Fraud Tips for Buying Web Sites

Revenue

When valuing a web site, revenue is king.

The standard method for valuing web sites is to take the monthly revenue and multiply it by another number to determine a fair value for the web site.

The number is called the multiplier. Sellers like multipliers of 36. Buyers like multipliers of 3. Most deals end up somewhere between those two extremes.

Fraud Tip: Be sure to look at revenue numbers over a year's time. Some sellers will have one good month or one good quarter and try to overprice their web sites based upon that. Don't buy a store thinking that every month is December.

PageRank

A web site with a PR6 main page is worth more than a web site with a PR5 home page.

Fraud Tip: PageRank is easy to spoof by using a 301 Redirect, waiting for a Google PR update, taking down the 301 Redirect, and then selling the web site before the next Google PR update. Be sure to examine the backlinks to a web site to ensure that it deserves its PageRank.

Fraud Tip: Some sellers will sell PR0 domains and say "The site doesn't have PR yet." The truth is that these sites have often been banned by Google. You are better off to wait for the next Google PR update.

Fraud Tip: A seller may have a lot of their own links pointed to a domain, artificially inflating the PR. After the domain sale is completed, the seller will take down their links to the domain. Be sure to examine the backlinks to a web site to ensure that they are not all coming from the sellers other web sites.

Page Count

A web site with 5,000 pages is worth more than a web site with only 5 pages.

Fraud Tip: Don't listen to how many pages a seller says the web site has. Check with the search engines. Web pages that are not indexed by the search engine do not have much value. If the seller has web pages that aren't being indexed, there may be hidden problems with the web site.

Domain Name

A web site with a great domain name is worth more than a web site without one.

Fraud Tip: Make sure that the domain name does not have potential trademark violations. Don't buy "buying-and-selling-on-ebay.net" and wait for eBay to sue you. They will.

Copyright Compliance

A web site which is built with copyrighted material can cost you a lot more than what you pay for it.

Fraud Tip: Check the text of the website for originality using Copyscape.

Fraud Tip: Check the web site graphics using Google Image Search.

Fraud Tip: Lyrics and Ringtones are copyrighted material. Don't buy this type of site unless you know this material was used with permission.

Originality

Some webmasters build a web site, make a dozen clones of the web site, and then sell off each clone as an original web site.

The clone web sites are then penalized by Google's duplicate content filter.

In addition, if there are a dozen web sites offering substantially the same content, those web sites will have to divide the same limited number of web visitors between them.

Fraud Tip: Check the originality of the website for originality using Copyscape.

AdSense

Some webmasters sell their websites after they have been banned by AdSense.

Fraud Tip: If you intend to use AdSense on a web site, examine the web site to ensure that it is compliant with the Google AdSense ToS and Program Policies.

Tip: Before placing AdSense on any new domain that you purchase, write and notify them that you have purchased a used domain. This will prevent your AdSense account from accidentally becoming confused with that of an AdSense cheat.

 

Great post, thanks a lot for taking the time.

I definitely picked up a couple of new things

Adi Friedman, Partner.
Two Believers Web Holdings.

 

A useful post. Even if I knew most of what you said, your clear explanations reinforced my understanding. Thanks.

 

very useful information, thanks dude

 

Great post, Will.

I have some questions and comments though.

In the case of ringtones, there are ways of licensing them, but with lyrics, from what I've heard 100% of the sites out there are not licensed to use lyrics. So, if you buy a site with lyrics, you have to accept the fact that you can be sued or shut down at any given moment. This same advice applies to similar sites with images, videos, etc. If the seller is claiming the content is public domain, more than likely it is not. Barely any content is public domain. Maybe it's covered by a license that allows it to be distributed, which is good enough for you to use it, but just keep in mind that's not the same as public domain.

Is that the same as Google Image Search? If that's the case, then that means you need to search for words related to the image, or the filename. It's sometimes tough tracking down images just based on keywords. But on the other hand, I thought you might be talking about a different Google service that actually does binary comparisons. That would be cool, but I could find anything like that.

Will, an addition question. Do you have any tips about how to handle the actual transfer of files/domain, possibly using an escrow account. I'm sure there's all sorts of fraud there, and wondered if you had any tips.

 

Thanks Will, great post!

 

Yeah, thanks I learned few new things.

 

Nice post, thank you for sharing those tips!

 

Great post Will!
Here are some tools that I use:

Check pagerank fraud: http://www.seologs.com/pr-check/pagerank.html
Backlink check: http://www.marketleap.com/publinkpop/default.htm and http://www.webuildpages.com/neat-o/
Page Count: Using the site:http://www.website.com/ in various search engines.
Sandbox detecting tool: http://www.seomoz.org/tools/sandbox-tool.php
Bad Neighborhood checking: http://www.bad-neighborhood.com/

And always checking with http://www.urltrends.com/ and the waybackmachine http://www.archive.org/web/web.php to see what the website used to look like.

 

Great tips to avoid what they call "the pump and dump". Thanks for posting some common sense.

 

Nice post!

Thanks!

 

really helpful indeed

 

Really useful

 

Great addition to this forum. Thanks

 

Just starting out and advice like this is priceless ...
maybe a great ebook in the info Will

 

interesting...
But how can estimate a site on revenue?
Revenue depends on traffic, site with few pages and good traffic can bring much more money than a site with great content, but no traffic.

So the question is what in your opinion is more valuable: traffic or content?
Both take time and effort to get, so it's interesting to see some comments on this..

 

Excellent tips Will!

 

Thanks,
I'm just starting to look for sites at DP, feel a lot safer knowing how
Yoook

 

I would rate this the most helpful thread I have read in this forum (to-date). Thank you for the super tips. Look forward to reading the replies to this thread for some time. Many thanks Will

 

Great post. Just add that sales of sites with lots of content, images, logos, etc, should be subject to a legally binding contract signed by both parties.