Lesson Learned From A Recent $10k Purchase

[ChrisGuthrie]

I bought a site earlier this year for $10k, it's been a solid earner since the purchase date and with some tweaks (aka more / better ad placements etc) the site should be paid off before the end of this month which is awesome (wish they all went this way).

This time around I tried something different with this purchase. Specifically, the seller was really knowledgeable about this niche and so one of the things I tried to do was get the owner to write a more detailed how to info product to try selling to the email list and to wrap this into the purchase price of the website. I had the completion of this guide within our contract, but after the sale there were some issues (will leave it at that) and the owner has still yet to deliver this to me.

I don't want to bother with the legal hassle of going after the seller for not completing this part of our deal - but it has made me decide that I'm not going to do any other types of deals like this again. Beyond a typical XX hours of help that I typically write into a contract (that can be difficult to enforce anyway) I think it's just not worth it to include any substantial ongoing work or services that need completion in deals that are as small as this one for a couple reasons:

1. If there's not enough money on the table then it's not worth the time, money and/or distraction pursue legal action
2. If I really wanted this additional guide to be created I should have set up a two stage payment contingent on the completion of the guide. i.e. $8,500 up front and $1,500 upon completion (duh I know)

Primary lesson learned: Once a seller has the money there is nothing stopping them from moving in except the threat (real or perceived) of legal action that depending on their location or deal size may or may not be feasible (or worth it).
Edit: After re-reading this post I think this lesson is pretty obvious so I think I should clarify by saying no matter how comfortable you feel with the seller there's no telling what they will do when the deal is done.

I'm still satisfied with the purchase though and after the minor misstep in the contract just thought I'd share the details of this sale in case anyone else is considering bundling on going work / services etc. into smaller deals so you can learn from my mistake.

[DomainMagnate]

Chris, congrats on a profitable purchase!

I had a few similar cases. In one I bought a site for 5 figures and the agreement was that the seller would write additional 100 articles for it. More than a year later and with countless reminders and excuses, promises he only added 2 articles out of 100.. It was a good site and it paid off though, but as long as there is no motivation for the seller to deliver the additional work, which is anything beyond answering a quick email from time to time, I wouldn't expect it.

In another similar deal I did this "smarter". He wanted $6k for the site, so we agreed on a $5.5k escrow and that I'll pay $500 more after he delivers additional content within several months. Months passed and he didn't add any content and just kept saying he's busy and will do it later, so I just kept the $500.
There has to be an incentive.

That said though it's not always true, sellers vary. Some would follow through as agreed and even beyond.

[ChrisGuthrie]

Chris, congrats on a profitable purchase!

I had a few similar cases. In one I bought a site for 5 figures and the agreement was that the seller would write additional 100 articles for it. More than a year later and with countless reminders and excuses, promises he only added 2 articles out of 100.. It was a good site and it paid off though, but as long as there is no motivation for the seller to deliver the additional work, which is anything beyond answering a quick email from time to time, I wouldn't expect it.

In another similar deal I did this "smarter". He wanted $6k for the site, so we agreed on a $5.5k escrow and that I'll pay $500 more after he delivers additional content within several months. Months passed and he didn't add any content and just kept saying he's busy and will do it later, so I just kept the $500.
There has to be an incentive.

That said though it's not always true, sellers vary. Some would follow through as agreed and even beyond.

Yah I knew it was going to be a good buy but it was ultimately just the decision that I could tell he wanted at least $10k so I didn't want to risk losing the deal by offering less up front. Ah well - I may still get it but if I don't that's ok as well.

I believe that in general when buying from people that aren't necessarily marketers / website owners for profit (and more of - this is my hobby and I just happen to make money) when they do ultimately decide to sell it's because they're just over the idea of running the site and in those cases asking for extra work just isn't really worth it.

[David S]

I believe that in general when buying from people that aren't necessarily marketers / website owners for profit (and more of - this is my hobby and I just happen to make money) when they do ultimately decide to sell it's because they're just over the idea of running the site and in those cases asking for extra work just isn't really worth it.

I think that statement is probably true even if the seller was in it for profit. A seller may have great intentions to assist the buyer but most sellers are mentally done with the site when it is sold. Counting on the seller to follow through without some structural incentive is probably a hopeless cause more often than not.

[Clinton]

I don't want to bother with the legal hassle of going after the seller for not completing this part of our deal - but it has made me decide that I'm not going to do any other types of deals like this again. Beyond a typical XX hours of help that I typically write into a contract (that can be difficult to enforce anyway) I think it's just not worth it to include any substantial ongoing work or services that need completion in deals that are as small as this one

I agree. One of the problems I face is that sellers don't seem to understand this. They feel that if they're offering six months support or continued linking from their network of sites or some other post-sale help, I should be reassured; that this promise has some cash value. There's one Flippa seller I'm talking to now who has two competing sites and is selling one. He expects me to act / buy his site now on the assurance he will close the other site down permanently in a few months!

I recommend avoiding any purchase where you are dependent on the seller for anything post-sale. Not hosting, not help with running the site, not link support from his network, nothing.

[ChrisGuthrie]

I think that statement is probably true even if the seller was in it for profit. A seller may have great intentions to assist the buyer but most sellers are mentally done with the site when it is sold. Counting on the seller to follow through without some structural incentive is probably a hopeless cause more often than not.

I agree. One of the problems I face is that sellers don't seem to understand this. They feel that if they're offering six months support or continued linking from their network of sites or some other post-sale help, I should be reassured; that this promise has some cash value. There's one Flippa seller I'm talking to now who has two competing sites and is selling one. He expects me to act / buy his site now on the assurance he will close the other site down permanently in a few months!

I recommend avoiding any purchase where you are dependent on the seller for anything post-sale. Not hosting, not help with running the site, not link support from his network, nothing.

Both comments well said. If someone's offering something extra in the form of on going work post sale (and money isn't held back) you're rolling the dice.