With an average of 2,000 sites listed at any moment on Flippa, sifting through pages of listings that don’t match your desired criteria can be time-consuming and frustrating. Today we put together a short video that explains how to use Flippa’s Advanced Search function to weed out websites that don’t match what you’re looking for, and how to save those results.

http://www.youtube.com/watch?v=837dgxbdaCY

What types of websites do you normally look for? Do you wish we included something else in our Advanced Search? Let us know in the comments?

Today’s post is by Chris Yates of the website flipping blog FlipWebsites.com. Chris is one of the organisers of the Internet Investment Summit, happening May 18 – 20 in Las Vegas. Note that early bird tickets end 20 April!

Have you ever considered what it would be like to buy or sell a site valued over $100,000? Several times a year sites sell on Flippa in the six figure range. What exactly makes these sites command a valuation over $100,000? That’s the question I set out to answer before writing this post. First, I’ll explain the methodology I used to answer this question, then, I’ll summarize my findings into 10 factors that affect the value of a website.

The Methodology

In order to answer the question, I first had to find a source of data. Using Flippa’s advanced search feature, I set my search criteria like this:

• Listing Format: Auction
• Auction Status: Won Listings
• Property Type: Websites
• Auction Price: Minimum $150,000

This narrowed the list down to about 30-40 listings. I further narrowed it down by weeding out any auctions that only had 1 bid, were private, and those that sold more than a year ago. I ended up with 10 auctions to use as source data.

For each of these auctions, I did a little “mini due diligence” on them, making notes on what I felt increased and decreased the value of the site based on my own experience buying six figure sites. In the interest of full disclosure, this part of the process was rather subjective since I don’t pretend to know the value every buyer sees in every auction. I also assumed the seller’s statements on factors such as traffic and revenue were accurate since I had no way to verify them directly from the sellers for my research.

Summary Of The Data

• Average Number of Bids: 20.4 Bids
• Average Price: $279,500.00
• Average Unique Visits Per Month: 75,7175.5 Visits
• Average Net Profit Per Month: $22,819.20
• Average Revenue Per Unique Visit: $0.29
• Average Price Per Unique Visit: $2.37
• Average Monthly Revenue Multiple: 15.27 Months

The 10 Factors Affecting Valuation

At this point, I gathered my notes and looked at the various factors affecting the value across different auctions. I came up with a list of the most common factors which were prevalent across the data set and identified the factors that seemed to be the outliers which contributed to the value. Keep in mind, this is not meant to be a comprehensive list of all the factors that affect any website’s value, only those that I felt affected those in my data set.

Subscriber Lists

10 of 10 of the sites included some form of a list such as a customer list, subscriber list, membership database, forum database, social media account, etc.

The lesson: Six figure sites build and manage lists.

Solid Traffic History

It’s no surprise that all of these sites were generating traffic. 8 out of 10 of the sites were generating over 100,000 visits per month.

The lesson: Six figure visits to a site each month can translate into six figure valuations.

Solid Earning History

All but one of these sites had a history of revenue generation. Auction 3 didn’t claim it in the Flippa system, but did state the site had earned revenue in the auction copy. 9 out of 10 of the sites had earned more than $5,000 in a month.

The lesson: Four to five figures of revenue each month can translate into six figure valuations.

Low Maintenance

8 out of 10 of the auctions used wording like “low maintenance” or “automated” to indicate that the site could be maintained with little time. Surprisingly auction 10 seemed to require the most amount of work but also received one of the highest revenue multiples.

The lesson: Six figure sites are scalable.

Multiple Sources of Traffic

Based on the seller’s statements, 8 out of 10 of the sites didn’t rely primarily (more than 50%) on Google for its traffic. Even the two which did seemed to have a diverse range of keywords with no one keyword driving over 50% of traffic.

The lesson: Six figure sites don’t put all their traffic eggs in one basket.

Established Relationships

6 of 10 of the sites included unique relationships such as suppliers, joint venture partners, etc. which were key to the success of the sites and were included in the sale.

The lesson: Networks of strong relationships build six figure sites.

Proprietary Digital Products

6 out of 10 of the sites had proprietary products that could be delivered digitally. Buyers often see value in proprietary products since they can add the product into an existing business’s offerings. Digital produts also tie into the low maintenance aspect to each of these sites.

The lesson: Proprietary products that can be delivered in a scalable way increase the chances of a six figure valuation.

