for it.
• In relation to point one, use anchoring.  Retails shops do this all the time when they post the retail price and the sale price. Ever heard of the MSRP? Yeah, car dealers do it too all the time.  Anchoring doesn’t need to make logical sense.  In the book Winning Decisions by Russo and Shoemaker, they prove statistically that the anchor still works even when completely baseless.  How could you anchor your prospect?  Giving them your “budget” is one way.  Even letting them know you’ve bought sites for as much as $### works.  Again, it doesn’t need to make logical sense, but it still works.
• When you’ve been given a good deal, take it.  Don’t be greedy and don’t burn bridges.

To make our job easier, we actually have templates that we’ve perfected (you should especially perfect your subject line — a lame subject line means your email is ignored.  “LOVE YOUR SITE!” is not effective) when pitching to potential sellers.

This isn’t rocket science, simply let the seller know you’re interested in purchasing their site and were hoping to open a dialog between them.  Some emails will bounce, some will be ignored, etc.  This is all just part of the game.

When you have a seller that bites, you’ll need to do a bit more due diligence about that site.  The best thing you can do is have the seller give you read-only access to their website stats.  If they’re using Google Analytics (you can tell this by looking at their site’s source and checking for the GA code) then simply have them add your gmail.com email address as a user.  You’ll then be able to dig to your heart’s content.

If the seller is not willing to give you as much traffic data as you’d like, walk away.

We’ve found 95% of sellers are more than willing to give you any information you need to help the deal go through.

So, once you’ve done your due diligence, seeing that what you had originally surmised is true, or close enough, you can make your first offer.  Give the seller your lowest fair offer.  Adam and I have lost opportunities to buy a website because we low-balled the potential seller so badly they simply ignored us.  If you’re trying to purchase a site and would reasonably pay $12,000, do not offer $750.  It’s counterproductive.

If the seller accepts, get a contract to them so everything is legal and straight-laced.  We have a standard contract we use.  You’re welcome to use it as well if you’re part of the Prosperly Beginners.  We’ve lost out on some great deals in the past because we didn’t have the buyer (in this instance) legally bound to purchase and they walked without giving any reason whatsoever.

In the next step, we’re going to talk about the mechanics of the purchase and the importance of taking control as quickly as possible.

All right I have finally decided to post this. I apologize for making you all wait this long but we had very good reasons which I will not go into here. Considering how much you are paying for the info I knew you would understand. :-)

Now that you have chosen your industry and found out that there is real potential to see if you could make money in that industry, the next step is to go out and find a website that will work for you.

This is when you need to make the decision on whether to buy a website or build one from scratch. In my estimation it is always better to buy an established website rather that build a new one. You let someone else do all of the grunt work and then you step in a make the necessary changes and increase the value of the site quickly.

The only time I would say that it makes sense to build a website from scratch is when you are entering an industry where nobody really knows SEO that well and you are confident that you can quickly enter and move up in the rankings quickly.

The only other reason would be if you look and look and just can’t find a suitable website to buy in that industry and still want to get started.

I have created a video that explains one of the ways we actually go about looking for websites to buy. There are other ways than the one I talk about here but it will give you a good start.

Before I show you the video I need to tell you that we have been contemplating long and hard on whether or not to even continue with this series. We know that some people have begun to abuse the information we have given out and that has disappointed and demotivated us in our efforts to teach others.

The information on internet marketing and website flipping is valid and valuable. We really do want to help others succeed online but there are always those few who ruin it for everyone else.

We have decided to create a Prosperly membership and allow only members to access the video for step 3. The membership is free but we need to be in complete control of who gets access to this free information.

If you still wish to proceed and don’t mind becoming a member at Prosperly then click on the link below:

Watch step 3 video

Many of you have emailed me wondering where step 3 in flipping websites is…well I can tell you it is coming. We have been busy selling another site. Now that the website has sold we can get back to business.

I will have step 3 for you in the next day or two.

P.S. The site we just sold we bought for $500 and in less than a year sold it for $150k.