FP - What do you think about flipping service sites?

[chockfactor]

Hey guys I am just wondering if anybody of you have tried flipping service sites or are thinking about it?

You know sites selling fb fans and then outsource the service itself to another person.

Do you think there still is a market for it? Or do you think it is starting to reach a saturation point?

I am thinking that one thing buyers love about such site, besides profits it may have made. Is if you give them your outsources details. You know it's like those who loves "secret" wholesale lists lol.

[Bryan]

Selling service site is nothing new or nothing that can get "saturated" - I would say that a good third of all sites/businesses we broker offer a service of some sort.

That said, the main problem with services such as FB fans, twitter contacts etc. is the reliability of the outsourcing contacts. FB changes their stuff around all the time and because of this, many service providers go out of business every week - and buyers know this and are therefore extremely careful when buying these sites. This, and also the fact that service like this is a bit on the black hat side, which serious buyers with investing backgrounds generally tend to dislike.

[chockfactor]

Selling service site is nothing new or nothing that can get "saturated" - I would say that a good third of all sites/businesses we broker offer a service of some sort.

That said, the main problem with services such as FB fans, twitter contacts etc. is the reliability of the outsourcing contacts. FB changes their stuff around all the time and because of this, many service providers go out of business every week - and buyers know this and are therefore extremely careful when buying these sites. This, and also the fact that service like this is a bit on the black hat side, which serious buyers with investing backgrounds generally tend to dislike.

So it might not be that good of an option to flip such sites? Or would you just say they generally fetch for lower amounts?

[Bryan]

So it might not be that good of an option to flip such sites? Or would you just say they generally fetch for lower amounts?

It depends. The multiples are obviously lower, but as for flipping such sites being a good or a bad idea - I actually can't see anything wrong it it, however if I were to sell a site promoting such service then I would feel obliged to explain the buyer what they're getting into and letting them know of the fact that the service provider can easily go out of business at any time. You will never want to end up with buyers who buy a site from you that dies a few months down the line as in this industry reputation is everything.

[chockfactor]

It depends. The multiples are obviously lower, but as for flipping such sites being a good or a bad idea - I actually can't see anything wrong it it, however if I were to sell a site promoting such service then I would feel obliged to explain the buyer what they're getting into and letting them know of the fact that the service provider can easily go out of business at any time. You will never want to end up with buyers who buy a site from you that dies a few months down the line as in this industry reputation is everything.

So you would basically tell them that in worst case scenario the outsourcer might go out of business?

I can easily see that would scare away a lot of buyers. But wouldn't a guide or something explaining exactly how to find another good provider help on that?