Wondering how to buy a website? In this era of remote working, the lure of making money online is a strong one. Almost everyone considers the idea of starting a blog or building a website.
But growing a website is hard. You need to spend months adding content before you ever see any traffic. And you need to spend months building traffic before you ever see any profit. The sheer volume of content on the internet makes it impossible for a new site to make a splash.
That’s why so many people are starting to buy websites instead. Websites can be a great investment, since they generate monthly income and are much cheaper to buy and run than traditional small businesses. Still, if you’re new to the game and don’t know what you’re getting into, you could be in for trouble.
So for those of you who are just getting into website investing, this article explains how to buy a website, step-by-step. Once you have read and understood this article, I recommend looking at some of the many advanced articles on website buying on this site.
Table of Contents
- Before you start: download the Website Investing Beginner’s Kit
- Step 1: Do you really want to buy a website?
- Step 2: Determine your budget
- Step 3: Where to look for a website to buy
- Step 4: Choosing a type of website
- Step 5: Peruse the listings
- Step 6: Make an offer and negotiate
- Step 7: Due diligence
- Step 8: Closing and transfer
- Key points
Before you start: download the Website Investing Beginner’s Kit
Buying a website can be very scary, but it does not have to be.
To help you out, I am giving away my Website Investing Beginner’s Kit, which includes a valuation worksheet, a due diligence worksheet, an income planner, and much more. All you have to do is sign up for my mailing list, and you’ll get website investing tips and insights — as well as the Website Investing Beginner’s Kit — delivered straight to your inbox.
Before you continue with this article (or any other one on how to buy a website), it’s a good idea to download the Website Investing Beginner’s Kit and follow along with it.
Step 1: Do you really want to buy a website?
Website investing is great, but it can be risky. That’s especially true if you buy instead of build. Buying a website can catapult you to big earnings quickly, but it can also result in losing a lot of money. Building a website, in contrast, can take what seems like forever. But you won’t be spending too much of your hard-earned cash on it.
So the question is, should you buy a website or build one? In order to help you answer the buy vs. build question, we have written a complete guide here. I suggest you go through that article first, and fill out the worksheet. Then, if you determine that buying a website makes sense for you, read on with this article on how to buy a website.
Step 2: Determine your budget
Buying a website is an investment. In the best case scenario your returns are many times the money you put in. However, it’s possible that you break even or make less than the amount you spent. As a smart buyer, you need to be aware of this risk. Before you start looking for websites — and perhaps before you even start looking into how to buy a website — set a budget for yourself, make sure that it’s an amount you can afford to lose, and stick to it.
Say your initial benchmark is $50,000. Only look at sites for less than that value. Make an offer for less than your maximum when you begin bargaining. If you over invest and bump it up to $55,000 or $60,000 during a purchase, you’ll regret it later because now you need to get a higher return on your investment. As a novice buyer, the more stress you take, the greater your chances of making a mistake.
What can I afford?
Although determining website pricing and valuation is a huge topic in itself, and I have multiple other articles on this site about it, you can make an extremely rough estimate of the size of site you can afford. To do this, divide your budget by 40. The result is an estimate — again, an extremely rough estimate — of the monthly revenue of a site you can purchase.
There is a detailed process on how to determine the value of a website, and you should try to familiarize yourself with it before making an offer. However, during the initial stage, the basic estimate should suffice.
Step 3: Where to look for a website to buy
Once you decide to start looking for a site to buy, you need to start searching. There are two different routes you can take, the easier route or the more involved route (that may save you some money).
The easier route for new buyers
If you want to save yourself the time and hassle of finding a website on your own, you can contact a broker. A broker collects information on a variety of sites available for purchase. You can browse through their listings until you find something you like. They will also explain to you how to buy a website with them.
The good thing about brokers is that they do some of the due diligence work for you. But don’t be fooled into thinking that you don’t have to do your own! The most money I’ve ever lost in this business was on a site I bought from a respectable broker.
Sites listed by a broker tend to have higher prices than others. In fact, many brokers don’t bother listing sites that are less than $100,000. So your budget may force you to go the more involved route.
The more involved route
If you don’t want to (or can’t) buy through a broker, you can either buy through a marketplace, like Flippa, or you can find a site on your own and contact the site owners. Searching on your own is an advanced concept, but the one I prefer, since it can get you the best deals.
In either case, you will have to do your own due diligence, as well as negotiation and paperwork. The risk is higher if you go this route, but you can save some money and get better deals if you do it right.
