Website Buying Tips #2

Posted on 11th July 2009

If you’re reading on from part 1 of my website buying tips series you’ll know that this post will be covering the art of haggling and bringing down the asking price. It’s a skill that despite being more of a common sense thing is still over looked by many of the buyers and friends I work with on a daily basis.

This post aims to clarify and remind everyone about the little tips and approaches one can follow in order to grab a website at the best possible price.

Keep a Level Head

The first tip is simple, don’t follow the hype. Most sellers for some reason or another always seem to over rate their websites. They’re trying to grab your attention with fancy figures and wild reports of traffic. So always take their reports with a pinch of salt.

If you play defensively like this, there’s a much lower chance that you’ll get mesmerized with their sales pitch. I’m not saying look down upon the seller and his estate for sale, but just presume the worst and never let on that you’re absolutely amazed with their property.

10x Monthly Income

Buyers like myself, like to start on the 10x monthly income rule. It’s a basic rule which simply states you’re willing to pay them 10x their current monthly income. Not only has this rule worked really well for me but I suggest all of you carry a similar benchmark in terms of how much you’re really willing to pay for a site or what the highest price you’re willing to bid to in an auction.

Of course there are times that sites for sale are truly worth well over the 10x monthly income figure. I recall paying $5000 for a site in 2007 that was making around $50 per month but because I knew what to do with the site once I had acquired it, there was no pressure on my side and I was 100% comfortable and confident that it would go onto recover my initial investment. This however is not the norm and should only be done if you’re 100% sure about what you’re doing. In most cases you should stick to your benchmark rate.

Private Offers

I know it’s generally frowned on from the sellers and watchers of public auctions but getting to negotiate a price privately is a great way at picking up a good bargain. There’s two approaches to this.

1.) Get in early before any major bids have come in and offer them close to their BIN price but still maybe discounted. For example the auction opens starting the bids at $50 and the BIN at $1000. If you absolutely want this site, private message (PM) the seller and offer them say $750 for a quick sale and instant payment. In my experience this type of startegy works 60%-70% of the time and presuming the $1000 price is about 10 months income, you’ll have picked the site up for around 7-8 times the monthly income.

2.) Watch the auction keeping an eye on the bids, if the sites still up for sale after 3-4 days that means you can get in there and throw in some low ball offers, which are higher than the current bid but still significantly below their asking price.

I once did this with a pair of wallpaper sites that were both getting in excess of 1000 unique visitors per month. The guy didn’t really know how to monetise them but nevertheless wanted $800 for both sites despite the highest bid sitting at around $200.

After a couple of days the bids dried up completely and I pm’d the guy with a $350 offer. He tunred down the offer and wanted at least $600 for it. I walked away and two days later he came back to me with a counter offer of $400. I accepted and walked away with a bargain (it was a bargain because I know how to monetise wallpaper sites, and 3-4 hours worth of work was all I needed to increase the sites monthly income by almost 100%.

Final Words

There’s loads of ways to make offers and grab bargains and the above mentioned tips will definitely bring you some great savings. However if I had to summarise my buying strategy into a single sentence, I would have to say “Be Stubborn and Play Hard To Get”.

What I mean here is don’t let the seller play you around with his fancy figures and assurances of quality. You Play the prices and game you want to play. If they don’t like it, they can keep there site because you’re not paying.

If you play with this attitude, yes you’ll lose a few good sites here and there but over the long term you’re gonna pick up bargains left, right and center. So stick to your guns, come up with a benchmark buying price (e.g. 10 times monthly income) and just get out there making those offers.