Scammed – Not! 3 Safety Tips on Buying a Website

Websites that makes money via advertising and affiliate sales always interest me as they can offer me passive income opportunities. Your real work would be attracting highly targeted traffic to your website via content marketing, as well as optimizing the placement of your textual/banner ads, call to action, and other tools for conversion.

Pay-for-access web tools, mobile apps, and service websites offer enormous opportunity – but those require a certain level of skills required to perform the service, as well to maintain and support the apps.

However, there is one, big caveat when it comes to buying a website with any types of earning methods: Misleading income claims.

Buying an website based on revenue and income exposes to you a risk of getting scammed simply because you have a limited access to earning income statements for verification purposes.

Website sellers usually show proofs via screenshots. Unfortunately, as we know it, screenshots can be digitally engineered. It’s easy for scammers to fake the income claims: All you need to do is just to photoshop the numbers (yes, some people would do just that!)

Sounds scary? A little. But entrepreneurs – both online and offline – should be comfortable with risks (as more risks mean better opportunities!)

So, here are some tips to minimize the risks of getting scammed when buying an income-generating website:

1. Expect the website asking price to be 20+ times monthly income – or even more

When buying a website, aim for the best price, not the cheapest price. With websites, price and quality are highly related.

One example: A website making, say, $100/month via AdSense and sold for $300 is most likely to be a scam, unless you can proof that the seller urgently need the money for one reason or another.

How can the $100/month for $300 be a scam? From my experience, there are generally 2 reasons: False claims (with fake screenshots) and the site is implementing (the illegal) AdSense arbitrage strategy.

Here’s another example: A website making $2,000/month via user subscriptions, with an asking price of $10,000 is potentially a scam. There are a number of reasons for this: The service/tool website is declining in signup counts; the service/tool is less effective/no longer well-maintained; new competitors/new services available potentially render the service/tool obsolete.

As you can see, there is a certain level of legwork you need to do in learning whether the site sales you are interested in is legit or not.

As a general rule of thumb, I would say that you should expect the asking price to be anywhere in between 12 – 36 times monthly income – or even more.

The reason is obvious: It’s not easy to build any business. So, unless the seller is in dire need of money, a low asking price compared to the income level should raise a yellow flag. More on this on tip #2 – read on!

Please bear in mind that you can still get scammed, even though the asking price is 20+ times of the monthly income. But still, your can weed out plenty of scam offers immediately.

2. Niche vs. traffic vs. conversion rate

The website niche is important because it determine a number of things, such as earning potential, buying habits, and so on.

Make your buying decision based on the niche first, and then consider the traffic afterward. How so?

You see, well-trafficked site is good, but such site will not necessarily making more money than the low-trafficked site.

Here’s why: The income of a site depends heavily on three major factors – the traffic counts, clickthrough rate (conversion), and the niche of the site. This is especially true if the income source of the website is mainly advertising via PPC network, such as AdSense.

Again, emphasis should be made on the niche selection. Next, you should consider traffic and conversion rate.

Here’s an example: Blogging niche won’t make you much from AdSense – but insurance niche can make you $10+ per click (even as much as $50/click!) – depending on the traffic quality (organic, targeted traffic from Google search is generally the best quality for AdSense) and ad unit placements, which will impact conversion rate.

But why the difference? Remember, the more advertisers compete for the same keyword, the more expensive the keyword will become. Just the good ol’ supply-and-demand mechanism.

Here’s another example: A site claims to make $10,000/month in affiliate sales. What you need to know is: How much is the commission per sale? How’s the clickthrough rate? What’s the web traffic like? Then you can start analyzing things.

If the affiliate program yields $100/sales (yes, this kind of commission do exists – typically in web hosting affiliate programs) then we can assume that there are 100 sales/month ($10,000 divided by $100). If the site gets 100,000 visitors/month and the affiliate program gets 1,000 clicks, then we can learn that: There is a click every 100 visitors (1 percent clickthrough rate) and 1 sale happens in every 10 clicks (10 percent conversion rate.)

Sounds legit? Maybe – but unless the website is super-optimized in their traffic acquisition and the placement of ads/call to actions, those figure seems to good to be true based on today’s standard.

3. Make an agreement with the seller regarding the income claims

Here’s the fact: In my early years of webpreneurship, I NEVER acquired AdSense websites that make equal or more money that what was claimed in the sales proposal. So you can call me “noob!”, but that’s what I am; for this reason I always learn and get better through time!

Today’s online marketplaces are getting better, though: Flippa, for example, have this feature called AdSense verified site, which means that they are using Google API (direct access to Google) to grab the income data.

If you can get such verified info for the income from affiliate sales, that would be great. Unfortunately, not many can offer that due to various reasons (e.g. no access available for third party, etc.)

So, the best way for you is to make an agreement with your seller on the income claims.

For example: If for 3 months time after the purchase the site is still making less than the claimed earning figure, the seller must buy back the site… or something like that – but you get the point…

Takeaway

The cold, hard truth is this: Not many website sellers will agree to back their income claim with a buy-back guarantee. That’s just the way it is.

However, there are other paths you may want to consider, using the common sense: Buy from trusted sellers with real track record and plenty of positive reviews/testimonials. Generally-speaking, they will supply you with income disclaimers and agreements to gain your trust and help you decide.

As always, do your due diligence: Do a background check on the website you are going to acquire. Use the available tools to verify the traffic, income, and other metrics.

Also google for the seller and see what comes up from the search results; consider your options and decide based on real data/info first, then gut feeling second. I don’t know how about you, but I trust my gut feeling when investing in any web properties, whether it’s domains or websites.

I hope this post helps shedding some light on your webpreneurial journey! If you have more tips, please leave yours in the comment section.