063 – How To Buy And Sell Domain Names And Websites

Podcast: Download (Duration: 43:25 — 39.8MB)

Get Notified Of Future Episodes Apple Podcasts | Spotify | Amazon Music | Android | Blubrry | TuneIn | Deezer | Anghami | RSS | More

James Schramko invites Luke Moulton back to discuss website buying and selling. Luke used to work at Flippa.com

Highlights discussed in this podcast:

• Where to buy and where to sell websites
• How to value websites
• Personal branding and the impact of saleability
• Escrow services for transacting purchases safely
• Portfolio strategies for profit
• The viability of the ‘built to sell model’
• How to refine your website winners into hyper profitable winners
• The secret to off-market transactions and exploiting loopholes
• What to use as a benchmark for earnings valuation
• Much Much more…..

Transcription:

James: James Schramko here. I’ve got my good friend Lukie Luke Moulton back. Welcome Luke.

Luke: Hello James.

James: This is becoming regular.

Luke: It is becoming regular. It’s irregular regular.

James: Well you know the thing I like is you do have availability from time to time and you’re a little more reliable than my other podcast co-host at the moment.

Luke: Couldn’t help yourself, could you?

James: Well it’s a fair pot shot.

Luke: You know it’s only going to upset him.

James: Well that’s kind of the intent anyway. Of course we’re talking about our good friend Timbo Reid from FreedomOcean.com and Small Business Big Marketing. Big shout out. Both great podcasts to listen to as well.

Luke: Yeah. He’s been doing a wonderful job without me, James.

James: Well I really need your help this week because the topic is something that you have probably got a passion for and a fair bit of experience with. We’re going to be delving into the whole website stuff, in terms of maybe buying, selling, trading, whatever you want to call it, and I’m going to sort of look to you for a little bit of leadership on this episode.

Luke: Well yeah James, I have had a bit of experience. I wouldn’t say that I’m the expert’s expert, but I was the marketing manager of Flipper for some time and I’ve done a little bit of buying and selling myself and probably one my largest sites, I spent a fair bit of coin on so I suppose I’ve been down the path of doing due diligence in terms of buying decent-sized sites. There’s nothing like putting our own money on the line to make you learn how to acquire a site.

James: This will be good because I’ve probably come at it from a very different perspective from the investor point of view. I’ve slowly acquired a little portfolio of domains and then developed some of those into websites. I’ve also bought entire websites in clumps of a couple of hundred at a time, and I now find my business at the point where we’ve kind of reached the capacity and now we’re zooming in on the bits that we want to focus on, which has of course left a little bit of a surplus, and I’m starting to approach the selling side of this.

So I’ve done some buying, done some selling, and I certainly tied up my own capital in these investments. A good many hundreds of thousands of dollars out there sitting somewhere in the internet of my own capital, sitting in these certain websites here and there. So this should be a fun discussion.

Luke: Yeah for sure, for sure. Absolutely. So where do you want to start? Should we start on buying or do you want to start on selling?

James: Why don’t we talk about buying a website. This reminds me, there’s this Jewish saying, some guy Sol says to this guy, “How much is the watch?” And he goes, “It depends. Are we buying or are we selling.” So it’s a great expression around the value of stuff. It depends on which side of the fence you’re on. It’s funny when you have to put on the hat to buy something and then you have to put on the hat to sell things. There’s a lot of psychology going on, isn’t there?

Luke: Yeah. There is. I suppose it’s like that real estate adage. What’s a property worth? Well, it’s worth what someone’s willing to pay for it. But it does obviously get, there is a little bit of sales behind it. Hopefully we can touch some of few of those points.

Buying a website

James: OK. So let’s go into buying a website. Where do you want to tackle this one from?

Luke: I suppose if you’re motivated to buy, I think you’ve got to look at the reasons why you want to buy. So first of all, are you looking to buy some passive income? Essentially like investing in shares or investing in property. Do you want to be able to acquire and to a degree let it sit there and turn over money? I’m certainly thinking in more recent times James, it’s a lot more difficult to do that with websites than what it was previously. I think you do have to have a team to maintain.

