content site with great domain and decent adsense earnings..should I buy?

[Snowballer]

Hi,

So I found this website that I liked, I contacted the owner and turns out he is looking for a buyer for his site.

The site has a great domain name (its the products name exactly, no trademark issues btw) and it is earning $500-550 / month via adsense.

Asking price is $11K USD

Traffic is at 100K uniques, with around 1/2 million page views.

I trust the webmaster as I haven't checked traffic levels via a 3rd party company (if you guys do that?).

He also claims to have 2-3 other interested buyers.

The way I look at it, it is a win win situation. It will pay off it say 2 years assuming I don't improve it much, and the domain is great so there will always be interested buyers.

Should I buy?

[AndyH]

Without knowing what it is and its potential I wouldn't pay that much.

[sandman]

From what I've seen, people seem to pay about 8 months to a years worth of earlings.

[Cutter]

#1 one most important stat --

where is the traffic coming from?

If its search engine traffic you need to know which engines and what keywords.

[Snowballer]

Cutter,

who is going to give that sort of information away?

[Blue Cat Buxton]

Well if the site owener wants a premium price, and $11k is not a small amount of money, I would expect him to provide quite detailed information.

If you were buying a business you would ask for details of the existing customers etc.

If you were paying a few $100, then maybe you could take a flier

[Cutter]

Buxton is right, if the owner wants 11k he needs to show you everything.

Here is why:

If 90% of that traffic is coming from MSN, then that site is worth about $500, not 11k.

If 90% of that traffic is coming from a single keyword on Google, its worth $1500 (may be.)

If 30% of the traffic comes from 1000 keywords on Google, 20% of the traffic comes from 1000 keywords on Yahoo, if 5% of the traffic comes from 1000 keywords on MSN, and if 20% came from bookmarks and if 25% of the traffic comes from external links, and I saw potential for good growth then I might think about paying 11k for it.

[paul]

I think the multiples of net earnings paid for websites are on the low side compared to more famaliar businesses. As more people learn to do accurate and thorough "due dilligence" on websites I would expect the multiple to increase.

In other words, if you know how to check out a site, I think they are cheap right now. I have looked at a lot of businesses over the years and I don't know of any other arena where you can buy income so cheaply. If my idea is correct and you can also improve a site while you own it, the potential returns are very attractive.

If you buy a site for 10 times its montly net income that's a potential 120% annual return on investment.

Example: I bought a site three months ago for $150, PR4 and 50 pages indexed. I don't really know how to do technical "due dilligence" so I went by the sellers reputation (Sitepoint advisor for several years with thousands of posts and posts I thought were intelligent.) I didn't even realize I was getting a name first registered in 2001. I added about 25 pages of content I had already written on more or less the same subject but made no other changes. Net income has been a little over $20/mo. Annualized that is $240 net from a $150 investment. Not big bucks, but on a percentage basis it sure beats a CD :)

I realize that if I don't do any maintenance the income will may decline as backlinks decrease and the content ages; but maybe not. I should also do some SEO work, but that can be as time permits.

I think a real opportunity awaits someone who exploits the tax code to better shelter these profits. I see lots of parallels with the real estate investment world where one entity owns the asset and another operations. For example, if one company owns the domain name and leases it to an operations company, if a third company owns the copyright to the content and collects royalties from the operations company, it should be possible to minimize taxes and reduce the potential for successful lawsuits.

How about an example: (In the USA) Have a family limited partnership own the domain (very hard to sue successfully), have yourself as the operator (sole prop, LLC or Corp.), Assign copyrights to trusts set up for the benefit of your significant others (kids, parents, spouse etc.). There are books written about this stuff and it works. Its a real pain to set up though and wouldn't be worth it until your sites are making some real money.

[Snowballer]

ok things seem to be changed with Google.

