Considering buying a website on Flippa? If you decide to get into the business of website investing, and aren’t working with a reputable broker or partner, it’s important to be careful. This is especially true if you’re trying to get started by looking for sites on Flippa, since Flippa allows unverified sites and sellers on their platform.
But it’s possible to protect yourself if you know what to look for and what questions to ask. This article will tell you what to look out for when you’re buying a website on Flippa.
So, what do you need to look out for, and how do you minimize risk?
Table of Contents
- Before you start: get my due diligence worksheets
- Verify the owner independent of Flippa
- Know what you’re buying through Flippa
- Don’t buy starter sites through Flippa (or anywhere)
- Proof of traffic and earnings
- Cost of running the site
- Growth trends
- Business strategy
- Reason for selling on Flippa
- Download the Due Diligence Overview worksheet
- Key points
If you’ve been considering buying a website, but don’t know where to look, you’ll likely end up on Flippa. Flippa is the biggest online marketplace for websites and online businesses, but it got that way because it doesn’t filter the listings.
The result is that there’s a lot of junk on Flippa, and you need to be able to sort the good sites out from the bad sites (or worse, scams). This article walks you through specific questions you should ask before making an offer on a site on Flippa.
Before you start: get my due diligence worksheets
I have developed many due diligence tools over the time I’ve been investing in websites. For Flippa buyers, I recommend going completing the Due Diligence Overview worksheet. This worksheet is a crucial starting point to performing a thorough due diligence analysis on a website from Flippa.
I am making this worksheet available for FREE to Flippa buyers to help you avoid getting scammed. All you have to do to get it is fill in the form below.
In the next several sections, I explain what to watch out for on Flippa. If you have downloaded the Due Diligence Overview, you can follow along with the sections below.
Verify the owner independent of Flippa
If you’re buying through a broker, chances are the seller has already been verified. Most brokers require several forms of verification before they will work with a seller.
If you’re buying on Flippa, the risk is a lot greater. In fact, it’s possible to sell on Flippa by simply entering your email address. And many sellers simply provide an email and phone number before they list a site for sale.
The best course of action is to verify multiple times. Even if Flippa says that they have a government ID from the seller, ask for proof of identity, phone number, and address. This information also comes in handy if you do end up purchasing a website from the seller, and need assistance in the future.
One scam that you may encounter is people selling sites they do not own. Knowing how a business works or having access to the website is not enough to prove you’re the owner. If you want to buy a seller’s site, you need to obtain their domain. So you need to verify that they own the domain name for the website they’re selling. This data is easy to provide. And valid sellers should have no issues handing over any of this information.
Know what you’re buying through Flippa
When you’re negotiating with a site owner, keep in mind that the price isn’t the only thing you need to discuss. During your talk, find out everything you can about their business. Ask them how their day-to-day operations work, where they market their products, what methods they use, and what platform runs the site. These aren’t just side details, either. When you’re negotiating a sale, you need to know exactly what you’re buying.
Flippa sellers aren’t very good about providing a clear list of what is included in the sale. In addition to the standard due diligence questions, here are some things to clarify:
- How many social media platform accounts does the site have? Are they a part of the deal? Sometimes this is listed on Flippa, and other times it’s not.
- Does the business contact its customers using an email list? Will you receive the mailing list as part of the sale?
- Are there copyrights or patents in place? Do they roll over with the site?
- What else will you need to keep the systems running? And are those assets a part of the sale?
- Are there backlinks from another site owned by the seller? How will those be handled in the future?
- How was the content produced? Are the images used lawfully? Will the content pass a plagiarism detector?
Never assume anything during the buying process. When you are buying a website on Flippa, if it’s not written on the Flippa listing page, it’s up to you to bring it up. Simply asking these questions will set you apart as a knowledgeable buyer, and reduce the risk of sellers trying to scam you.
Don’t buy starter sites through Flippa (or anywhere)
Starter sites — those with very little traffic and no earnings — are sold by the dozen on Flippa. A few sellers are starter site factories, and they list dozens a day.