I suppose the other aspect is do you want to buy an online business? Are you looking to get out of the day job and buy an online business that you’re willing to nurture, maintain, do sales and marketing, build a team around? I think the first thing is to look at your motives and question those.

James: Right. I mean how viable is it that someone’s going to be able to buy a website and quit their day job? I guess part of that depends on how much they earn in their day job and how much capital they’ve got to put into a website. I imagine a website making enough to have an average salary is not going to be cheap to get originally. Is it? Or are there bargains out there?

The cost of buying a website

Luke: There are bargains out there. I think I was fortunate enough to find one a couple of years ago, but they are certainly are few and far between. I think these days, it’s a bit of a rule of thumb, don’t hold me to this, but it’s usually an index of I found of two, and by index of two, I mean if there’s an online business that’s making 100 grand a year then you’re probably going to pay in excess of 200 grand to acquire that business. So it really is getting towards what you pay to acquire a bricks and mortar business, which are probably more like an index of five these days.

James: Right. So what sort of things can someone do to identify a good business to buy?

Identifying a good business

Luke: I suppose it’s like doing your due diligence when you want to buy bricks and mortar business. I mean you really want proof first of all, first and foremost, proof of income. So if someone’s selling a website, they’re stating that they’re getting X amount of traffic per month, that there’s X amount of income per month. So how can you approach that seller and ask them to prove those metrics? I mean obviously most of us are familiar with Google Analytics. So you can look at Google Analytics data and see that there’s a certain amount of traffic.

Hopefully, if it’s a business that they’re actually keeping books, you might be able to get access to PayPal transactions or at least a proof of PayPal transactions. In terms of doing your due diligence on a business, obviously analytics data, have a look at page rank, have a look at how old the website is, how long has it been transacting for, is there a good history of transactions, is it a business that’s only been operating for six months and it’s done a WSO, a Warrior Forum special offer?

Certainly if you’re looking in marketplaces online, they are something that you really need to look out for. Quite often, people will launch a special offer and there’ll be a nice, big peak in revenue, and then it’ll just peter to nothing. So that’s certainly something to watch out for.

Traffic sources

James: Are there traffic sources that are more valuable or less valuable? So let me give you an example. Let’s say a website is getting 90 percent of its traffic from just SEO results versus a website that’s getting say 90 percent of its traffic from an AdWords campaign. And they can verify these and validate it. Is one more attractive than the other?

Luke: I think this is a matter of looking at the expenses in the business as well. I mean obviously if it’s AdWords, you’re paying for the traffic. So at the end of the day, what’s the profit on that? Whereas a business that’s an online business are getting from organic sources. Obviously there’s least cost involved but there might be maintenance in other areas. Obviously link building SEO, there’s time in there. Particularly these days, there’s also some risk attached with that.

So what’s more valuable? I think something that’s more valuable is a business that has, it’s less reliant… what’s your saying James? Don’t have a one-legged horse?

James: Yeah. Not be single source dependent or single point sensitive.

Luke: Yeah. And I think in buying an online business, I think that’s a really important thing. If you’re solely organic traffic based and deriving income from that single source, then particularly in this day and age, that could be risky. So I think looking for a mixture of traffic sources is an important thing as well.

Where to buy sites

James: So where do you find these sites to buy?

Luke: Well, obviously there is Flippa.com, but it tends to be a little like finding a dime in the rough or a needle in haystack to find a good online business. If you just do a search for businesses for sale, quite a lot of good businesses for sale websites will have an online businesses section as well. You do have to be careful in those avenues as well. There are some people trying to sell crappy online businesses. But I think there’s also approaching people, James.

What sort of experience have you had in buying valuable properties?

James: Probably one of my more interesting ones was when there was this product put out in the marketplace a few years ago, which was called the MSN ranking loophole, and it purported to be able to show you how to set up your websites to take advantage of Microsoft’s ranking index. The thing was, you’d set up all these blogs and then you’d rotate links on them all the time and push up money pages.

