In buying a website, I follow a super-simple principle: I am willing to pay (much) lower than the site value. Let’s say I try to implement Warren Buffett’s ways of investing – discover the intrinsic value of a business, and pay for it accordingly, not considering how much the market think the business worth.
Now, the problem with website value is the unknowns. Website valuation is obscure at best – just try widely available free website valuation services out there: You’ll see your site worth varies widely from one site to another. Trying to quantify the exact value of a site is really complex.
As of for me, I follow the rule of thumb in website value: A website is valued at how much the market think the site is valued at.
I’ve seen great sites tagged at $50,000 (asking price) at an auction marketplace, but the highest bidder for the site is $8,000 and the auction is about to end. What do you think: Is the site worth $50,000 or $8,000? Beats me – all I can try to consider is whether I am willing to spend $x on the site or not. If so, I’ll battle other bidders; if not, I back off. It’s pretty straightforward, really.
Now, here’s something you might be interested in: Did you know that a site’s value is heavily influenced by the marketplace it was listed on?
If you are looking for hidden gems, focus your effort in discovering them in forums. There are website owners in need of money for various reasons, ranging from financial hardship to investing in a new, bigger project requiring quite an amount of investment. The best thing of this situation is that most sites will be offered at a much lower price tag. So, buying from them is a win-win situation, really.
As of for me, my best deal in my short 2 years into webpreneurship is acquiring a finance blog at $250 from SitePoint Marketplace (Flippa’s predecessor) and sell it to a private investor at $3,000. The site is making about $125-150 a month, and it was PageRank 5 and a decent 6,000 visitors a month. So $3,000 deal price is quite a good deal for me (considering the purchase price.)
However, many of my sites sold at 5 to 10 times the original purchase price are from DigitalPoint’s Buy, Sell or Trade forum and some other smaller forums.
So, yes – all in all, forums are some of the best places to find hidden gems.
Another way you might want to invest your time in is by personally contact the site owners of the web properties you are interested in. If on-site contact details or forms were not preset, I look on the WHOIS record of the site and use the email address listed to contact the site owner.
I’ve tried to pull a deal using this technique, but the site owners are largely being ‘sentimental’ about their sites, offering an asking price that is much higher than the actual site worth. This is normal, really – if you would want to acquire this blog, I wouldn’t let it go for cheap
The best way to discover hidden gems is to train your eyes to spot the gem in a sea of overpriced or junk sites. I suggest you to hang around a bit longer on buy and sell site marketplaces and do nothing but watching what’s going on – which sites are getting plenty of bids; which sites were sold at asking price (BIN – buy in now); and other observations that can support your decision making process.
Discovering hidden gems