The site does not show up on page #1 or #2 for the product name as it once did.

site:domain.com has about 2k indexed, and 98% of those are showing up in the supplemental results index.

i think my decision has been made, unless i'm looking at this wrong!

[Emancipator]

He wants $11k which is almost 2 years of revenue. I wouldnt pay that bud... thats bonkers. All it takes is a google shift and good night. as you just noted.

[ozgression]

I would pay $5k if the search engine traffic is varied enough (eg. not all from one search term on one search engine).

[Cutter]

If it is a really good domain name, then its a whole other ballgame and might be worth 11k+ despite all the other factors. Also, what year was the domain registered? The older the better.

[paul]

...what year was the domain registered? The older the better.

What is your sense of the importance of the domain being hosted and having some sort (minimal?) content vs just being registered.

This older first registered value is reducing the pain of renewing some of my old domains :)

[Peter T Davis]

The site could be worth $11K, could be worth more, could be worth less, could be a complete fraud. Nobody could make a serious evaluation based on the information you've given. Buying a site based on search engine traffic is foolish. Saying two years of revenue is too much, or too little, is foolish without knowing more about it. For the right site, I'd pay $11K whether the site was making a grand a month or a dollar a month. When the domain was registered is meaningless. If the site is #1 in Google, that's a very risky bet if you're staking $11K on that single SERP. As you've discovered, it might not be there tomorrow.

[Cutter]

What is your sense of the importance of the domain being hosted and having some sort (minimal?) content vs just being registered.

This older first registered value is reducing the pain of renewing some of my old domains :)

I believe that it is better if the site actually has content on it (rather than being parked or just registered) because that means the search engines have all already crawled it, other people link to it, and you are probably long out of the alleged google sandbox.


BTW, this is the reason why domain age is important:
http://www.webuildpages.com/seo-tools/whoischeck-bykeys.pl
type in the #1 keyword you want to rank for one of your sites and you will see the domain age for the top 10 rankings on google.

[paul]

Interesting link. I have a site that is usually #2 for my main keywords. I have done very little link or SEO work. That link made it obvious the guy in #1 position must have spent a fortune on SEO. Turns out he has three sites going on the same subject with 5,000 to 8,000 links for each one. Makes my 2,000 look pretty pathetic. I just bought seoelite so it will be interesting to do some serious link analysis to see exactly what he did.

I must admit the link also made me remember an example from my first statistics class many years ago. There is a highly significant correlation between the number of bars in a community and the number of Baptist ministers. The point being that correlation does not prove causality; they are both a function of population :)

[Blue Cat Buxton]

Thats a nice tool.

Of course, the longer a site has been around, the more chance it has had to get incoming links (so a potential double wammy to overcome)

[Peter T Davis]

Yea, I also think it's more to do with the links, older domains have more older links.

[webcs]

Get an evaluation of his site first (time2sell.com does them).

Oh gotta love the old 2-3 other buyers thing. If you have 2-3 other buyers, then sell the darn site. Don't give into that.

[Peter T Davis]

Oh gotta love the old 2-3 other buyers thing. If you have 2-3 other buyers, then sell the darn site. Don't give into that.
Agree, he may be just trying to see if he can get your emotion to overpower sense and get you to pay more. What I've done in situations like that is after doing a thorough evaluation of the property to set a price for myself what is the maximum I'd pay, then see how far below that I can negotiate. Make that figure a hard/fast figure that you will not go over on any circumstances, even if you have to pass on the deal.

[Snowballer]

he also said that that the 3rd 'buyer' is waiting for the last bid, and then he will bid if he wants too!

[Peter T Davis]

Heh, I've actually told sellers that before, because I don't usually want to get caught up with auctions against phantom bidders. More often, though, I'll just ask them what exactly they want for the site, what's the "buy it now" price so to speak.

[qingfeng]

no...don't buy!

[Snowballer]

ok it did end up showing on the #1st page of google after all, must have just been a lag in the indexing.

i believe it sold to someone else...