And so all these people, especially the Warrior Forum, they went out and set up these blog networks, they got their multi IP SEO hosting, they set up WordPress, they had 20, 30, 40, 50, 100, 200 blogs and very few of them actually got success with that business model, for whatever reason. Maybe the product was no good, maybe they didn’t implement it properly, I’m not saying I could be sure either way.

But I recognized that there was all these people who got to month two and month three of their hosting and they’re like, “Oh crap. I can’t afford this. I’m not making any money, and this is just burning a hole in my pocket.” So I went into that discussion about that product and I said, “I buy websites.” And I had people sending me private messages, and they’d send me a list of their sites.

At the time I had a pretty switched-on techie silent partner in this project and he would go and sniff around the site and have a look at some of the things you talked about – analytics…. We’d make a decision on what we felt the value was, and I started snapping up these sites.

One batch, I bought over 200 websites in one go. They’re all on domains and all pre-owned and everything else. So they were all set up, but they just weren’t set up right. I had to go and reconfigure them. I had to move them to a proper hosting solution. They were all like on those horrid addon domains. I hate those things. They piggybacked on each other in hosting. So I basically renovated them all and fixed them up, changed the permalink structure, put fresh content on them.

In many cases, I just demolished them and started again. But they’re on mature domains and they had rankings and I was able to redirect the old things. I ran that network for quite some time and that actually has formed the core base of part of my expansive sort of blog holdings.

Recently, I’ve started selling some of them off and now I certainly made my investments back and some. A little bit extra with the services that we run. But that was how I acquired a lot of sites in one hit – by identifying an off-market sort of trench where people are it’s not an obvious marketplace and I’m not competing with many other people. I’m actually the savior almost. Coming and stepping in to take over their hosting account. Here, I’ll give you some cash, I’ll take over your accounts, you push the domains across to me and you can walk away from this and cut your losses. It worked out well for everyone. So that was on-off market thing.

Luke: Brilliant. I think that’s the best way to find good opportunities. I mean there’s obviously a housing property analogy in there as well. Buying something that you see that’s maybe a bit unloved, a bit run down, but you can see some potential in if you just give it a slap of paint and maybe add another room on and tidy it up a bit.

James: So that’s really like the seller’s tactic from my experience, isn’t it? To demonstrate a value that the intangibles or the potential and make someone believe in that, but I think being a good buyer is when you see that but the seller doesn’t.

Luke: Yeah absolutely. I suppose with the one large acquisition that I made, I suppose that’s what I saw. The person that I bought from didn’t really perhaps have a good appreciation for what he built and wasn’t able to take it to the next level. It looked crappy. The ad placement was terrible, there was no sort of affiliate or ancillary offers he was able to make. He wasn’t building a list. Actually that’s not true. He was building a list but not very efficiently. So being able to walk in and I guess make those tweaks.

I think that’s where if you’re buying a website or buying an online business, I think you need to look at where your skill sets lie or where you are willing to build a team that have certain skill sets. So whether you know about SEO, whether you have a publishing background and can create content, or whether you’re a good designer, if you’ve got those skills, you can value in.

James: That’s great I mean because people don’t know what they don’t know so firstly, if you’re aware of something that can be done with a website that the current owner doesn’t know, then there’s potential for you and they may not see that. Then the second side of it is yeah, you may have resources lined up that they just don’t have or can’t get access to. So I think I’ve done both of those things as a buyer and a seller.

I’ve bought things that people couldn’t fully develop, and I’ve also sold things that I’m not prepared to develop even though I’ve got resource. I just have to say, I’m going to partition this part of my business off and just not put any more effort into it because I now have greater opportunities to focus on.

So if I know how to 10x something, I’m not going to focus on the 2x. But for someone who only knows how to 1x, a 2x opportunity looks really, really attractive for them.

Focusing on smaller portfolio

Luke: Absolutely. I think you touched on something there James, too, that some, perhaps more recently than before is I think now it’s better to be focused on a smaller portfolio than a larger portfolio given the recent Google changes. Is that something that you’re finding in your business?

