It’s a guess and not supported with proper data, but I believe that 80% of web property investors who flip sites are selling their sites below their asking price.
Sure, it’s only natural that buyers will haggle upon your asking price, but I realised that following this real estate advice proved to be the most effective of all when it comes to property pricing:
You want your property to be the one that is not for sale but everybody end up wanting it (real bad.)
The above could mean one thing: Your property will be sold (way) above the market value, if you can attract the right kind of buyer.
My web property investing roller-coaster ride
Here are some highlights from my web property investing and site flipping activities in my short 2 years entering make money online/web property investing arena:
Some examples of the boom…
- A web directory I started with $200 sold 3 months later at $1300.
- A finance blog I bought for $250 sold one year later at $3000.
- A domain name I parked was registered and renewed for the total of less than $30 and received an offer of $1000.
Some examples of the bust…
- A twitter-related site I bought for $450 is becoming obsolete and collecting dust today.
- I have closed down a web directory I bought for $300.
- A business social bookmarking site I touted to be ‘big’ has been sold for a mere $150.
…and some transactions fall between the boom and bust – i.e. a couple of hundreds of dollar in capital gain profit, break even sales, and some just simply sitting around on my hosting accounts collecting dust.
Now, why I mentioned the above? My answer is: Because the boom I have experienced happened as the sites sold were actually not for sale. The bust happened because, well, um – nobody really wanted them badly :)
Lessons learned
If you are a website flipper, you can make a huge profit buying sites, ‘renovate’ them, and sell them for a nice profit margin – which is great. However, there is one caveat: Your sites are measured by the so-called market value (whatever that is – I agree with the saying that a website is valued at how much people are actually willing to pay for it.) Suppose you spend 100 hours to ‘renovate’ them – fix them, grow them, nurture them – you can’t dictate that the buyers will pay you 100 hours times your expected hourly rate; the buyers will make an offer on how much they perceived the site is worth, regardless of your effort.
Unfortunately, website flipping is closer to being a job than investing activities. I see so many excellent start-up sites are being sold cheap because the sellers claim they are web designer/developer, not investor. They declare that building sites is their job – nothing wrong with this, but I personally wouldn’t really enjoy building a site for someone else (unless I’m a bit short on cash to pay the bills.) What I envision is for me to build a site (or buy a site) to keep and nurture, in such a way that when I feel I need to sell the sites I am ready to do so in an instant, whether they are for sale or not.
You and I would want our sites to be the ones that investors are after, but not for sale. This way, you and I are in control of the acquisition negotiation. Instead of stating your asking price, you would want for the buyers to name their price first – why? So that you can keep the negotiation under your control; my principle in negotiation is that if you name a price, you lose control. If you lose control, you will less likely to get a good deal out of the negotiation.
I just recently received an offer of $3,500 for one of my web properties – the one that I actually perceive it to be valued at less than $500 considering the revenue. Let’s see how far the not-for-sale approach goes.
Ivan Widjaya
Web property investor