Lots of Free Traffic

Auction 2 had no claimed revenue but had the highest traffic at over 3.5 million unique visits a month. Even with no revenue, the site sold in six figures. This means a buyer likely saw the ability to monetize the traffic and could justify the price.

The lesson: Traffic alone (which can be profitably monetized) has value in the eyes of six figure buyers.

Effective Monetization Systems

Auction 4 had the best claimed monetization with the highest revenue per unique visit number. To be making over $40,000 a month on only 30,000 unique visits is quite a feat.

The Lesson: Create a monetization system for your six figure site which buyers can leverage.

Recurring Revenue Streams

Auction 10 sold for the highest revenue multiple. I believe one of the factors that contributed to this was the fact the site had over 200 recurring subscribers. Recurring revenue streams significantly reduce the risk for buyers. Auctions 4 and 8 also claimed recurring revenue streams.

The lesson: Six figure sites are able to maintain momentum and revenue after the sale.

Want to Learn More?

If you’d like to learn more about over 250 other factors I’ve uncovered which affect the value of a website, join me and several other website investors at the Internet Investment Summit happening May 18 – 20 in Las Vegas.

About Chris Yates

Chris Yates is an entrepreneur who actively buys, sells, and invests in websites. In addition to buying and selling internet businesses, he also educates and coaches others to make money buying, selling and investing in websites. Chris is also co-owner and co-author of several sites and books on the subject of building, buying and selling websites and co-creator of the Internet Investment Summit.

Connect with Chris in person at the Internet Investment Summit happening May 18 – 20 in Las Vegas. Note that early bird tickets end 20 April!

Are these factors you look for in a website purchase? What else do you think factors in a high-value website? Let us know in the comments!

Today’s post is by David Gass of BuyingAndSellingwebsites.com. David is one of the organisers of the Internet Investment Summit, happening May 18 – 20 in Las Vegas. Note that early bird tickets end 20 April!

Ask five website buyers what they think your website is worth, and you’re likely to get five different answers. Each buyer would likely have a different valuation number and potentially a different method for creating the valuation.

There are so many factors involved in determining the value of a website it’s easy to understand why valuations will fluctuate from buyer to buyer.

So what is your site really worth? “What anyone is willing to pay for it!” That’s the real answer. However, that’s not an answer you can put in your bank account. To make it a bit easier to find a fair valuation for your site, here are five valuation methods to use:

Website Valuation Method #1 – Comparable Sales

In the real estate market, Comparable Sales are called COMPS. A comparable is found by searching for related sites in your niche that are as close to your site’s age, traffic and revenue as possible. The closer the numbers are for a comparable site, the higher relevance the site has in the valuation.

To create a comparable valuation on a website generating $250 in monthly income from Adsense, with 5,000 unique monthly visitors and a PR of 1, the first step is to search Flippa.com won listings for sites that closely match this criteria.

The following are six sites in the results that can be used for the comparison.

Domain                                                           Won Price       Profit   Mthly Unique  PageRank

Onlineincomeportal.com   (listing)                $2,950             $212             72,062                 0

Cheapholidaytr.com        (listing)                     $1,500             $229              4,200                 1

Theexpensivecars.com       (listing)                   $1,700             $300            45,000              0

Garnethillcoupon.biz        (listing)                    $2,450             $312                9,237               1

CnaTrainingSuccess.com    (listing)                $9,000             $366               2,523               3

Bankruptcy-chapter-7.org    (listing)                $3,700             $152              2,547                 0

A Formula for comparable valuation:

Step 1: Add “won price” for all sites sold in the comparable listing: $2,950+$1,500+$1,700+$2,450+$9,000+$3,700 = $21,300

Step 2: Find the average price of comparable sites:

$21,300 divided by # of Sites (6) = $3,550

The comparable valuation would be $3,550 for the site.

In this particular case, I’d recommend dropping the highest and lowest priced sites that were sold to get a better valuation. If you drop the $9,000 and $1,500 sites, the comparable valuation is $2,700.

Website Valuation Method #2 – Revenue Multiple

The revenue multiple valuation method is to divide the monthly or yearly profit by the sales price. Although buyers use this method frequently, it’s not an exact science.

For example, the valuations should be different for two sites with $500 per month in net profit from the same revenue source (adsense for example) if one site has three months of history versus another site with three years of history generating the same income.

