Today we’re handing the blog over to Jerry Banfield. Jerry is an entrepreneur and teacher who has coached over 80,000 students on everything from Facebook marketing through to time management and productivity.
Last year Jerry built and sold a profitable site on Flippa for $5,500 with no experience and the best part is, he’s put together a step-by-step Udemy Course to share the details on exactly how he did it. Usually $199 – for a limited time, Jerry has dropped the price down to just $25 for all Flippa users. Simply use coupon code: FLIPPABLOG or THIS LINK.
Over to Jerry:
If you are trying to sell your website on Flippa, knowing what works to make a sale can save you a lot of frustration and money. The first two times I posted websites for sale on Flippa, I made my listings and then tried to promote them in complete ignorance of what other sellers were already doing right. No one bid on any of my listings…
When I went to relist my website again, I realized it was crazy to do the same thing I did before and expect different results. For the next few weeks prior to launching another listing, I researched the Flippa marketplace to see what websites were already selling so that I could discover what they all had in common. I found websites that had sold for at least a thousand dollars almost always showed solid proof of income and had verified Google analytics. I also discovered what price to start the bidding at, how to write a compelling listing to attract watchers, how to directly contact potential buyers, how to convert people watching to bids, why every question was worth answering in great detail, and what I needed to do to make it easy to close the auction successfully.
When I used what I learned to launch a new listing on Flippa, the same website that did not attract even one bid when I listed it before sold for $5,500.
You can skip the painful learning process I went through to learn how to sell on Flippa when you take this course. You can see what your website is really worth when you list it the way I listed mine. This course will continue to be useful for you through any improvements Flippa makes because what I teach is based on principles that you can adapt to what you are doing today. You can count on me to answer any questions you have in the course and to add new lectures based on your feedback! Thank you for reading this and I appreciate the chance to serve you as your instructor in this course.
During my time at Centurica, a due diligence service, I have come across a number of different due diligence cases. While the majority of the websites that we analyse have only minor red flags and shortcomings, we occasionally come across sites that surprise even us.
Below is a case study on a website that was listed right here on Flippa. It looked fine on the surface, but when we performed an initial due diligence on the site, it resulted in quite a few shocking discoveries!
I’m publishing this case study to illustrate not only the importance of performing due diligence when purchasing web assets, but also that it’s always worth going the extra mile and digging just a tiny bit deeper, as it may mean saving you several thousands of dollars further down the line.
On the surface, it seems like a solid site. It gets a fair bit of traffic each month (15,000 monthly uniques, according to the seller’s claims). It makes nearly $1,000 per month, and best of all, the owner doesn’t spend any time on maintaining it.
And it’s growing, too! In June it already made $1,500 and it’s on track to generate a similar amount in August.
Looks good, right?
The Not So Good
Whenever I analyze a site, I first look at the traffic and revenue claims. I want to check whether they appear to be accurate and if they can be sufficiently proven.
Traffic: Lack of Third Party Analytics
With this site, the first red flag was the lack of third party analytics. The seller doesn’t have any third party tracking scripts (such as Google Analytics) installed, which means that the buyer will have to rely on self-hosted analytics tools, which are notoriously easy to tamper with. For example, I conducted this experiment a year ago, where it took me 35 minutes to put together a good looking set of AW Stats traffic proofs that showed completely inaccurate data.
Furthermore, the seller has only provided traffic statistics for less than one month, which may suggest that the site has only recently reached its current level of traffic and hasn’t yet stabilized.
Daily Statistics for June 2013
Click on the graph above to open it in a new tab.
I also took a look at the claimed traffic figures in comparison to the site’s Alexa rank and the result was slightly worrying. Whilst Alexa alone can’t be relied upon as a direct measure of traffic, sites that receive around 15,000 unique visits per month typically have an Alexa rank much lower than 1.4 million.
Revenue: Potentially Misleading Revenue Proofs
The revenue proof that the seller has provided is interesting too. Whilst the proofs date back six months, there is no way to verify whether it was this website that had generated the revenue, as opposed to another site that the same seller may operate.
It’s also impossible to tell whether the provided screenshots are actual screenshots made of the (undisclosed) revenue source’s reporting backend or something created in Excel, as there is no reference to the actual revenue source itself.
