If you decide to get into the business of website trading proceed with caution because people will try to scam you. Even if you use a verified broker, site owners will try to overprice and misrepresent their websites. You have to know what to look for and what questions to ask. The trick is to be well-informed and one step ahead of whatever scam they try to pull.
So, what do you need to look out for, and how do you minimize risk?
1. Verify the owner
If you’re buying through a broker, chances are all the sellers have already been verified. The risk of a fake site owner is a lot greater if you’re contacting them directly and without an intermediary. However, you should still dot your i’s and cross your t’s. Ask the seller to send you their proof of identity, phone number, address, business details, tax information, and other relevant details.
One common scam people try to run is selling sites they do not own. Knowing how a business works or having access to the website is not enough to verify the owner. If you want to buy a seller’s site, you need to purchase their domain. So you also need to verify that they own the domain name for the website they’re selling. This data is easy to provide. And valid sellers will have no issues handing over any of this information. In fact, they will likely ask you to send them the same details.
2. Know what you’re buying
When you’re negotiating with a site owner, keep in mind that the price isn’t the only thing you need to discuss. During your talk, find out everything you can about their business. Ask them how their day-to-day operations work, where they market their products, what methods they use, and what platform runs the site. These aren’t just side details, either. When you’re negotiating a sale, you need to know exactly what you’re buying.
How many social media platforms does the site have? Are they a part of the deal? Does the business contact its customers using an email list? Will you receive the mailing list as part of the price quoted? Are there copyrights or patents in place? Do they roll over with the site? What else will you need to keep the systems running? And are those assets a part of the sale?
Never assume anything during the selling process. If the site owner hasn’t mentioned it, it’s up to you to bring it up. Simply asking these questions will set you apart as a knowledgeable buyer, and reduce the risk of sellers trying to scam you. Otherwise, you may end up paying a high price for a website and only receive a domain name. You’ll complain to the site owner and your broker, but frankly, the fault is yours. You assumed other assets would be a part of the sale but never verified that information.
3. Proof of traffic and earnings
The next step is taking stock of all the website has to offer. You need to ask for the proof of traffic, which is basically Google Analytics records. And you can cross-check these numbers against SEMRush metrics.
Once you have an overall measure of traffic, you have to check it against the site’s earnings. That means profit reports, AdSense, Ezoic records, PayPal reports, and other earning methods like affiliate marketing. As a buyer, you cannot look at web traffic or profits records in isolation. You have to look at both of them together.
When you do this, you get a greater understanding of how successful the site is. If the numbers match up, it shows the marketing efforts are not only drawing in new viewers but also turning those leads into sales. However, if a website has high traffic and the sales don’t match up, that’s a red flag. It means that the site isn’t reaching its target audience and the viewers aren’t interested in buying products. As a result, any traffic metrics are completely useless.
Once you enter the website trading world, you’ll see many sellers putting their traffic numbers forward as a point of pride. That may seem impressive. But, as a buyer, you need to understand how misleading those values can be. When you’re evaluating the worth of a site, you can’t look at individual factors separately. You have to look at how they play into each other.
Traffic is only as important as the profits it brings in. And profits are only as valuable as the methods a business employs.
4. Cost of running the site
If the expense of running a website is high, then the overall statistics for traffic and profit can be misleading. One example is if a site’s main marketing strategy relies on high-cost advertising. The metrics may show increasing viewership and massive sales, but the website’s overall value is low.
Similarly, if a business relies on trend-based SEO content, you’ll have to update it regularly. You might even have to hire content creators or SEO experts to do the job for you. All of this will add to the cost of running the website. Ideally, you want your site to rely on low-cost sustainable methods like quality SEO or an active email list.
You also need to look into how much work goes into the daily running of a company. If a site employs freelancers, you’ll have to factor in the cost of keeping these workers on board. Alternatively, if the current owner handles certain tasks themselves, you’ll have to outsource them. Depending on how much the expense is the cost of running the site may outweigh its potential value.
5. Growth trends
Growth trends can tell you a lot about a site. When you ask a website seller for their Google Analytics records, you need to be clear about what you want. The farther back a site’s files go, the more accurately you can determine their growth patterns. Ideally, you want the analytics for at least the past year, longer if you can get your hands on them.