A site with just three months history might get 6 times monthly profit as the valuation where as a site with three years may get 20 times monthly profit.

Using the same six websites above from recent Flippa auction sales these are the multiples the sites sold for:

Domain                                       Won Price       Profit         Monthly Multiple

Onlienincomeportal.com               $2,950             $212                13.9

Cheapholidaytr.com                        $1,500             $229                6.5

Theexpensivecars.com                    $1,700             $300                5.6

Garnethillcoupon.biz                      $2,450             $312                7.8

CnaTrainingSuccess.com              $9,000             $366                24.5

Bankruptcy-chapter-7.org             $3,700             $152                24.3

The multiple valuation method results vary from 5.6 to 24.5 for these sites. Age isn’t the only factor in determining the multiple. The buyer could have additional sites in that niche or know ways to increase revenue for the site that the current owner isn’t using, which is why they will pay a higher multiple.

It’s easy to see with this example that using just the multiple as a valuation method can be deceiving.

Formula for Multiple Valuation Method:

Monthly Revenue divided by Sale Price = x

X is the number of months it would take to earn back the purchase price of the site with the current monetization methods.

Website Valuation Method #3 – Traffic Value

Another approach to determining the value of a site, specifically sites that have yet to be monetized but have traffic, is the Traffic Value Valuation Method.

This method is determined by researching the top key phrase or phrases that drive the majority of traffic to a website. Then find the Cost-Per-Click value of the keywords.

For example, the site we have used in other examples: Bankruptcy-Chapter-7.org has two key phrases driving over 90% of its traffic, the two key phrases are; Chapter 7 and Bankruptcy Chapter 7.

Once you know these terms go to Google Adword’s keyword tool and enter both terms. The approximate cost per click for each term will be found. For [Chapter 7] it’s $5.95 and for [bankruptcy chapter 7] it’s $11.44.

If the amount of traffic going to Bankruptcy-Chapter-7.org is 900 visitors using Chapter 7 and 500 using bankruptcy chapter 7, then you can multiple the cost per click with the visits.

Formula for Traffic Value Valuation Method

Cost per click x # of Monthly Unique Visitors from That Keyword

$5.95 x 900 = $5,355 + $11.44 x 500 = $5,720

$5,355 + $5,720 = $11,075

The value of traffic to the site is worth $11,075 per month if a site had to pay, for each visitor with a service like Google Adwords. The next step is to multiply $11,075 by an amount around 45%. Taking a percentage of the total traffic value creates a more realistic picture of what the traffic will cost if paid, since not everyone would pay the maximum cost-per-click.

Traffic Value ($11,075) x Percentage .45 = $4,983.75/month.

Website Valuation Method #4 – Reverse Engineering Cost

The Reverse Engineering Cost method formula calculates the price to build a site from scratch to match the site being sold.  The formula is:

Cost to Build Site + Cost to Drive the Same Amount of Traffic + Time Factors = Value

The cost to build a site is pretty easy to determine. It’s easy to go to developers and ask them to look at a site and give a fair quote for the cost of creating the same type of site with new content. Obviously, a complex site versus a simple site will require a higher cost to build.

The cost of attracting traffic to a site can be difficult to calculate. However, getting a quote from an SEO company may provide some good valuations.

The first time factor includes the amount of hours for the buyer to get the site built and driving the same amount of traffic, whether its outsourced or created on their own. The second time factor is the opportunity cost. How much money would the site make in the time frame it would take to build a new one?

For example, if the cost to build the site is $1,500, and an SEO company quotes $3,500 to build the same amount of traffic, the site is valued at $5,000. Then add the opportunity cost and hours spent by the buyer. If the buyer needs to spend 10 hours and their time, is worth $50/hour it’s an additional $500. If the time to build the site and traffic is six months and the original site would have generated $300 per month, the opportunity cost is $1,800. ($300 x 6)

The total cost to reverse engineer the site is $5,000 + $500 + $1,800 or $7,300.

Website Valuation Method #5 – Customer Value

If a buyer already has a list of customers or prospects, he/she likely knows what that list is worth. There are a few metrics list owners use:

LTV – Life Time Value of a customer

DPE – Dollar per email

To best understand how to calculate the life time value of a customer when taking into consideration other expenses in the business and the acquisition cost of a customer, download the Harvard tool that calculates the LTV.