Revenue Proof Sheet 2013
Click on the table above to open it in a new tab.
A main concern to me is that the site uses a single revenue source, which the seller is not willing to publicly disclose. This creates a situation where it’s impossible for potential buyers to evaluate whether the revenue source is stable and sustainable enough, or one that is likely to drop soon and leave the site with no income.
Other Red Flags
There were a few other minor red flags, such as the Pages-per-visit being abnormally high (an average of 6 pages per visit, for a website that provides questionably “useful” content). The seller also claimed previously that should the auction not be won, they wouldn’t relist the site, but then proceeded to relist it a month later.
Let’s cut them some slack though and ignore these issues for now.
All of the issues above could be deemed circumstantial. After all, it’s possible that the seller has a valid reason for not using Google Analytics and that they’re in fact perfectly happy to provide further revenue proofs to potential buyers.
However, the situation gets even more interesting when you start digging deeper and looking at the site itself.
Since the seller claims that the site gets the majority of its traffic from search engines, it’s important to take a look at the backlink profile, so we can see how sustainable this traffic seems in general.
The Link Profile
Having done a little bit of research using ahrefs.com, it seems that the link profile would cause even the most risk-loving SEO a few sleepless nights.
Not only has the site acquired most of its backlinks very recently (it had a total of less than 1,000 links in the beginning of June vs. nearly 4,000 at the end of June), the majority (65%) of its backlinks are with the anchor text “payday loans and cash advance”, which indicates a strong possibility that unnatural link building has taken place. The majority of the site’s backlinks is also “site-wide”, which often suggests that links have been purchased solely for SEO purposes.
Based on the graph above, it’s reasonable to assume that most of the link building has been done recently, and as such the site’s search rankings haven’t had time to stabilize. It’s very likely, especially if link building is stopped, that the site will lose many of its rankings in a month or two.
SEO vs. Maintenance and Expenses
Assuming some (heavy) link building has been done, let’s take a quick look at the declared maintenance time and expenses.
The seller claims that the site is “hands off”, as well as that its total expenditure is $20 per month (which I’m assuming is mostly web hosting), and that seems about right at first glance. However, an important aspect that the seller has conveniently missed is that it takes continuous SEO work for the site to maintain its current rankings.
With link building, especially in the case of relatively young sites, there is no such thing as “set and forget”. Whilst that’s not what many sellers like to hear or admit, the reality is that if link building suddenly stops, a drop in search rankings is in most cases imminent.
The seller has also admitted in the comments of the original version of the listing (prior to relisting it), that he has purchased “a few high quality links”. It’s important to understand that not only is buying links a dangerous game, links are bought for a certain period, meaning that the links that the seller has bought will either be taken down (likely affecting the site’s rankings) or the new owner will need to continue paying for them.
Because of this, potential buyers need to either account for a sizeable monthly SEO spend, or put aside several hours each week if they wish to do the link building themselves (providing they have the skills to do it).
Google’s Quality Guidelines
Last but not least, I had a look through Google’s Quality Guidelines to check whether the site complies. This also gives some indication of the risk of Google penalizing the site as soon as it goes through a manual review (which many sites do sooner or later), and needless to say, there was more than a few raised eyebrows!
Google’s Quality Guidelines document is a long read, so for the sake of not boring you, I’ll bring up only the most relevant and important violations.
Firstly, the site is in clear violation with the guideline that reads:
“Make a site with a clear hierarchy and text links. Every page should be reachable from at least one static text link.”
When you navigate to the front page of the site, all that you see is a lead capture form, a link to a longer lead capture form and a couple of links to “recent articles”, with no way to reach other pages of the site, other than through the sitemap.
The sitemap itself isn’t a particularly good one either as instead of containing links to the whole website, it contains only a bunch of keyword links to content that is obviously there only to game search engines. Take a look at it, since it’s guaranteed to bring a smile to your afternoon!
Another important quality guideline is that every site has to have content that is “useful and information-rich”. Whilst it’s debatable whether the site is in violation of this, my subjective opinion (which is likely to coincide with the opinion of Google’s manual review team) is that the site’s keyword-rich content is written first and foremost for search engines, rather than for humans.
