How does Flippa work?

Flippa

One of the most popular websites on the Internet for Internet marketers has to be Flippa. The site has only been around for a few years and yet it has become the single most important destination for people who wish to buy and sell websites. However, for the uninitiated, Flippa can be somewhat difficult to understand and it’s also very easy to end up wasting a pile of cash on the website. Here’s what you need to know about it:

What is Flippa?

For the newbies among us, websites are built up and then eventually sold on a daily basis. You may have heard of some of the big ones, for example when Arianna Huffington sold her Huffington Post website to AOL for $315 million, however, there are also thousands of sites changing hands every day for just a few dollars or a few hundred dollars.

While not all of these transactions happen at Flippa, a great many of them do occur there. It’s in essence kind of like eBay for websites. People buy and sell websites, both veteran sites and brand new sites through Flippa on a daily basis and millions of dollars have changed hands through the site since it was created around four years ago.

The thing that makes it so popular is that it’s a clearinghouse for buying and selling websites so that you don’t need to go hunting down individual sites. Plus, like eBay, they have a rating system which allows both buyers and sellers to feel reasonably confident when they make a deal that the deal will actually go through on the site.

Flippa Basics

The basics of using Flippa are really quite simple – you can go to the site and search by a variety of criteria, including buy it now sites, closing soon and even specific niches. You can also see which sites are already making money (more on that in a moment though) and which ones have some potential but are as yet not earning their owners anything, either because they’re too new or because they’ve been poorly monetized.

In order to make this guide easier to understand, I’m going to break this down into three separate sections to discuss the various things you can buy on Flippa so that you can simply jump to the section you are most interested in rather than wasting your time reading through this entire blog post.

Buying Domain Names on Flippa

The most basic thing that can be purchased on Flippa are domain names. These domains generally will be “parked” and have no website attached to them. This can be both a good and bad thing. The good news is that you’ll likely pay less for a straight domain name than you will for a complete site, even a brand new one. The bad news of course is that you are starting from scratch.

You Still Pay Hosting and Transfer

An important thing to note by the way regarding domain names that you buy on Flippa is that you’ll generally still be required to pay the hosting fees and the domain transfer fees for the domain, even if it currently has a number of years left to run.

That’s because the current account is under the current owner and when you transfer, you pay per year for the amount of time you transfer it for. Therefore, even if a domain has a 10 year registration, it doesn’t mean that you’ll save money because you buy it for $10 on Flippa. You still have to pay to have it hosted on your own account.

PR is Meaningless

Another important consideration when purchasing a domain on Flippa is that the PR (page rank) the domain has is totally meaningless. First of all, with the exception of the front page links, none of the links will work anymore which means that Google will drop the PR rating for the site once it does a sweep.

Second, from what I understand, Google monitors transfers and if they see that a new site has appeared on an old domain, they reset the PR to 0. The only way you to keep the existing PR for a web site is to buy one which is already operating and which actually has links still in place from before.

What You Buy When Buying a Domain

In essence, that means that when you buy a domain on Flippa, all you are purchasing is the domain. You are not in fact buying the registration, nor are you buying age or rank of the domain in question. Now, this may still be a good deal.

For example, if something like “money.com” were to come up for sale on Flippa, it would be worth buying it just because it’s a great generic domain. However, assuming the owners had removed their site completely and were only selling the domain, that’s all you’d get. You wouldn’t get the massive number of links that CNN Money owns for the domain.

Buying New Websites on Flippa

The next option for purchasing something on Flippa involves purchasing an actual website which is brand new or relatively new. This option actually breaks down into a number of different possibilities and each one should be considered separately.

A New Site with an Old Domain Name

I’ve seen lots of websites on Flippa which are in essence new sites with old domain names. What that means is that the owner of the domain name decided to remove their site completely (or simply let it fall away) and someone else snapped up the domain and put in their own, generic website which fits the theme.

I saw this when I considered purchasing a site there which had a space theme. The site seemed pretty interesting and since I have always been fascinated by space, I figured it would make for an interesting site for me to manage as part of my portfolio.

In the end, I didn’t buy the site because I wasn’t willing to go crazy and spend hundreds of dollars for it. The reason was simple – the site was brand new with an old domain name which supposedly had a PR4 rating.

The thing is, because the site was brand new and simply based on an old domain name, ultimately that PR rating wasn’t going to be worth anything. The site design was nice and the name was a good one for space (I forget what it was now, but it matched well), but the content was all PLR (i.e. not unique) and the PR rating was likely to be reset by Google once the site was re-indexed by them.

