Before we look at the different avenues you can follow to find websites to buy, let’s talk about the different types of deal you might encounter on your website investing journey. In my mind there are three main categories of deal:
- The Steal. This is where you get a really good website for a super low price, steals are very rare, but they are still possible even in today’s markets.
- The Deal. This is where you get a good website and you get it for a price that’s generally below what the market would typically pay for it if the website was well advertised and it were available to a lot of different buyers.
- The Solid Investment. Still a great investment but not a steal, this is where you’re getting a good asset for a fair market price.
Where can I start my investment journey?
Like all investment opportunities there are marketplaces you can look at. You can find websites to buy via the normal channels such as eBay or Craigslist but one of the most important marketplaces in the online business arena is Flippa and it truly is a marketplace, it’s like an eBay for online businesses, think sales ads and an auction style sales format – you place a bet and if you’re the highest bidder you win the site. If you win, you’re responsible for communicating with the seller and doing your own due diligence. There’s very little vetting that’s done by Flippa itself, that’s changing over time and some of its improving, but you must be careful.
It is possible but it is difficult to find a steal in a public marketplace. You are more likely to find a deal for a better price in a marketplace than you would from a brokerage, but you must use your knowledge to spot things that maybe others have missed and make personal connections with sellers.
Now let’s talk about brokers.
It’s very unlikely that you would ever get a steal from a broker, but you might get a good deal, better than market deal, although most websites you’re going to buy through a broker are going to be at the what we call the ‘solid investment’ level.
One of the exceptions might be that there are many websites that come to brokerages that they turn down and usually it’s because the websites aren’t big enough, sometimes it’s because the quality is low but if it’s the size consideration where say it’s $20,000 or $40,000 website and the brokerages don’t do anything with sites less than $50,000 or $100,000 depending on which brokerage you’re talking about. If you have a good relationship with the broker, they may agree to refer those smaller deals to you and in that case, you might get a better deal directly from the seller than you would when the website listing is made public.
A broker might also agree to sell a website, but they have a pre-public listing state. If you get on the list with a broker where you get early access to website listings, then that may not give you a better price but there may be slightly less competition in that state with the website. So, you might get a little bit better deal than you would otherwise if the thing goes completely public.
The power of building connections
Private deals are all about making relationships with sellers of websites and making it known to them that you’re in the market to buy websites. The more you make that known at conferences and in your communications with entrepreneurs, the more likely it is you’re going to start seeing opportunities come to you. It may require that you contact websites on their ‘contact us’ page or in their social profiles or other ways that you can find to contact website owners.
Doing a private deal has a lot of advantages because it can be relationship based -you can form relationships before you enter into a deal, you can also maybe find partnerships where you don’t buy outright but you do an agreement such as an Investment Partnership or owner/operator partnership.
I believe that there are as many deals done in private mode as there are in public- listed mode because there are enormous number of websites that are active in the world right now but there are not that many websites that we see appear on public listings either in a marketplace or in a brokerage site. I would say about a half to a third of the deals that I do have been private deals versus either a broker assisted deal or a marketplace deal.