There are a few more guidelines that are worth pointing out, but as the conclusions are quite obvious, I will leave it for the readers to decide whether the site is likely to be in violation of these or not. They are:
“Make pages primarily for users, not for search engines.“
“Avoid tricks intended to improve search engine rankings. A good rule of thumb is whether you’d feel comfortable explaining what you’ve done to a website that competes with you, or to a Google employee. Another useful test is to ask, ‘Does this help my users? Would I do this if search engines didn’t exist?’“
“Think about what makes your website unique, valuable, or engaging. Make your website stand out from others in your field.“
Considering all of the above, I’m relatively sure that despite the unlikelihood of the listing being fraudulent, it is an extremelyrisky investment. There’s a significant chance that the website will lose the majority of its rankings (and therefore traffic) very soon, either as a result of an automated movement in search rankings or due to a manual review by Google’s web spam team.
Turns out it wasn’t the only big thing happening in her life: Jennifer gave birth to her first child days after the auction, and was getting ready to move into a brand-new house at the same time. I had a chat with her to see what it was like to sell what started as a personal blog for more than $25,000.
Can you tell me a little bit about why and how you built TheLooksForLess.com?
On a Friday afternoon in 2009, I was talking to my fellow web developers at my university day job about a new (at the time) application getting a ton of buzz, WordPress. As a geeky developer, I thought it would be fun to expand my skill set by creating a blog. I was pretty savvy at coding PHP and CSS, and knew just enough about database management and web hosting to get started.
I went home that evening, signed up for a hosting account, installed WordPress, purchased a domain, and connected all of these technologies as I watched the sunrise Saturday and Sunday mornings. I was instantly obsessed and my blog, The Looks For Less, was the perfect way to combine my love for fashion and technology.
On Monday morning, I went back to work and shared with my coworkers my brand new blog complete with a theme, logo, and 5 “celebrity look for less” outfit posts. They were shocked at how quickly I was able to put everything together and it became the topic of many exciting conversations over the next couple of years after what started as a hobby, quickly attracted a following of loyal readers and was picking up endorsements from top brands as well as invitations to New York Fashion Week.
What was your experience in running the site, and why did you decide to sell?
Once I got started, I thought about my blog morning, noon, and night. I watched the sun come up often working on post after post. I kept up this momentum for 3 years, yet found the pace difficult to keep up with when my husband and I decided to expand our family. My priorities had changed.
With a baby on the way, there were so many things that I wanted to share beyond fashion so I decided to start a lifestyle blog. At FabFatale.com, I am able to document my every passion including recipes, DIY projects, beauty product reviews, and all things baby. I had every intention of keeping up with both blogs; however, this quickly became impossible with a full time job, a baby on the way, selling our house, and moving into a rental while building a new home, so I decided to sell The Looks For Less while it still had a lot of momentum.
My favourite thing about your auction is the interest it drew in the last few hours, including an all-out bidding war where the price more than doubled to $25k. What were your expectations for the sale, and how did they match the reality of putting your site up for auction?
I had no idea where to begin when I decided to sell my blog. I also had no idea to price it, so I did a search to see if there were any online website auctions available so the market could determine its value. My biggest fear was that the right market wouldn’t find my auction, and it would sell for way less than its current and potential value.
Flippa was the first site to come up in my search and with its high Alexa ranking, I figured it was a legitimate option for selling my blog, and I literally just went for it. I listed my site and set a random reserve price of $8,000 hoping to afford a sectional sofa for the house we will be building this summer. The Premium Support team was a huge help in helping me strategize my listing and I firmly believe the they are the reason my sale was so successful.
On the last day of the auction, all sorts of chaos ensued. The listing was set to expire at 4:30 pm on a Thursday afternoon. My coworkers and I were gathered around a computer and kept refreshing the listing page as the bids continued to rise. All of a sudden, 60 more minutes was added to the clock. It turns out that if a listing gets a bid in the last hour, another hour is added to the ending time, in order to prevent sniping.
Bid after bid came through and this pattern of “bidding and 60 more minutes added to the clock” continued throughout the night. I was literally 9 months pregnant, moving boxes into a rental house that evening, refreshing the listing on my iPhone, and shrieking with joy every time the price went up… $8,000, $10,000, $15,000, $20,000 and finally $25,500!
If this isn’t indiscreet: what do you plan to do with the money?