Step 4: Choosing a type of website
The next step in how to buy a website is to choose the type of website you want to buy. Don’t confuse this with what to look for in a website as that’s a whole other topic. The technical and strategic decisions come later. This initial step is simply about picking a form of monetization and a niche.
Choosing a monetization strategy
Websites have various different monetization strategies. Many are ad supported and make most of their money from ads. Others are affiliate sites, which make money when a reader buys a product they recommend. Still others sell products or services directly.
While a website you purchase is likely to use a combination of these strategies, you will want to determine which strategy is best for your needs. Check out my article on affiliate vs. ad supported websites for more information on the benefits and drawbacks of each strategy.
Your monetization strategy may dictate which niches you will be able to purchase in, so the next step is narrowing those down.
Evergreen vs. trend-based niches
There are two types of website niches: evergreen topics, and trend-based. If these terms are new to you, don’t worry, they’re relatively straightforward.
A trend-based niche is any business that relies on the popularity or recent hype of a subject. So, a handknit woolen clothing store can only sell products during one season. Or, face masks sell better during COVID-19 surges. On the other hand, an evergreen niche, such as weight loss, sells products year-round.
When you’re buying a website, try to pick an evergreen niche so you can profit over the long term.
The niche and the audience
Try to look at niches that interest you. Websites can go up or down in traffic, depending on the vagaries of Google. So if you have something of interest that you’re passionate about, you’re more likely to be able to weather the down periods.
The main reason you’re buying a website (as opposed to building one) is for its audience. So, when you’re considering a specific niche, you need to be very clear on who the target market is. The important thing is to pick the demographic you know the most. That can mean college students, stay-at-home moms, working women, younger men; it’s up to you.
Step 5: Peruse the listings
Whether you choose to buy from a broker or marketplace, or even if you’re looking on your own, you should be constantly perusing the listings. Every day, brokers and marketplaces email out their new listings. Make sure you have subscribed to those lists, and check them religiously.
Don’t jump on the first site that comes along; you will regret it. Instead, spend a few months looking at what is listed. If you see something that really piques your interest, you can request more information. Just note that brokers may blacklist you if you request details on too many sites and don’t purchase. Also note that some brokers will require you to put down a deposit or verify funds before getting information.
There are several things you should look for in a site. There are other articles on this site that go in depth about them, but here, I will highlight a few:
When you’re buying an up and running website, you’re paying for useful traffic, not just random traffic. There is a big difference, and you need to know what it is before you get started. Your entire strategy depends on you making money the minute you buy the site. That means you’re assuming the business is (or at least can be) monetized. Just because a website gets online traffic doesn’t mean it is making any money.
Traffic is of little value if it’s not monetizable. If viewers are looking at your page and moving on, you aren’t making any money. And if viewers are not the kind of people who buy, your income will be low, regardless of whether your site is affiliate or ad supported. So, how do you make sure a website has useful traffic? For one, don’t assume anything. Ask the website owner for proof of earning, through AdSense, sales reports, or other accounts (in addition to Google Analytics traffic data). You need to know that the site has an audience and that they’re willing to buy products before you invest.
Look into the site’s business model. Is it purely ad supported, or does it make affiliate income. Is there any e-commerce component, selling goods or services? How many people buy products in a month? Do the site sell multiple items?
Whatever the business model, you will want to ensure that it has been consistent historically, and that the trend is upward (or at least flat). If you are looking at an ad supported site, make sure that the ad revenue has not had any unexplained drops (or jumps), and that the historical revenues per user are reasonably static. If you’re looking at an affiliate site, make sure that the number of monthly sales is consistent (or trending up) and that the commissions per sale are not changing. And if you’re looking at an e-commerce site, make sure that the number of products sold aren’t fluctuating wildly, that costs are not changing, and that profit per user isn’t going down.
Also, a good tip is to ask them where they think their site could improve. Since the owner knows the market, chances are they have some ideas on how you can grow the business.
Email lists and social media presence
Ideally, the business should have basic marketing strategies in place. Confirm what assets are a part of the sale. Do you get access to a working email list and active social media accounts? Are there any other valuable assets?
A mailing list is a very valuable addition to a website. If you can re-target your customers with information on new products and services, you can increase your income. And a quality email list takes years to build, making it an integral part of the sale. Social media accounts are also important, and can be monetizable on their own.