While its common knowledge that you need to be careful if you see a downward growth trend, this isn’t the only pattern you need to check for. Decreasing trends just mean that customers left. Whether this is a cause for concern depends on why they left. If it was because the site owner lost interest and stopped updating content, it doesn’t matter. However, if your market research shows that a competitor emerged on the market at this time, it can spell some trouble. In this case, it means customers are leaving the seller’s site for another vendor, possibly because they have a better product.
Another red flag is if there is a massive spike in traffic. Such patterns are uncommon in the regular course of business. Unless there is a clear explanation, such as the arrival of a new, popular product, this is something to be careful about. Such increases are often because the company either used a high-cost advertising method, in which case any growth is budget-based.
Or it’s because the site used dubious SEO methods to get a jump in rankings. You won’t know until you look into the matter. Either way, the site is a bad sell. Black hat SEO or even gray hat can get your website blacklisted by Google. You could lose your investment overnight. If a seller is unwilling to provide their metrics it means they’re hiding something.
6. Business strategy
When you purchase a website, you don’t just buy a domain, but an entire business strategy. That means you need the company to have multiple profitable products and systems in place to sell them. Everything else, from the audience to marketing, falls within that. A smart buyer knows that the results are only one part of the purchase. How the website is getting its results is of greater concern.
As a buyer, you need to ask the right questions. Find out who the target audience is, which social media platforms the site uses to contact them, how they market their products, and why they’re so successful. If you’re looking to buy a site, you don’t just need them to be successful; you need to be able to emulate their success.
Can you get the same results with this website? Because the running of a business depends on any number of factors. For example, a website may be successful because the owner has a deep understanding of their audience. This will reflect in their content and sales tactics. But if you cannot do the same, then buying the site will not benefit you.
Similarly, if the website has a brand identity centered on the owner, this is a cause for concern. Many younger business owners build their marketing strategy around Facebook Lives and IGTV videos that give their customers a window into their lives. This is not a business model that will survive if the website changes hands. And if the owner sells you their domain and starts their company under a different handle, all their customers will follow.
A final concern is the dependency of the business model on the owner. If the site is being managed by one person you’ll either have to shoulder all of their work or outsource it. And if the current owner is handling technical tasks that you do not have the necessary skill for you’ll have to hire experts to do them for you. All of this will add to the running cost of the business. Ideally, you want to buy a website that suits you personally.
7. Reason for selling
Keep in mind that these sellers are people who have spent years building their businesses from the ground up. And if they’re getting rid of a profitable website that they have so much personal investment in, they probably have a good reason for selling. Your concern is whether that reason negatively affects you.
One situation in which it is safe for you to buy a website is if the owner wants to reinvest their money in a different venture. Alternatively, if a website hasn’t been updated for a long time, that’s a good sign that the site owner lost interest. These are both good reasons for selling. However, if the seller doesn’t have a clear answer, you should be cautious.
There are many cases where everything looks good on paper, but the sale is actually a bad decision. It all comes down to why the owner is selling the website?
If a site owner has had success in their niche but is losing customers to a new competitor, they may choose to sell the site while still in a good place. How can you check for this in the growth trends? If you look at the website’s records, you’ll see a long upward trend that eventually flattened out and is now going downwards.
Smart sellers may offload the site when the profits are stagnant if they know their competitor has a better product or sales strategy. That’s why you need to conduct market research before you buy a site.
Ideally, you want a website that has multiple sources of income. But, this isn’t always the case. Many times a site only has one top-selling product. So, it forms a marketing strategy around that item and builds a massive fan base. Such sites are risky because if that product loses value, the website will go bust in a single day.
An owner who thinks their product may lose traction or is trying to avoid risk will sell their website when it is at peak popularity for massive profits. There are no downward trends or other evidence to show that this will happen. Hence, it is always recommended that you buy a website will multiple profitable products.
The trick to avoiding risk while buying a website is to take your time. Do not rush the process. Check each step and find out everything you can about the business before you invest.