Don’t buy these! They often contain recycled content and copyrighted material, and they have nothing of real value to them. Furthermore, there are some sellers who sell the same starter site over and over (with a different domain name).
Starter sites appeal to a lot of buyers because they’re a cheap way to get into website investing without the complexities of building and without the costs of buying. But they also don’t have the benefits of either.
If you do buy one of these, you may end up paying a high price for a website and only receive a domain name, some stale content (and possibly a legal headache).
Proof of traffic and earnings
Flippa generally gets traffic data directly from Google Analytics. But don’t assume that it’s complete. Sellers often accidentally or purposefully leave out months of data.
Once you have an overall measure of traffic, you have to check it against the site’s earnings. That means profit reports, AdSense, Ezoic records, PayPal reports, and other earning methods like affiliate marketing. As a buyer, you cannot look at web traffic or profits records in isolation. You have to look at both of them together.
When you’re buying a website on Flippa, determining what’s missing from the seller’s listing gives you a greater understanding of how successful the site is. If the numbers match up, and there isn’t anything missing, the site is worth looking into further.
However, if a website has missing data, check that portion of the data very carefully. There may be a steep drop in traffic or earnings due to a Google algorithm change or affiliate commission change (or something else), which the seller is trying to hide by not updating the data.
When buying a website on Flippa, you’ll see many sellers putting their traffic numbers forward as a point of pride. That may seem impressive. But, as a buyer, you need to understand how misleading those values can be. When you’re evaluating the worth of a site, you can’t look at individual factors separately. You have to look at how they play into each other.
Cost of running the site
If the expense of running a website is high, then the overall statistics for traffic and profit can be misleading. One example is if a site’s main marketing strategy relies on high-cost advertising or paying for traffic. The metrics may show increasing viewership and massive sales, but the website’s overall value is low. This happens all too often on marketplaces like Flippa.
Similarly, if a site relies on trend-based SEO content, you’ll have to update it regularly. You might even have to hire content creators or SEO experts to do the job for you. All of this will add to the cost of running the website.
Although this is applicable anywhere, it is especially true when buying a website on Flippa. When sellers advertise sites making thousands of dollars a month with low Google rankings, they may be constantly pumping tons of new content into the site, at a rate that you won’t be able to keep up.
You also need to look into how much work goes into the daily running of a site. If a site employs freelancers, you’ll have to factor in the cost of keeping these workers on board. Alternatively, if the current owner handles certain tasks themselves, you’ll have to outsource them. Depending on how much the expense is the cost of running the site may outweigh its potential value.
Growth trends can tell you a lot about a site. But when you’re buying a website on Flippa, sometimes the growth trends are unclear. Flippa only shows basic monthly traffic history and a graph of earnings by default, and the start and end date aren’t necessarily current.
So when you ask a website seller for their traffic or income data, you need to be clear about what you want. The farther back you can go, the more accurately you can determine their growth patterns. Ideally, you want the full analytics and income data for at least the past year, longer if you can get your hands on them.
While its common knowledge that you need to be careful if you see a downward growth trend, this isn’t the only pattern you need to check for. Decreasing trends just mean that customers left. Whether this is a cause for concern depends on why they left. If it was because the site owner lost interest and stopped updating content, it’s less concerning. However, if your market research shows that a competitor emerged or the site was hit by a Google ranking change or affiliate commission change, it can spell trouble.
Another red flag is if there is a massive spike in traffic. Such patterns are uncommon in the regular course of business. Unless there is a clear explanation this is something to be careful about. Such increases are often because the company used a high-cost traffic acquisition method, in which case any growth is not sustainable. They also may be the result of black hat SEO methods to get a jump in rankings. Black hat SEO or even gray hat can get your website blacklisted by Google.
When you purchase a website, you don’t just buy a domain, but an entire business strategy. That means you want the site to have good, reliable and consistent revenue streams. Everything else, from the audience to marketing, falls within that. A smart buyer knows that the results are only one part of the purchase. How the website is getting its results is of greater concern.