Operating procedures and workload
You also need to find out what the operating procedures for the website are. What systems are in place to keep things moving? Depending on what type of site you’re buying, the sellers will have a system in place for production, delivery, review, payment, and quality control. If the website employs freelancers like designers or writers, they’re a part of this process. So are other partners, such as payment gateways.
Remember to take into account the tasks the current website owner manages himself/herself. And if the owner has skills you don’t, you will have to outsource those tasks as well. Prepare a complete list of the skills needed to run the business and the costs involved.
Before you buy a website, consider the workload. Some sites are low maintenance, while others require constant attention. The more processes involved in the daily running of the business, the more effort it’ll take. You may not have the time to dedicate to the task. And if you fail to maintain the success of the site, by the time you can sell it, it’ll have lost value. Not only will you not make a return on your investment, you’ll probably lose money. Find out how much of the process you can outsource or automate. Also, consider that if you hire more freelancers than the current owner, you’ll probably make less profit.
Step 6: Make an offer and negotiate
When you have found a site that suits you, it’s time to make an offer and negotiate.
How you offer and negotiate is dependent on where you are purchasing from. Brokers will normally dissuade you from offering less than around 90% of the current listing price. You can generally push them a bit, but you won’t be able to go too low. Brokers have a good sense of what the market value of the site is and they won’t take you seriously if you don’t offer a fair price.
On the other hand, if you go direct to sellers or through a marketplace, you can offer whatever you want. I have made offers of less than 50% of the asking price for some sites and was able to get the seller to agree.
If you purchase from a broker, you don’t have to understand website valuation in too much detail, because the broker will have done the valuation for you, and they won’t let you deviate too far from their valuation. However, if you buy direct or through a marketplace, you need to be able to value a site and defend your valuation.
I have written several articles on valuation, from beginner to advanced, which you can find on this site.
Once you have made an offer, and the seller accepts it, you will generally sign an LOI, or letter of intent, which states that you are planning to purchase the site for a specified amount. After the LOI is signed, the seller should provide you full access to the site’s records so that you can do a deep due diligence review.
Step 7: Due diligence
While due diligence is an ongoing process, you will have a period after the LOI to access all of the records of the website and ensure that they have been accurately described. There are many articles that my team and I have written on this website to help with due diligence.
If you’re buying through a broker, some of the due diligence has been done for you, so you have a head start. But remember, they haven’t checked everything, and they sometimes miss things. So you should do a complete due diligence review regardless of what the broker has done.
Due diligence is too big of a topic to explain here. For the basics of due diligence, check out my introduction to due diligence article.
Step 8: Closing and transfer
Once you are satisfied with your due diligence review, you can move forward to closing.
The first thing you will do is place the purchase price into escrow. Most brokers and marketplaces use Escrow.com for this, so you will need to go to Escrow.com and send a wire from your bank for the purchase amount, including any buyers fees and an escrow fee. Once the money has been accepted by the escrow service, the seller will be notified to transfer the site to you.
Now, you’ll transfer the website.
How this works depends on where the domain is registered, where the site is hosted, the technology stack, and who is doing the transfer. Generally, the domain is transferred to you either by a standard domain transfer or an instant transfer to another account at the same registrar. After that, the site is transferred. The process for this varies quite a bit, but for WordPress sites (which are the most common), you will need to either take over the hosting account or have someone move the WordPress site to your server.
There are articles on the technical details of a transfer elsewhere on this site. These will explain all of the intricacies of how to transfer different types of sites, from basic WordPress sites to specialized CMS’s like Drupal, to homebrew PHP sites.
If you are lucky, the seller will help you perform the technical transfer. However, you may need to hire someone to do the transfer if the seller doesn’t do it and you don’t have technical expertise.
Once you have transferred the site successfully, you’re done!
While this may seem like a lot of information to keep track of, there’s no need to get overwhelmed. It’s really just a step by step process. Don’t skip any levels, and you’ll be good to go. At the end of the day, your goal is simply to find out everything you can about the website you plan to invest in. This guide just highlights a few factors and key areas for you to look into.
Overall, if you’re getting started on buying a website you should:
- pick an evergreen niche
- choose a relatable audience
- set a budget and stick to it
- contact the website owner or a broker
- know what you’re buying
- make sure the site has a successful business model with multiple income streams
- find out if a quality email list and active social media pages are a part of the deal
- know what the basic operating processes and costs of running the site are
- understand the workload