James: Totally, because I mean I have built up my team now. The first 18 months of my team, we were just developing sites. We were just building, creating content, getting them looking nice, ranking them, and they formed the foundation that I would later build my service businesses around, and they gave us that sort of anchor. But it is very, very expensive. This is what people don’t realize.

To do content and to do design and to do SEO is actually expensive. Even if you think you’re going to do it from five or whatever, the time it takes to go and find someone and get the job done and check it and realize it’s sh** and get it done again and all of that, that’s just half a day gone. Your time is valuable. You ask any parent or someone with another job, time is super valuable, right?

Luke: It sure is. And look, I’ve been through the same process as well in terms of setting up a certainly smaller network compared to yours, James. But if you’re taking into buying and you’re setting up WordPress, if you don’t have a large team and you’re outsourcing the content, even if it’s $6 to $8 an article, you get a decent amount of content on the site over time and you keep building that content, it’s expensive particularly when you don’t know when payday is.

James: Even if you do have a team, you still have a cost for each thing. Let’s say it ends up costing you $4 or $5 an article and you have 1,000 websites and you want to stick like one page a week, that’s 1,000 posts a week at $4 each. I mean that is actually quite expensive right? Like when you realize the numbers, it’s just like, woah!

So you’ve got to have a way to make money from these things if you’re going to put the money in, and that’s where I think a lot of the marketplaces created, people come to that realization, well I’m not getting out what I’m putting in or I don’t think I will get out what I could put in so therefore, this is no longer part of my system.

What I’ve done, in fact I’m going to develop that story of the first 200 sites because that actually turned out quite interesting. Would you like to know what happened next?

Luke: I’d love to James.

James’s first 200 sites

James: Actually, I put AdSense on a lot of them because I figured that it would be good research. So over a year, I let them just run. I went into my analytics account and I actually did some filtering and I filtered by a performance results by site and just took the top four sites. Of all the 200, which ones over a year had made the most AdSense revenue.

I went and had a look at them and I figured out what category they’re in. These are the winners. This is like the top few percent. And then I went and got 50 websites made around each of the four top topics. So that was another 200 websites. So that was basically building with the idea in mind that these are profitable markets. So I basically added another 200 sites to the portfolio but there was like 50 of each of the top performers of the first 200.

Luke: And obviously that turned out well.

James: It turned out great because a lot of them had replicable results. Hang on, these are going well. There’s actually a good correlation between the high-paying niches and the markets that tend to have good service revenue for the other businesses that we supply. So one of the markets for example is in like the plastic surgery niche. If you have 50 websites in plastic surgery type niche and then you want to go and do SEO services for a plastic surgeon, it’s kind of a no-brainer that you can help them with thematically related links.

One of the other niches was, as it turned out, the downloads market, like free downloads. People go online, they download stuff for free, believe it or not. The AdSense is really strong in that market for some reason. Maybe someone’s advertising to them with free accounts, whatever, I’m not sure. But those ones have less value for me as a service business.

So what happens is over time as my business evolves, I think, well, I have less need for this type of site now, I’ll basically sell them. So I just put a line through my sites and said to the team, OK, let’s just categorize this. What are the top hundred, like aside from our sale sites that sell things, which is like a couple of dozen, what are the top hundred sites that we want that spread us around categories? Then what are the next 350? And then what’s everything after that? And that left us a lot of sites. We’re just working our way through getting rid of them. And then there’s of course a bunch of domain names that I never developed at all. And I now know I’m not going to develop. I’m just not likely to get to them ever because there’s just so many.

Stage one, OK, I go and just turn some of my auto renews off, this domain’s so crap that I don’t even want to sell it. I mean I turn off auto renew, I list it on the marketplace on the domain registrar, that’s like the lazy way out. The second lazy way out is, OK, it’s a pretty good domain but I probably won’t keep it if I have to renew it, so I’m going to sell it but I’ll sell it cheap, like 19 bucks. I’ll stick it on my thing and that’s a front end offer. Maybe someone who buys it will buy a website from me for $199 and then do rankings.