Once a buyer understand the LTV they are able to determine how much they can spend for a site that will generate x number of customers.

With DPE (dollar per email), a list owner may know, for every email they have in the list that matches the current demographics of their list, they can generate $3 per email. If they can find websites to purchase that have lists with emails that match their demographics, that list is worth $3 per email.

A site with 2,000 emails could be valued at $6,000 for the buyer, without even looking at any other factors. If the site already generates income from other sources, add the value of income with the $6,000 valuation to determine the overall value of the site.

For additional methods of valuing websites, strategies for buying and selling websites and to meet others in the industry, visit InternetInvestmentSummit.com. The event is a live seminar held in Las Vegas for anyone looking to learn the latest strategies and techniques for buying, selling or investing in websites.

About The Author

David Gass is a serial entrepreneur who has started businesses with $200 and grew to multi-millions.  His companies have been listed on the Inc. 5000 list of fastest growing companies in the United States three years in a row and he has received several awards for his entrepreneurial efforts and commitment to giving back to his community.  He currently buys established websites as a business and teaches others to do the same at buyingandsellingwebsites.com.

How do you generally value web sites? Do you have any questions for David? Let us know in the comments!

Image:plaisanter~

Once a website has been purchased, the next step is the exchange of funds for domain ownership and website files. While there are several ways to transfer funds, including PayPal and wire transfer, Flippa always recommends using an escrow service, such as Escrow.com, to protect both buyers and sellers.

We receive a lot of questions about the escrow process. To answer a few of these, we had a chat with Andee Hill, Director of Business Development at Escrow.com.

What’s the process of using Escrow for transferring a website?

Either the buyer or the seller can initiate an Escrow transaction from the Flippa Sales Completion area.

They simply have to click the “Start Escrow” link. Once both the buyer and seller have agreed to terms, the buyer will be prompted to send payment. Then, once funds are secured, Escrow.com will instruct the seller to transfer the domain or website. When receipt is confirmed, the inspection period (review period for the buyer; agreed upon by both parties) will begin.

During the inspection period, the buyer can confirm acceptance and Escrow.com will disburse funds to the seller.

What are the fees associated with Escrow.com?

The escrow fee is based on the purchase price of the transaction. The fee calculator available on our site https://escrow.com/support/calculator.asp. Flippa customers enjoy a 20% discount off our standard fee when they initiate the transaction on Flippa.

How are buyers and sellers protected by using Escrow?

How Buyers are protected:

• The buyer has the agreed upon inspection period to accept or reject the site/domain.
• The Seller isn’t paid until the Buyer accepts or the inspection period expires.

How Sellers are protected:

• The Seller is authorized to transfer only after Escrow.com verifies good funds.
• Escrow.com protects the seller against fraudulent payments.

What happens if I’m not satisfied with the site I’m buying, or if the site is fraudulent?

The buyer has the option to reject the website during the inspection period. If the buyer rejects, they are responsible to return everything received back to the seller. Upon the Seller’s acceptance of the returned merchandise, the buyer is refunded, minus the escrow fee.

As a seller, what happens if the buyer doesn’t pay?

If the buyer does not fund the transaction, the seller can request a cancellation or the transaction will time out on its own if it reaches a specific period of time without us securing funds. The seller is not responsible for any fees.

Does Escrow offer protection for the site, or only for the domain?

Both the domain and the website are protected as funds are held in Escrow until the buyer accepts the transaction, or the buyer rejects, returns, and the seller accepts the return.

Buyers and sellers can avoid much confusion by discussing and agreeing on the transfer and review process BEFORE funds are transferred to escrow (and before committing to buy, if possible).

Escrow.com transactions allow the buyer to receive and review, with the ability to reject and return if the site is not as agreed-upon. A seller should understand this before agreeing to our service.

Buyers should also have a clear understanding of how to verify website stats before agreeing to buy a website. It’s the buyer’s responsibility to confirm this during the inspection (or review) period.

What’s the process for transferring money in and out of Escrow?

All transactions can be funded by the buyer via wire transfer.  Some transactions also have the credit card option. Escrow.com can disburse to the seller via check or wire transfer.  Disbursement via ACH (Automated Clearing House) is also available for US customers.

Do you have more questions for Andee? Let us know in the comments!