Wow, not only can I afford that new couch at my new house, but I’m pretty sure I can afford the room it will sit in. With all we have going on, new baby and new home in progress, this money feels so good sitting in my bank account and will come in so handy. With so many major life changes going on right now, the extra money allows us take a deeper breath as we keep calm and carry on. The timing couldn’t have been more perfect and, although I’d like to say that was my intention, I had no idea that my site auction would be such a huge success.
Another guest post to share some of the learnings from the Flippa user community. This guest post to help website sellers is from Danny Batelic, founder of BBSformula – a guide to buying, building and selling websites.
I’ve been a website seller for a few years now and I continually see sellers on Flippa make the same mistakes, so I thought I would share my top seven with you.
Website Seller Mistake 1: Poor Record Keeping
Let’s start at the top, as this is the number one offender when it comes to selling.
Buying and selling is a numbers game and “potential” really means nothing. It’s all about the proof.
There is no excuse for poor record-keeping.
When you sell your website, the onus is on you to tell an authentic story and backup any claims you make with proof. If a seller can’t prove any claims, then as far as I’m concerned, the claim never happen. If I can’t get the information I need, I’ll just walk away. There is so much opportunity online that I’m not going to waste time on something that triggers alarm bells.
When I buy a website, I like to see at least six months worth of traffic stats. The simplest way to keep traffic records, is to install Google analytics. This should be installed as soon as you either build a site or take ownership of any you have purchased. There is no excuse for not having analytics installed.
Then there is proof of income. You’d be amazed at how many sellers can’t substantiate income claims they make.
If your site has been making money through AdSense, affiliate commission, or from your own product, most sales will come via PayPal and you should be able to show buyers the PayPal history. If there have been sale spikes through promotions you’ve run, explain that to buyers, don’t wait for people to point it out to you in the comments section. Being transparent helps remove suspicion, which can hurt your auction, particularly if you have a string of comments pointing out any irregularities.
Website Seller Mistake 2: Not Knowing What Your Site is Worth
A lot of website sellers simply undervalue their sites and consequently so many sites are undersold.
Flippa is a relatively new marketplace and as a seller, it’s your job to understand how to value websites and then convey that value to potential buyers. The best place to learn valuation is on Flippa itself. Study the “just sold” section and develop a feel for what people are paying, but more importantly look for patterns. I learnt this from bricks and mortar real estate, where any new investors are encouraged to study at least 100 auctions before they even think of buying property.
The more you understand why sites sell for the prices they do, the easier it will be for you to educate buyers as to why they should pay the price you are asking.
Website Seller Mistake 3: Weak Sales Copy
This is where you get to tell the story. You want buyers to feel comfortable, knowing that they are buying the real thing. The number one fear buyers have is being ripped off and it’s your job to remove those fears.
You need to talk about the site’s history. How did it start? Did you build it from scratch, or did you buy it as an established site? Explain what you have done to the site and what will be required by the new owner to maintain it.
You need to discuss all features and benefits. Explain the traffic. Is it organic, or is it mainly paid traffic? A lot of sellers will try and hide the fact that they pay for traffic, but if a site is making more money than it spends in traffic, then that’s a good thing. If I can make $2 for every $1 I spend, I will buy traffic all day long and as much of it as I can.
Explain the monetisation. Show how the site makes money and how the new owner can continue to make money. This is where you need to show proof of any claims you’re making. Proof always trumps potential. Even if your site makes $20 a month from AdSense. As long as you can back it up with proof, your site will be more authentic than one that claims $4000 a month income potential, with no proof.
The sales letter is where you get to avoid all those after sale hassle. You need to clearly outline what happens once the sale is complete. Be explicit with what you are prepared to do from your end as part of the transfer process. I’ve seen so many disputes arise here because buyers expected certain things that never happened. The sales letter is the perfect place to explain the whole after sales process.
Another example of why it pays to study a number of auctions before you start to sell, is that you can answer any potential questions buyers might have, in the sales letter itself. Covering potential questions helps having to answer question after question in the comments section, which can be time-consuming.
The headline is a great opportunity for you to grab people’s attention and so many people get this wrong. Again, a great tip here, is to study the just sold section and take note of headlines that grab your attention. Avoid headlines that just sound too good to be true.