Where to find James’s sites for sale

Luke: If someone was looking to buy one of those websites, James, where would they find them?

James: Ah! Well you see I set up a website to sell my websites.

Luke: Now, you’re supposed to say, “I’m glad you asked.”

James: No, no, because it sounds like a big set up and I didn’t actually prompt that.

Luke: I know mate. I’m just teasing.

James: Well, rightly or wrongly, I figured I don’t want to go to Flippa and sell my sites there. I want to create my own marketplace, because I’ve got an audience, I can set up a site easily and I can promote and market my own things, and I’d rather own the racecourse than be the race horse on someone else’s racecourse because I’ve learned about ownership and control. And in the process of selling my websites and domains at VREdirect.com, I’m actually creating another business, another asset that could be sold when I’m finished.

The last website I sell might be well, VREdirect is for sale now. We’ve successfully sold 1200 websites. Here are the stats. This is the cost of the sites. This is the profit we made. If you have websites to sell, you may very well want to buy this established brand and domain from me. That’s the end game for that site.

Luke: Can I ask you something about that James? Just in regards to putting away your websites out there. Was there any reluctance to I guess air, or essentially is it fairly large network of sites? Was there a consideration around, hang on, maybe there’s a few domains here or there’s a few sites here that I’m not overly proud of. Did you ever question that?

James: No. I mean obviously these are ones I don’t want anymore so firstly, if someone looked at it and go, “Why would you have that?” I think well, he’s selling it, he doesn’t need it anymore, so that’s sort of justification in itself. Of all the sites I’ve got, these are the ones that I currently have no plan for because I’ve got other. And anyone who knows me and most people coming to this site do, they know I’ve got domains that are 15 years old. I’ve got some domains from 1996, 1997, 1998. I’ve got PR 3s and 4s and really good two-word brandables. I think they’ll forgive me for having a freedownloads.net or something because that was just part of my, when I buy 200 websites, there’s going to be 30 or 40 in there that I wouldn’t have ever registered in the first place. I wouldn’t go out of my way to register some of those domain names but they just come with the batch.

If you can buy 200 sites in bulk and get a deal, you’ll take the good with the bad and you’ll develop the ones that you want to run on, and you’ll get go of the ones you don’t want to run on. But it doesn’t mean they’re all bad sites. They’re just not perfect for me, and I have other things that I can choose from.

So imagine if you’re like a horse breeder and I had the world’s best stable and I had like 100 horses but I really only wanted to commit the resources of the hay and the water and the barn and electricity and the trainers for the top 50, it doesn’t mean the other 50 are no good for someone. The other 50 are probably way better than other people’s best. So I don’t care putting them up there. I’m sure people will go and look at them and reverse engineer them and see what’s there and find out what server they’re on and all that, but I work on the assumption that people can find that stuff out anyway. I’m under no illusion that all of this is super secret squirrel.

But we’re not doing anything wrong with these sites other than sticking original articles and putting them up on the internet. We’re not doing anything illegal, unethical, shady or whatever. Google knows where my sites are. They’re all attached to webmaster tools and analytics. So what are people going to do? Even if they want to try and copy me, if they want to go and replicate a couple of thousand sites, go if you like because they don’t know which ones are profitable, they don’t know which ones aren’t.

In fact, one of the sites I’m selling right now for $299, I know I paid $800 just for that domain, but I couldn’t be bothered making a big argument for why I should sell it for more and all that. Probably at the time it might have been 2 in the morning and maybe I overpaid but I’m happy just to let it go and someone will get a real bargain from it, and I know there’s other ones that have page 1 rankings already and they’re a perfect fit for someone else’s business. I’ve also got domains that could just as easily be somebody’s actual name. I know there’s like four or five of them on Facebook right now and I could probably sell that for a lot more to those particular people. But I’ve got my resource cut point. I’m better to go and focus on building my SEO business another 10 or 20 grand this month than to worry about eking an extra $300 for my domain.