When you are buying a website on Flippa, you don’t automatically get a chance to have a conversation with the seller, so you should make sure to request one. Find out who the target audience is, which organic and social media platforms the site uses to contact them, how they built their audience, and why they were successful in their niche. If you’re looking to buy a site, you don’t just need them to be successful; you need to be able to emulate their success.
Flippa sellers often include sponsored post revenue in their earnings numbers. Ask the seller if they allow sponsored posts. If their site strategy relies on sponsored posts, it could affect the valuation of the site.
Can you get the same results with this website? Because the running of a website business depends on any number of factors. For example, a website may be successful because the owner has a deep understanding of their audience. This will reflect in their content and sales tactics. But if you cannot do the same, then buying the site will not benefit you.
Similarly, if the website has a brand identity centered on the owner, this is a cause for concern. Many website owners build their marketing strategy around giving their customers a window into their lives. Their likeness may be plastered over the site, or they may be prominent on the included social media channels. This is not a business model that will survive if the website changes hands. And if the owner sells you their domain and starts a new site under a different handle, all their customers will follow.
A final concern is the dependency of the business model on the owner. If the site is being managed by one person you’ll either have to shoulder all of their work or outsource it. And if the current owner is handling technical (or subject matter specific) tasks that you do not have the necessary skill for you’ll have to hire experts to do them for you. All of this will add to the running cost of the business. Ideally, you want to buy a website that suits you personally.
Reason for selling on Flippa
Keep in mind that these sellers are people who have spent years building their businesses from the ground up. And if they’re getting rid of a profitable website that they have so much personal investment in, they probably have a good reason for selling. Your concern is whether that reason negatively affects you.
When someone sells on Flippa, instead of through a broker, they are likely to get a lower sale price. So there is generally (although not always) a specific reason why they chose to list the site on Flippa.
There are a few common reasons why a site may be listed on Flippa:
- The value of the site is too low, and brokers will not accept sites under a certain price.
- The owner just lost interest in the site and wants to offload it with minimal hassle.
- The owner doesn’t think that the site would make it through the strict examination a broker would perform before listing the site.
The reason that should cause concern is the last one. Is there something that the seller knows about the site that would make brokers avoid it?
One situation in which it is safe for you to buy a website is if the owner wants to reinvest their money in a different venture. Alternatively, if a website hasn’t been updated for a long time, that’s a good sign that the site owner lost interest. These are both good reasons for selling. But if the seller doesn’t have a clear answer, you should be cautious.
If you suspect that the seller thinks there’s something wrong with the site, it’s important to follow up until you get a satisfactory answer.
Change in the rankings?
If a site owner has had success in their niche but is losing customers to a new competitor, they may choose to sell the site while still in a good place. How do you check for this in the growth trends? If you look at the website’s records, you’ll see a long upward trend that eventually flattened out and is now going downwards.
Smart sellers may offload the site when the profits are stagnant if they know their competitor has a better site or strategy. That’s why it’s important to conduct market research before you buy a site.
An owner who thinks their site may get hurt by a Google algorithm change or is trying to avoid risk will sell their website when it is at peak popularity for massive profits. There are no downward trends or other evidence to show that this will happen. The trick to avoiding risk while buying a website is to take your time. Do not rush the process. Check each step and find out everything you can about the business before you invest.
Download the Due Diligence Overview worksheet
If you’re looking at a website on Flippa, my Due Diligence Overview worksheet is a crucial tool to help you make a decision. And it’s available FREE — all you have to do is join my mailing list below. Along with great website investing content and tips, you’ll get the entire Website Investing Beginner’s Kit delivered to your inbox.
If you are looking at a website on Flippa, make sure you do these things before buying:
- Get my Website Investing Beginner’s Kit
- Verify the owner
- Know what you’re buying
- Don’t buy starter sites
- Get proof of traffic and earnings
- Know the costs of running the site
- Understand the growth trends and strategy
- Know why the site is listed on Flippa