Buying a Website Listed By A Broker: No Exception to Caveat Emptor

Buying a Website Listed By A Broker: No Exception to Caveat Emptor

By: Corey Philip
Updated: September 22, 2020

I’ve been in the market for an online business recently.

I’m not a noob to online businesses.

I ran an eccommerce business from 2009-2012. From there I got into the offline world of home service businesses, largely driving their growth through online marketing. I’ve operated an info product business in the contractor marketing / management space since 2017. And for the last year, I have ran an affiliate business fueled by paid ads.

If that isn’t enough ‘proof’, I’ve also got a Clickfunnels 2 Comma Club award.

Anyhow I’ve got a 3 person digital team behind me and I was recently looking to acquire a digital property. I’m familiar with the marketplace of Flippa, but in my experience most of the sites/businesses on there are junk… not sustainable sites, so I had been browsing the listings of brokerage firms searching for my established online businesses when I found this one… right in my ‘forte’ niche of home/garden.

One thing to point out before we got any further is the ‘*’ which denotes revenue and profit “Revenues and profit annualized on a L3M basis”.

In the offline business world, a L12M would be used providing a longer look back period. And in the case of this list the numbers on an L12M would be a lot lower.

But valuation is all relative to what the market bears, and it is price is negotiable, so I tend to overlook that until I understand the fundamentals of the site.

The important considerations for myself when looking at an online business is…

#1 will the traffic (and revenue) continue.

Those of us that have been in the ebiz world for a while know that weird things (algorithm updates) can happen when you are entirely reliant on Google. Ideally you would have more than one traffic source, but in the world of content sites, Google is basically it.

There’s 2 things I look for when it comes to ensuring the (Google) traffic will continue, having built a brand or ‘branded search’ and backlinks from sites with real traffic (ie. checking the search traffic of the sites linking to the target site).

If you’ve got a real brand, and real backlinks, you’re pretty golden.

This site had zero branded search, nearly zero interaction on facebook pages, and tons of backlinks from sites nobody would go to.

#2 Have they had stable growth.

Stability is better than fads when it comes to buying and income producing websites. Sites with rapid jumps in growth indicate something that will not continue. I want something that will last.

On this site, there was something weird.

A drop to damn near zero organic search traffic.

That’s not normal.

What could’ve happened there?

Possibly the site was de-indexed due to a robots.txt error… but that is unlikely as it would’ve had to have gone on for 2-3 months to be reflected like this. Possibly the site was google penalized, so they redirected another domain to it.

Not my dog, not my pony, not my show.

This site had no branding, or community around it, and unstable traffic growth. It was a no go for me, and although listed by a broker, it was quite frankly no better than much of what is out there on Flippa.

Maybe this site will go on to produce the same income (or grow) for years, but it seems more like a ticking time bomb waiting for the next Google update.

Corey Philip
September 22, 2020
Corey Philip

Founder of a home service / specialty trade contracting company (think patio's and deck) with a focus on customer experience. Quantitative investor. Data driven marketer. Runner.