Luke: Absolutely. I think this is an important point, too. When someone’s buying for example from someone they know and someone with integrity, there’s certainly less likelihood of buying something that’s going to be, let’s say, a lame horse, to use your horse analogy.

James: Yeah. Well you know, those people out there who spoof PR and stuff, like they ramp up a PR to 6 by pointing a PR 6 domain to it, wait for the update, and then quickly sell them all and move the PR 6 domain off and move it to the next one. None of that is going to happen with, I mean there’s no recourse going to happen with the stuff that I’m selling because everything is as is and it’s like, I clearly say I’m selling these as is, do your own research and checks, here’s what it is, and there’s nothing contrived or whatever, and in most cases, I’m making no income claims at all, with the exception of ones that I’ve turned into a little business, which I have actually recently done as well. I’ve sold little sort of ready-to-go business and based on your methodology, I think I’ve sold some of these too cheap.

Luke: Look, I think it is like, buying from a Harvey Norman versus buying from a no-name brand obviously is the reason of trust behind. I think people can safely buy from someone like yourself, James, who is putting it out there and obviously doesn’t want anything coming back to bite him in the ass.

James: No, not at all. I have high brand values and I want to be around in years to come. So you have to conduct yourself with integrity. I haven’t actually used marketplaces to buy. The other place that I bought domains from was you go into somewhere like the DN forum and you can find people selling domains. But once you buy a domain from them, then you go into sort of an internal house list. You seem to get offered domains that just don’t pop up anywhere for sale. I bought quite a few off-market so to speak.

Luke: And was that a good experience?

James: Yeah. They come back to you and say, “I’ve got these ones.” And I go, “No. Look, I only want .coms and I only want like two-word brandables.” So then they start looking around for them for you. So you’ve got like these agents looking for things that they know that they can sell to you and they’re sort of squirrelling them out. I got quite a few like that. They’d come back and say, “Look, I’ve got this one here. What do you think about this?” And I’m like, “Yeah, I like that. How much?” And then you make an agreement, then you buy it, they send them over. After the first transaction, quite often they’ll just move to PayPal or whatever if you started on Escrow.com.

How to protect yourself when buying

Luke: Perhaps it’s a good point to touch on James, when you are perhaps transacting with someone who you don’t know, like and trust, and that is how do you protect yourself? Escrow is certainly one of them. Do you want to explain what escrow is?

James: Yup. When you’re starting to talk more valuable stuff, you might want to use a service like that. A lot of people will insist on it. I used that for my high value sale recently. It’s basically, you log on there, if you’re the seller, you can just log on and put in the details of what you’re selling and the person who’s buying it. They get sent an email saying this is the deal. Do you agree? They say yes, and then it asks them to put the money into the account. They put the money in the account and then I get sent an email as the seller saying the money is in the account. Now you can send the website or the domain.

Luke: And that’s in the escrow account.

James: Yes. So it’s not in my account, but it’s not in the customer’s account.

Luke: So it’s almost like it’s being held in trust.

James: It is. What it really establishes is that they actually have the money. Like if you don’t go through that step, then you could send them the domain and they say, “Ha ha, see you later.” So the next step is you send them the domain and then they get sent an email that says, “Have you got the domain? Is it what you expected?” And they go, “Yes.” Then basically, they release the funds and the money comes across to you. So it’s a more controlled way of moving the money, but it does establish that they actually have the funds and that they’re cleared and ready to be transferred into your bank account.

Luke: And it’s good from both points of view. It’s good for both the buyer and for the seller because it’s essentially putting that money, the money goes into trust until both parties agree that they’re happy with the deal, then the funds are released.

James: And this is the important part as the seller, they’re not going to be able to put in a fee reversal or a chargeback claim.

Luke: Which they can do with PayPal.

