Buying, Managing & Selling Websites For Profit - Learn the Real Tricks of the Trade

A sure fire way to building a profitable business is the ability to find and acquire under-valued assets. This applies to the online world too, so being able to buy websites is effective for either building a portfolio or flipping.

There are a lot of marketplaces and forums out there to look for under-valued sites, but my favourite has to be Digital Point. There are a large number of sellers with sites and generally terrible listing sales copy. This does mean you have to trawl through a number of auctions until you find something worthwhile but it is often worth is when you can buy a site for 10x less than market value. I’ve bought a number of sites for around the $100 mark, and easily been able to sell them for $1000 or more in a matter of days. Some I keep, and continue to earn residual profits for a relatively low initial investment. Either works – it’s just a case of personal preference. My recommendation would be a combination on the two, but ultimately it is down to you.

Now, moving on to some techniques I use on a regular basis on marketplaces such as Digital Point in order to secure a sale quickly and below market value. I’m not going to cover due diligence at this point, so will assume that you already are confident with the seller’s claimed earnings, revenue and ownership. If you are not, at this stage you should always walk away. There is always a “what if” element for many of us, but it’s best just to leave it and move onto something else.

I never bid on auctions. For a start, I’m very impatient – but there is also some good reasoning for my methods.
What I do instead is contact the seller directly and negotiates a price that is suitable for the both of us.
This strategy has three very important advantages if we were to compare it against bidding:

1) Bidding tends to lead into bidding wars often enough and this is something you don’t want to get involved in. Not only are you likely to lose money, but I also consider this a waste of time (time is money).

2) Based on my experience, the majority of sellers are willing to bring their price much lower than the it could realistically reach in case the auction was finished – if they face the decision of selling the site right away for $x or continuing the auction and risking with the site not selling at all.

3) We’re not the only savvy buyers around. Prevent your competitors by out-bidding you by getting in there fast and getting it off the market as soon as possible.

Now, let’s talk about the actual prices and how you should size your offers. An error often made by inexperienced buyers, is trying to make an offer based on the seller’s current price or expectation. This is not the way to go. You should make an offer based on the price YOU want to pay. If they don’t like your offer, you can move on to something else. Not a problem.

Unfortunately, there is no set formula for determining the ‘right’ price. It all depends on your ability to negotiate and appetite for risk.

If you have no experience in valuing websites, I strongly urge you to take a good hour or two each day, browsing the ‘just ended’ auctions on Flippa and taking note of the prices versus ‘attractive features’. Past sales are a good way to value sites, especially as you are looking at CURRENT market prices.

Now that you have an overview on how to organise your pricing, let’s look at a scenario that keeps happening, over and over again. Let’s say that you’ve picked up a site that you’re interested in and determined that the maximum you will pay for this site is $450, however you would prefer to get it for $350 or less.

Everything goes well and even the traffic statistics check out, but the seller of the site is rather stubborn and tells you that the lowest they’ll go is $400. Do you buy it? I know I don’t - at least without doing my very best to get the price further down.

But how to negotiate if the buyer has already said ‘no’ to your offer? Easy! There are many techniques you can use based on basic psychology. I will look at just one.

The fear of ‘losing out’ is an extremely powerful psychological trigger and using it in to your advantage provides you with great results more often than not. When discussing the deal (and the price), you need to make it absolutely clear to the buyer that you will not stick around! The seller has to know for certain that they need to make their decision NOW – and that the decision can only be selling the website at the price that you’ve dictated or risking with not selling it at all.

What gives this method some further leverage is the fact that you will very often stumble upon inexperienced sellers, who may have certain expectations regarding the price their site is going to sell for, but they’re not confident enough to know that it’s indeed going to sell at this price. Therefore, once presented with an opportunity to make SOME cash now, as opposed to possibly a lot less later, they naturally tend to go with the first choice. Furthermore, you should try to always use action terms such as “now” to instil a sense of urgency, almost as if you were standing right next to the seller with a stack of dollar bills and asking them if they want it in their pocket or not.

There are a lot of good ways to get yourself a good deal. Direct contact and hard negotiation is just one. Don’t be afraid to get in contact with a seller if you want to make an offer, you may be surprised at the result. Auctions are great if you lack confidence, but if you can get the hang of negotiating outside of an auction and trusting your judgement you will quickly gain the ability to spot bargains and close down sales within a matter of hours.

I'll be back next week with something different

Thomas

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