Image:  Don Hankins

Image:  s_falkow

After last week’s guest post on Due Diligence with the Domaining Diva, we bring you a guest post by Zak Muscovitch, also known as the DN Attorney, on trademark and copyright.

Buying a website or online business can be an exciting time. It would be terrible if you spent a lot of money and time on purchasing a website only to find out that the domain name associated with the website was the target of a trademark infringement or cybersquatting claim, thereby possibly resulting in you losing the domain name.

Trademarks and domains

The first step in avoiding such a predicament would be to conduct a search of both registered and unregistered trademarks. Trademarks can be “words” or “logos”. Trademarks are generally registered in specific jurisdictions and only valid where so registered, so one may want to check out several national trademark registries, such as the USPTO, the CIPO, IP Australia and the UK Intellectual Property Office, for example.

It is not always simple to determine if a registered trademark is problematic for a buyer because it is identical or similar to the domain name associated with the website being purchased. For example, a registered trademark for ABC, in connection with clothing, may not be a problem if you are buying ABC.COM for a website dealing with electronics.

Of course there are plenty of exceptions to the general rules, such as in the case of famous trademarks. For example, COCACOLA.COM could probably not be used by anyone except the famous Coca-Cola Company, for anything even if its is not related to soft drinks, because their trademark is so well known that people would naturally assume that the domain name is related to the famous soft drink manufacturer. Accordingly, often a buyer should run the proposed domain name by a qualified domain name or trademark lawyer, prior to expending a significant amount of money on a website and associated domain name.

Registered trademarks are not the only kind of trademark to be aware of however. There are also “unregistered trademarks”, often referred to as “common law” trademarks. These are trademarks that have been used by a person or company without being formally registered, but are still distinctive enough and have been used long and wide enough, to qualify as a trademark for the purposes of stopping someone else from using an identical or similar mark in certain circumstances. They are however, more difficult to prove than a registered trademark. Accordingly, a simple Google search can often reveal third-party use of an unregistered trademark.

It is important to bear in mind that when it comes to trademark infringement, it does not usually matter whether a seller “intended to infringe” or was merely “unaware” of the existing registered or common law trademark rights. Likewise, for a buyer, it likely won’t be a defense to a trademark infringement claim, if you were not aware of the third-party’s trademark rights when you acquired and began using the domain name and/or trademarked logo. Accordingly, caution must be exercised depending on the value and importance of the transaction.

A buyer may also decide to check court and arbitration databases in order to determine whether a trademark owner has previously commenced legal proceedings regarding a particular trademark or something similar. This would give the buyer an idea of whether the domain name and/or logo are already the subject of legal proceedings, or alternatively, the degree of vigilance a trademark owner has shown in protecting their mark in the past. For example, one can check the PACER court database in the United States, the National Arbitration Forum’s Domain Name Dispute Database, and the World Intellectual Property Organization’s Domain Name Dispute Database.

Copyright: Ensuring Content and Software is Legally Owned

Copyright law generally protects the ownership of original content, such as a photograph, text, or song, whereas trademark rights protect brands. When considering buying a website that has content, such as images and text, it is important to ensure that the seller actually owns the content and thereby has the right to sell it to you.

Determining whether a seller validly owns content can often be difficult. Generally, the author of the particular text (the writer) or image (the photographer of graphic designer) is the party that holds the “copyright” over that particular content. Accordingly, the seller of a website with content should explain and certify that the seller created the content, or alternatively, has a valid license to use the content. A license to use the content could come from having paid for a license to use a stock photo, for example. Stock photo companies regularly troll the Internet looking for unlicensed use of their copyrighted images and then send out invoices or commence proceedings. Accordingly, care should be taken to ensure that all content was created by the seller or properly licensed by the seller and that the seller can properly transfer the license to the buyer. Additionally, if a seller used employees or contractors to help built out a website, those employees and/or contractors should have assigned all of their rights to the seller so that the seller becomes the sole and exclusive copyright holder in all respects.

A similar issue arises in the case of software. If any software is used in a website, then a buyer may want to confirm that the software is owned and can be sold by the seller to the buyer, or alternatively, that a valid license is held by the seller which can be validly transferred to the buyer. Otherwise, copyright infringement may occur and the buyer can be held responsible once they take over the website.

I, of course, have to remind you that there is no substitute for seeking the counsel of an experienced website attorney, and accordingly the information provided here is for general education purposes only, and should not be relied upon by you for any business purpose. 