James: They can do with PayPal, and I believe it happens in some of the dodgy markets. I mean I’ve bought a lot of domains second hand, like hundreds and hundreds of them. And I’ve only had a few little hiccups, but for the sites that I’m selling for $19, $99, $299, I’m just using credit card or PayPal because I figured if someone is going to go to the hassle of rip me off, get my website and then do a chargeback, it’s almost not worth $200 of my time to go through the hassle, and I don’t want to eat away all my profits from escrow. So I’ll go with the more streamlined process. But you know, thankfully, I’m dealing with people who have integrity. So far, I haven’t had any disputes, any concerns.

One guy bought a domain, thought it was a net but it was an org and said, “I thought this was a net.” Well, it was listed as an org. It’s on the site as an org. I got the last auto saved version of WordPress. I can see that it’s always been listed as an org. He goes, “We don’t want an org.” I went, “Well just send it back.” And I just reversed the transaction. That was fine. He just made an error and it was all fine. He was polite about it. I was polite about it.

But yeah, you’ve got to be careful with any type of transaction, and the higher the stakes, the more effort you should go to to make sure that you’re not being part of a fraud.

Luke: There is a little bit of a way if you have been using PayPal, if you’re a seller, to make sure you don’t get a chargeback, you can actually ship for example a backup on DVD or a thumb drive and actually ship a physical item and record the shipping details. It just makes it a lot harder for the buyer to dispute and do a refund request.

James: I don’t know if I’m right or wrong with this but I think with digital goods, there isn’t really any recourse.

Luke: Yeah. Well that’s why I’m suggesting if you change it to a physical good, it can help.

James: No, I thought that they don’t allow chargebacks on digital goods.

Luke: Oh right. Sorry, I beg your pardon, yeah.

James: Yeah. So I meant sort of the opposite but in any case, I’ve had so few issues with these matters to date because I don’t really have a hypey sales process and I’m mostly dealing with people who are straight up, thankfully. I think what we’re suggesting is if you go into the big open marketplaces, some of the forums, some of the eBay Flippa-type places, there will be people who focus their energies on working the system because that’s where the people are, right?

Luke: Yeah absolutely. I mean in some of the marketplaces, there are some people that certainly hype up a sale to perhaps unsuspecting buyers. Even if it’s a low-value site, just going through some of the due diligence checks that I mentioned, and also using some of the tools, James, that you and I both use regularly. For example, SEMrush. If you can’t get someone to give you Google analytics data for example, you can go and, I even use the free version of SEMrush.com to run a domain through SEMrush and see where it’s ranking for certain keywords in Google and get an idea or basic idea of organic traffic as well.

James: Yeah. And Ahrefs as well might be another good free tool to just get a bit of a sneak peek of what could be ranking and what sort of links are pointing to the site.

Luke: Yeah. I mean there’s a few others that I have as well, SEOmoz, they’ve got their own sort of ranking tool obviously looking at page rank as well. Have a look at Alexa. Just a few tools to have a look at. Wayback Machine as well to check out the history. Just a few tools there to check on the validity of a domain and a site.

Buying mature domain names

James: Excellent. I will give you a tip for buying mature domain names, if it doesn’t have a site on it. If you do put a WordPress site on the domain and then you install the plugin called DigiLink Doctor, then that will capture all of the links pointing to that domain from wherever they were up before, if it has ever had a website on it and it’ll allow you to repair the links. You can send them to the correct page on your new site or you can make them all go to a homepage but it’s a really great catchall for all of the links that might be out there that have been severed when someone takes down a site and just has a domain sitting there.

Luke: Nice, good tip. Now I mean some of the things that you’ve already talked about, James, but some pointers for if you want to sell your website, when obviously, you’re doing it at the moment, you’ve got quite a whole lot listed up there on VR. So what are some of the things that people should be divulging if they’re selling a site?

Things to divulge when you’re selling your site

James: Well I sort of eluded to this. If I wanted to go to more effort, I would make more money selling my site so there’s two reasons why I haven’t gone to way too much effort. Reason number one is I’ve got a big team and we’re really focused on our most important parts of our business and I can get a better return on our energy by focusing on those areas.