Website Seller Mistake 4: Mismanaging the Whole Auction Process
So many auctions just don’t run for long enough. I know, at times sellers are very motivated and after a quick sell. I think 5 to 7 days is the ideal listing for most sites. You need to consider people’s online habits. We all access the Internet at different times. Some people are only online during work hours, others at night and some only spend time online on the weekends. You want to cast your net as wide as possible, so I recommend including at least one weekend in your listing cycle.
A common mistake is not replying to comments regularly and efficiently. Once a day is okay at the start of an auction and as things heat up towards the end you need to answer any comments as soon as you can. Answer all questions honestly and if you don’t have information, just let people know that you will endeavor to find out and get back to them. This is where you see so many people caught out trying to cover for mistakes or misinformation. High end sites can run longer, as they have more traction.
A great tactic towards the end of an auction is to post a comment or two of your own, just to alert any watches or last-minute bidders that the auction is about to end.
A huge mistake I see in the auction process, is when sellers lose their nerve. This is where mistakes are made and money left on the table.
The auction process isn’t linear. Things start with a little frenzy in the beginning and then there is always a dip in the middle, with things really heating up towards the end. A lot of sellers get to that dip and panic. This is where reserves are dropped, low BIN prices are put in place and lowball offers are accepted.
I’ve spoken to so many website sellers who have dropped their prices, only to learn that there were buyers waiting to enter towards the end of the auction and were willing to pay top dollar.
“PM ME THE RESERVE!”
Do this and you lose. You would never go to a house auction and have the seller come out and reveal to everyone their reserve price. It just does not happen. It shouldn’t happen on Flippa either. You will be asked this question and the best answer you can give, is that revealing the reserve defeats the purpose of having one in the first place. Remember how I wrote about emotion earlier? This is the chance to use it to your advantage. People buy on emotion. That’s why the auction process is so successful. No one likes to miss out, so it can become more about winning the auction, rather than buying a website.
Website Seller Mistake 5: Confused By All Those Upgrades
With all the listing options available to sellers, things can get a little confusing
Upgrades can get a little expensive on lower end sites, but using just one or two can really help drive traffic to your listing. Most sellers ignore upgrades as simply a waste of money. No matter what price I’m selling at, I personally always use the highlight option when I first list. It’s a simple way to stand out from the crowd. On mid to high end sites, the rest of the upgrades do help, but it is a matter of using them strategically. It does require a little experimenting on your part to find what works best for you. I find using the featured listing upgrade towards the end of an auction really helps attract last-minute bidders.
Website Seller Mistake 6: Not Using Video
The option to attach a video to your listing is a fantastic selling strategy that hardly anyone employs. With so many free video tools available, it only takes a few minutes to screen capture a walk-through of your website and even your traffic and revenue accounts, which is a great way to show proof. A video walk-through is like a guided tour of your website and I have had fantastic success using video.
Website Seller Mistake 7: No After Sales Support
I touched on this earlier, but this is where any disputes will arise and headaches occur This is a trap the new sellers. If you have been very specific in your sales letter as to what happens post sale and deliver on what you have promised, you will avoid almost all problems. For a lot of buyers, this is probably the first site they will ever own and it can be daunting to manage a website the first time.
It’s important to contact the buyer as soon as the auction has finished letting them know what the next step is and what you expect from them in order to move forward smoothly. I personally never start any transfers until the money has cleared and once I’ve been paid. If this is your approach, remember that it is mentioned in your sales copy to ensure buyers are aware of your expectations – having consistently positive feedback will make this less of an issue. Once the funds are cleared, I work as fast as possible to transfer everything and finish the process. I’ve heard so many stories of things falling apart at this point, because of poor communication and sellers not working with the buyer to finalize everything.
If a buyer is happy with dealing with you, there’s a great chance that they will buy again. As part of the whole follow-up process, it’s important to ask the buyer’s permission to add them to your email list and then follow up with any future listings you have. Once everything is finalized, touch base with the buyer after a few weeks, and then a few months. Find out how they’re doing with the new site and if they’re ready for another. You’d be surprised at how many buyers become repeat customers.
Danny, is a seasoned website seller and buyer, and is a founder of BBS Formula, the complete step-by-step process to buying, building and selling websites.