Zak Muscovitch is respected and well-known domain name lawyer who has represented domain name and website owners since 1999. He has assisted buyers and sellers in website transactions worth millions of dollars, and has set numerous precedents in domain name dispute law. He represents clients from all over the world. His website is http://www.DNattorney.com.

Have something to say about this post? More questions for the DN Attorney? Let us know in the comments!

Today’s guest post was written by Suzanne Bucciarelli, a graphic designer, blogger and website developer. Her main blog, Domaining Diva covers topics including buying and selling websites and domains and other related topics.

There are plenty of bargains on Flippa, but when you are considering buying a site (from anywhere), you must be careful that you perform due diligence and research, and verify everything that is being claimed in the listing. It goes further than just verifying all the claims in the listing. You have to delve even further if you want to avoid some unpleasant surprises after you purchase the site.

You’re going to have to play detective a bit, and there are some useful tools to help you do this. Here are some questions to consider when thinking about buying a site:

• Does the listing have a detailed, clear description of the site and its assets, traffic and revenue?
• What stage in the Life Cycle of a site is this site in? Are traffic and revenue rising or declining, and is there room for expansion?
• How much competition is there and how do they compare in regards to position in the serps, price, product quality, etc.?
• Are there any obvious violations of FTC regulations, trademark or copyright violations, etc.? You can do a trademark search online at TESS (for US trademarks) and use Copyscape to check the uniqueness of the content.
• Check the site’s reputation in places like Rip Off Report and Better Business Bureau.
• If products or services sold on the site are outsourced, will you continue to have access to those vendors or suppliers?

1. Checking Out The Domain

Domain Tools is a great tool to help you find information about the domain, how long the domain has been registered, who the domain is registered to (if whois information is not protected), Whois history, Reverse Whois, and has DNS and IP Tools.

You also need to look into whether the domain has suffered from reputation problems. You’ll want to know if the domain has been blacklisted by anti-SPAM or anti-virus sites, or if the domain has been banned in Google. A simple search in Google using the operative site:domainname.com, replacing “domainname” with the site’s domain, can tell you whether or not the site is listed in Google and how many pages are indexed. You can enter the IP of the site at Spamhaus.org to check to see if the domain is currently listed in the live Spamhaus IP blocklists.

Flippa also has Due Diligence information on the listings, giving you a detailed snapshot of many important website stats from the “View extended due diligence data for this listing.” link. This includes links to the Wayback Machine – a pretty useful tool for checking out the history of a site. It has snapshots of the site, often going back years.

2. Checking Out the Owner

Flippa and webmaster forums will give you some information about the seller, but it is usually only what they want you to know, and very limited information. However, both Flippa and webmaster forums will normally give you a link to the feedback that a seller has received from previous transactions. This is very important information and you must take the time to check out their feedback. While it is not a guarantee that the seller is honest, it’s a good source of information on how the seller conducts business and if his customers are happy.

If the seller is new, you won’t have customer feedback to rely on. You will need to do some research yourself and Google can help you do that. Get the seller’s real name and type that in Google to see what kind of information you can dig up. You may find he/she has profiles in forums or social networks, such as LinkedIn, Twitter, Google Plus or Facebook. You can often find some very revealing information on these sites about the seller’s character and reputation.

In addition to how happy their previous customers are, you can tell a lot about a seller by checking out their other listings, including the ones that have already sold. You may be surprised to find that the seller sells this identical type of site many times over, and this may be something you would like to avoid buying.

3. Confirming Traffic and Revenue Stats

From the Flippa listing, you have access to the stats for hits, page views, and unique visitors, but those stats don’t tell the whole story. You need to verify where that traffic is coming from (referring URLs) and whether or not the seller has purchased cheap, untargeted traffic to inflate the traffic stats. Insist on either Google Analytics or access to Statcounter or AW Stats to confirm where the traffic is coming from. If some of the referring URLs are unfamiliar to you, check them out to see where that traffic is coming from. Be aware that a portion of those hits can be from the seller himself or from the search engine bots crawling the site.

If the seller provides traffic stats from one or more sources, cross-check the numbers with other sources, such as Compete, Alexa or Quantcast. The numbers will never be exactly the same, but if there’s a huge discrepancy, it’s worth investigating.