And reason number two is something my grandfather taught me. It’s always good to leave a little bit something in it for the next guy. So by not being too greedy and not over-selling the site, I’m probably not milking each domain to its full value. I’m leaving something there to make it really obvious what the renovations are.

For example, one of the sites that had page one rankings for a particular phrase, it would cost more in SEO, one month’s worth of SEO to get that ranking than the value of the whole domain and website. So it’s absolutely bargain for someone in that market, which I’m not anymore. So yes, if you do want to do the basic, then the sort of things you would put together as a seller, the kind of process I’ve got in a little internal spreadsheet that we have, it’s like set up in Google docs, we go OK, does the site have page rank? Is it valuable? Is it a really valuable brandable sort of thing? Like if it’s a twoword.com, that’s sort of a check. We don’t want to just let that go too cheap. If it’s a really good two-word brandable like birdcages.com or something. That could be worth a whole lot more than just a crappy hyphenated.biz type domain. So we check brandability, and so that’s more subjective. But I’ve got a yes or no tab for that.

We have things like how many pages are indexed in Google. So is the site indexed at all? If it’s slapped, then it may not be as valuable. But I have sold slapped sites before, but I was upfront about it and they were test sites. But they were on page one in Yahoo and MSN and still making really good AdSense income. So they were still valuable, but under the different context. Google seems to be the big benchmark though.

And then you have a look at does it actually rank anywhere, in Google.com or .co.uk or .com.au, Yahoo or Bing? It’s worth having a look. And then how many sites are linking to this site? So backlinks are good, because people are interested in SEO and they pick up a site with lots of established backlinks. It is actually hard to go out and get backlinks that stick. It’s expensive and time-consuming. So to have that walk-up start, other things like little subtleties, you can look at the most recent cache date to see how fresh it is and if Google is paying attention to it. You can see if there’s any earnings coming from it.

One little basic step that we do with most of our parked sites is we put AdSense on them because AdSense will just give us a feel for potential. It shows us how many impressions the site is getting. It shows us the clickthrough rate and it tells us if it’s a real commercial market or not. If one site is getting 16 visits and two people click but it makes $6, like hang on, what market is this? Give me 10 more of those sites. So it’s sort of like the little trap out there to find out where the potential might sit.

Luke: Canary.

James: It is, yeah. It’s the coal miner’s canary. So that’s been a real optimization strategy of ours is just to have these little things out there testing and then we pull in the data occasionally. Oh, isn’t that interesting. We had one site that just absolutely went off the Richter scale. It was cranking in AdSense like a maniac. So you know, I gave it to my team and said, “Develop this. Let’s take this bigger.” Because it was something I wouldn’t have found otherwise.

Luke: As an aside, James, when you do that to your team, what are their steps to take it bigger? Is it mainly content creation?

Making things bigger

James: Yup. They go and redesign content creation, optimize the ad positions, and then they start doing some traffic things to it. They’ll make a YouTube video for it, they’ll make an infographic for it, they’ll write a press release for it, they’ll get some links to it from some Web 2.0 stuff.

Luke: So they kind of go through the Traffic Grab Spaghetti Bowl kind of process.

James: They will go through the Octopus method.

Luke: Octopus method.

James: You heard it first.

Luke: Oh geez, I’m looking forward to that one.

James: It could be Traffic Grab 2 maybe.

Luke: Could be. You heard it here first folks. So perhaps a couple of things I’d like to add James on selling a website, I guess if you’re thinking more along the lines, the reverse of what we talked about earlier, selling a business, maybe it’s an online business, what are the sorts of things that you need to divulge, to I guess maintain transparency and attract the right people to your sales and obviously some of the things you’ve talked about, page link, page rank, backlinks, Google analytics data, giving some proof of history, WhoIs history, proof of revenue. Even if there’s a profit and loss statement as well. Probably not something that you provide upfront but if on request is something that you might want to give as well.

James: Yeah, the domain age is a good one. The bulk of the ones I’ve sold lately are 3 and 4 years old, and that’s a great advantage for someone.

Please ask questions and comment below.  If you want to rate it, head over to iTunes.