9 years ago investing281Jake

How To Trade Domain Names And Websites

What’s the difference between people who earn significant income on the Web and the others who only wish so? Usually the first kind of people look at their websites as business projects while the second blog and hope to make money. If you want to be one of the first and earn alternative income online, look at your web based projects as a real business – it’s not different than running a brick and mortar grocery shop.

Trading Domains And Websites
Photo by nicolasnova at Flickr

And business is something you can buy or sell. This is a post of the series about domain investing. If you are not familiar with the concepts, first learn how to profit from domains and websites and then how to find good domain deals. In this post I’ll share what I know about making real deals with websites.

Buying a Domain or Website – Beware Of Tricks

So, you have chosen a domain or site and you are going to buy. There are few possible tricks that dishonest sellers may try to use to cheat you. To protect your funds, act as follows:

  • Always use escrow service. It’s better to pay few bucks to a company like Escrow but be sure that your money will be sent only after you receive all the login details and files for the web business that you are buying.
  • Double check traffic details and links. Most website sellers will provide you screenshots from their traffic stats program to prove the traffic of the domain. Always keep in mind that faking a screenshot is possible and even easy for advanced users of programs like Photoshop. Check the traffic yourself: get a rough idea by looking at the Alexa.com and Compete.com ranks of the domain. Require a screenshot showing what keywords bring search engine traffic to the site – unless you are buying a website with a business model relying on PPC, affiliates or subscribers, you’d want at least 30% – 40% of the traffic to the domain to come from the search engines. Verifying this traffic is easy once you obtain the keyword stats – use Rank Checker to verify how the site ranks and the keyword tool to ensure that there is real demand for those key phrases. Some sellers are very professional in faking the website traffic, so this step is really vital.
  • Check the domain with the Web Archive. You don’t want to buy a domain which has been used for something illegal in the past. Check with the Web Archive to ensure this domain has not been used to run an online scam, ponzi scheme or illegal adult content.
  • Carefully examine the business model. When buying you must clearly understand how the domain makes money. Make sure that it doesn’t require you to do something that you can’t or don’t want to do. For example buying a website offering flash design services will be a bad deal if you are not a flash designer yourself (unless you can manage someone who is and offers prices that allow you make profits).

Buying a Domain or Website – Get a Better Price

People who have decided to sell their domains or websites have good reasons to do it. Usually they badly need the money or have totally lost interest in the business. Some of them want to sell because they lack the time due to a day job or other more important projects. Others sell because they are domain traders – they have bough the site earlier and now are trying to flip it for profit.

The common thing for all is they want to sell sooner rather than later. Which means if you offer a quick deal, you may gain some discount of the price. Don’t be shy to ask – I am sure you won’t refuse to save 10%.

Buying a Website – Closing The Deal

The seller is not the only one who want the deal to be closed sooner. You also must act quickly – don’t forget there might be other buyers. If you have found a really good web based business it would be a deal for other people too. If you procrastinate too much someone else may offer a better deal and immediate payment.

Here are few ideas which will help you make sure that exactly you and not someone else will buy the site:

  • Offer BIN price. This contradicts a bit with the suggestion to ask for a discount, but sometimes it’s far more important to buy the site than to miss it trying to save few bucks. If you have found a really good deal and there is an auction (like on sitepoint.com), just go ahead and offer the BIN. There are some real treasure domains and if you don’t offer BIN, someone else will do it.
  • Offer quick payment. Everyone who sells wants to see the money quickly. Offer fast payment by escrow.com or similar service. Your primary goal is to push the seller close the auction if there is one, remove the advertising and stop considering other buyers.
  • Push the seller to act. Some sellers just aren’t sure if they really want to sell and if the price is good enough. You may need to push them act by sending emails or making phone calls. Let them understand they have to act quickly or you may re-decide. Maybe you are not in a hurry to spend your money, but don’t show this to the seller. Letting things drag for long usually leads nowhere.

How To Quickly Raise the Price of a Domain or Website

One way to make good profits from a domain is to buy one, do some work to improve it and flip it. This works better than trying to create new sites and sell them, because when working on an existing domain with traffic, your efforts can leverage the work invested so far by the previous owner.

When buying a web business with the idea to raise its price and flip it, you must know what exactly are you going to improve. Here are the possible aspects to work on:

  • Ranking for specific keywords. You can improve the search engine ranks of the domain by doing some on-page SEO and bringing some inbound links. It’s much easier to improve the rankings of an established domain that already receives some search engine love. You can literally double the price of the site if you rank a page or two for some competitive search phrases.
  • Increase the Google PR. This works best if you buy a website whose homepage has Google PR or 1, 2 or 3 because raising with one level on the low end of the scale is not very hard. While it’s almost impossible to raise a PR 7 site to PR 8 unless it’s already “almost PR 8”. You can increase the PR by bringing in few high quality or few hundred low quality inbound links. The sale price of the site however can increase a lot just because of the improved Google PR.
  • Sell some ads. If you have bought a content site, try to sell some more ads. Probably you can run a promotional campaigns or something like that. The key is that the selling price of a domain depends a lot on its monthly revenue. If you can sell more ads for say next 3 months, you will be able to show and prove an increased revenue to potential buyers. You can get much better price for the site this way.
  • Improve website’s revenue. Same as above – just work on increasing the website income even if this means that you have to do some over monetization for a while. Send a promo newsletter to the subscribers if there are any, add new advertising networks, add affiliate offers etc. If the site is selling something, run a promotion to sell more for a couple of months. This will increase the average monthly profit from the website, will show ascending trend of income and will gain you much better price when flipping.
  • Improve the conversion. If you have bought a website which makes income from selling product or service, try to increase the conversion. Each percentage increased conversion equals the same percentage increased revenue and selling price.

Use the tactics above without cheating. Your efforts should demonstrate real raise in the site’s value. If you want to be a successful website flipper, be sure that you are really selling something which is better than what you have bought.

Selling a Domain or Website – Get The Best Price

If you follow the advice in the previous point, you should be able to get a good price. When making the deal, use the standard deal tactics for getting good price – point out the advantages, why your site is good, what extras does the buyer receive and make sure it’s clear that they have to act fast.

To increase your chances to get a good price, open auctions on 2-3 places – like Sitepoint and Sedo for example. Answer properly to inquiries and make sure to provide all the proofs you are asked for.

Selling a Domain or Website – Closing The Deal

When selling a website or domain, your closing the deal strategy can be similar to the one you use for buying. However you may slow down the rush a little bit. If your domain is really good, you will find buyers at a good price. So don’t let other experienced flippers rush to you sell right now. Selling a business is not like trying to sell your service or product to someone. The demand for good working domains is higher than the supply, so you can afford being picky.

When selling, make sure to either use an escrow service, or get the payment in advance (the latter is unlikely to happen). Besides the payment, you don’t have much more things to worry about.

Trading and flipping websites is often much more profitable than trying to make money by blogging or affiliate marketing. Of course it involves risk, but in my opinion the risk is much more reasonable than the risk in Forex trading and the rewards can be much higher.