4. Due Diligence on Site Revenue

One of the most unreliable pieces of information about a site is often the sites’ revenue. It is possible to fake revenue screenshots so you cannot rely on them to verify how much money a site is making. If revenue is a selling point of the site, it is very important to be able to verify the accuracy of the information given in the listing without relying on screenshots.

One way to verify the revenue of a site that is more reliable than a screenshot is by using screen sharing tools, like Join.me or Skype. This is very helpful to get a more accurate picture of the revenue without the seller having to give you login details to his accounts.

Learn to distinguish between actual, verifiable facts about a site and just unsubstantiated claims, such as “potential $15,000 month income,” or “the main keyword has 50 million searches per month,” etc. Statements that are not verifiable are not relevant and are only a distraction.

A site’s revenue should be based on a solid earning history. If the site was established two months ago and is claiming revenue of $1,000 per month, take that information with a grain of salt. Quite often, a seller will launch a site with a sales page or offer, make some quick revenue and then list the site with revenue claims from the proceeds of the offer. Very often, the offer has run it’s course and the income level being claimed is not sustainable. Look for a consistent history of earning for at least six months.

5. Conclusion

Buying websites can be an immensely exciting opportunity. Just be sure to bear in mind that some sellers may exaggerates or perhaps conceal important information about the site. It’s up to you as a buyer to distinguish between real, verifiable information and information that is incomplete or arguably misleading. Bear in mind that due diligence will vary based from site to site based on the type of site it is, traffic sources and revenue streams of the site. This effort up-front before you buy will be worth the effort in the long term.

Finally, when buying a website for any significant amount of money, always use an escrow service. Escrow services protect both the buyer and the seller.

Is this how you conduct due diligence? Do you have any questions about the process? Let us know in the comments!

When we got rid of the New or Established distinction a few months ago, we also noticed that more and more buyers are using the Date Established metric to separate new sites from old.

Just a minute, though – how are sellers defining the date on which their site was established? Is it the day the domain was purchased? The first week the site had content? The first month when the site generated revenue?

Until now, this has all been up to the seller to decide. Today we’re introducing new guidelines for claiming site age to make it more consistent:

Claims regarding site established date refers to the most recent point in time that the website, in its current form, went live. If the site was ever offline for more than 14 days, was previously redirecting, or if the site switched to a different niche, then the Site Established Date is from this more recent point in time. Changes in monetization method or underlying technology do not necessarily mean a new site established date. If the site was established on a different URL in the last 12 months, the original site established date can only be used when the original URL is included in the sale.

That’s a big block of text. Let’s go through it line-by-line, shall we?

Claims regarding site established date refers to the most recent point in time that the website, in its current form, went live.

If your site had a previous life under a different form, whether or not the site changed hands, you cannot claim the original live date as the Date Established.

If the site was ever offline for more than 14 days, was previously redirecting, or if the site switched to a different niche, then the Site Established Date is from this more recent point in time

Taking your site down for up to 14 days (for maintenance, hosting changeover or other reasons) won’t change your site’s Date Established. Any longer than that, and we’ll consider it a new site. Same thing happens if your site’s focus changes from one topic/niche to another.

Changes in monetization method or underlying technology do not necessarily mean a new site established date.

Adding ads, affiliate links or a subscription service doesn’t make your site brand-new, nor does moving from one CMS to another. If you change monetization methods or CMS as well as take your site down for more than 14 days or change the niche, that makes it new.

If the site was established on a different URL in the last 12 months, the original site established date can only be used when the original URL is included in the sale.

Let’s say you own a site called AwesomeExample.com, which generates great content. Someone offers to buy your domain name, as they want to use it for their new project. You sell the domain, and migrate your content over to BetterExample.com. While the content might be the same, the Date Established for this site would be the day you migrated to a new domain.

Now let’s say you own NotVeryGoodExample.com, and you migrate your site over to GreatExample.com. If you were to sell this site on Flippa, you could claim the original Date Established, as long as you sold both domains along with the site.

A note for buyers

No matter what the seller claims as the Date Established, it’s always a good idea to go digging through the Internet Archive at wayback.archive.org to see what the site looked like in previous years (eg AltaVista back in 1999).

What do you think of our new guidelines for defining site age? Are they similar to the guidelines  you already used? Let us know in the comments!

You may have noticed that our logo went black in support of the protest against the anti-piracy bills – bills which have serious concerns for anyone owning, creating, buying or selling websites. This is part of the tremendous effort around the web for 18 January.

You can join the biggest online protest in history at http://sopastrike.com/strike

Been hiding under a rock and think SOPA is just a typo? Watch this video. This is important information.

PROTECT IP / SOPA Breaks The Internet from Fight for the Future on Vimeo.

So you’ve just bought a website, and decided to transfer your new site to a different hosting company. The process of taking ownership of a site and transferring from one host to another can be daunting, but it’s a valuable experience and often a good idea.

We spotted a fantastic how-to on the transfer process by Clinton over at experienced-people.co.uk, and are re-publishing parts of it with his permission.

Pssst! There’s also a great discussion at the above link about deciding whether or not to transfer your site .

Step 1: Transfer of the domain name to the control of the new owner.

Contact your registrar and the site’s old registrar for details. Broadly, this is what you do:

1. The buyer starts the process with the “gaining” registrar following their instruction.
2. The gaining registrar sends an email to the administrative contact listed in the WHOIS.
3. If the contact replies within the time limit, the gaining registrar sends a request to the registry (the controlling body that oversees registrars). The registry sends an email to the losing registrar.
4. The losing registrar now sends an email to the administrative contact.
5. Provided the contact approves, the losing registrar releases the domain to the gaining registrar.

Step 2: Getting/downloading all the site’s files and folders in the correct structure.

Getting a copy of the applications (if any), database/s (if any), and non-publicly viewable configuration files such as the “.htaccess”. Getting manuals, lists, instructions and passwords from the previous owner. You want to prepare a list of questions for him. I quote a small sample here:

1. What’s required of the hosting? For example,

• What OS (Apache/Windows) is needed?
• What bandwidth and storage allowance do I need?
• What size of database is required?
• Do I need access to set cron jobs or change conf files?
• Do I need access to set size of the log files and rotation parameters?
• Do I need to change default SSI extension names from shtml to something else?
• Do I need Frontpage extensions on the server?
• Do I need a dedicated IP?

2. What affiliate or other codes do I need to change? Adsense publisher IDs and other affiliate codes will eventually need to be changed to your own publisher ID/account number.

3. What about order processing and payment facilities? If these facilities are not transferring with the site, do I have something else in place?

4. What’s needed to transfer the mailing list?

5. What software licenses do I need?

6. If the site has affiliates, how are they managed? If it’s a third party application then can control be handed over to you or will you lose all the affiliates?

7. What about agreements with merchants or drop-shippers? Will they transfer their agreements to me?

8. How do I backup the site?

Step 3: Uploading all the files, databases etc., to the new hosting company’s server. 

These need to be placed in the right location following the instructions provided by the host (and doing all this while the site is still fully operational at the “old” location).

Step 4: Making the changes to take control.

These fall into three areas – management, technical and financial.

1. Management

• Create email addresses for all the emails that are in use at this domain.
• Change the code for any free statistics such as Google Analytics.
• Transfer control of the mailing list
• Transfer control/ownership of software licenses
• Sort out the agreements with merchants or drop-shippers
• Offsite changes: If the seller referred to his product on his various web 2.0 profiles pages and other pages or sites he controls has he updated the references?

2. Technical

• If it’s a dedicated server, you may have to set a service plan, allocate space and resources, create users etc.
• You may need to modify file or folder permissions: CHMOD
• You may need to edit files that access the database
• You may need to double check what’s in the htaccess file to ensure it does what you expect it to do
• You need to double-check all forms, feedback and comment functions to verify the destination
• You may need to setup cron jobs
• You may need to install scripts
• You may need to edit conf files
• Use Google Webmaster Tools and carefully go through all the options. There may be unseen problems on the old site that you can now rectify on the new server.

3. Financial

• AdSense or other affiliate codes need to be changed to your own publisher ID/account number.
• Advertisers, link-buyers etc., paying members, paying subscribers etc., need to know the new contact address. If they are paying by PayPal subscription or some other regular automated payment, that needs to change so you receive the funds.
• Payments-out need to be similarly altered to avoid a situation where your valued partners (such as affiliates) don’t get paid on time and withdraw their support.

Step 5: Changing the DNS settings at the domain registrar to point to the new hosting company thus allowing visitors to reach the new location of the site.

Have you used a different process when transferring a new website purchase to a different host? Do you have any other steps to suggest? Let us know in the comments!