A New Site with a New Domain Name

There are two other options for a brand new site on Flippa. One is a new site with a new domain name and PLR content, the other is the same except that the content is original. The big difference between the two is whether or not you have to rewrite the content on the site.

Keeping a site with PLR content on it is not a good idea if you want to make money from it because ultimately Google will flag it as being duplicate content and will either not index it or not display it in search results. Therefore, when a site has PLR content on it (this is usually mentioned in the site description), you want to count on having to rewrite everything.

It’s also worth noting however that even if original content is claimed, you need to check on that original content. I’ve seen more than a few websites with original content which were pure junk – stuff written by someone who clearly doesn’t speak the English language and who thinks that content writing is easy. You need to do quality work in order to build a site which will actually attract visitors, so you need to ensure that the material you have is worth reading.

Finally, be sure to double check claims of originality in content as they may be lying about that as well.

Buying an Old Site on Flippa

Finally, we come to the most important part of buying a website on Flippa – buying an old site which has been around for a while and which (presumably) has some traffic attached to it and is possibly even making some money for the owner of the website.

6-10 Times Earnings

Officially, the rule of thumb that I’ve heard is that a website should sell for roughly 6-10 times the monthly earnings. That means that if the site is taking in $500 per month, it should sell in the range of between $3,000-$5,000. I have however seen sites earning less than that sell for more and I have seen sites earning more than that sell for less. As I said, this is a rule of thumb, not a hard and fast rule.

Verification

Okay, so you’ve found a website which you like and which you want to buy. You need to do some verification to find out if the owner of the site is telling the truth about it.

First, if the owner claims any kind of PR ranking, use a tool like SEO Quake to check on the rankings of the site. Be sure to check internal pages as well as front pages.

Next, check to see the PR ranking isn’t spoofed. Do this by going to Google and typing in site:siteurl. This should show every page that Google has indexed for the site. If a different URL shows up in the search results, then the site PR has been spoofed by using a redirect and the PR ranking is totally worthless.

In addition to asking for screen shots of the Adsense and other revenue pages for the website, it’s not inappropriate to ask for direct access to see the Google Analytics for the page and even direct access to the Adsense page. The problem is that these things can easily be spoofed by someone with a decent knowledge of Photoshop, to the point where it’s impossible to tell without seeing it in real time on the actual Google website.

Look for References

It’s also important to look for references from the seller (and buyer for that matter) to ensure that they’re reliable. While everyone has to start somewhere, if someone shows up asking for $50,000 on the first site they advertise, it’s a little more than suspicious and should raise red flags. At the same time, if you see that someone has a really bad feedback rating, it’s best to avoid them as well.

Payment

Payment on Flippa is kind of a two part deal. Flippa doesn’t actually arrange for money to change hands. They will refer you to an escrow company where you can arrange to have the payment held until the site has been transferred and the URL reregistered in the name of the new owner. However, some sellers don’t like to work with the escrow company and ask for alternative methods of payment. While this isn’t necessarily a cause for alarm, you should keep the following in mind:

Payment by PayPal

PayPal is probably the most common way to request payment of funds for a website other than through the escrow process. The thing to remember however is that PayPal buyer protection will not be available for any website purchase from Flippa or elsewhere.

They specifically exclude buyer protection for non tangible products meaning that if you get screwed, you’re on your own. On the other hand, you can at least see if a person who wants payment by PayPal has a record with them which shows them to be reliable.

Western Union or Money Transfer

While I’m sure there are some legitimate people who use these services, I’d shy away from them when buying a website on Flippa. The fact is that this is the least secure method of purchasing a website and the one that is most likely to end with you out of your money and a crook on the other side of the world laughing all the way to the bank.

Payment to Flippa and Hosts

Finally, there is also the second part of the payment puzzle, which is payment to Flippa for their commission on the site sale. Check the listings to see if the person who selling their website on Flippa is offering to pay the Flippa fees or if you’ll have to pay them yourself. Flippa payments can be made via PayPal.

6 thoughts on “How does Flippa work?

  1. Hi Eric, and thanks for that interesting article. I actually didn´t know that the PR will drop, when you buy an existing site. But then again – I´m not sure, how much value a high PR has at all. I see lot´s of websites with a PR of 0, that rank higher than sites with a much higher value.

  2. That’s a seriously good guide to flippa. Have you bought any good non-developed domains there?

    Some of the best pure domain deals I’ve done have actually been from forums, while Flippa often seems specialised on websites.

    My biggest issue with Flippa is that I find it hard to confirm earning statistics for developed websites.

  3. PR is not always set to zero just because a domain name transfers.
    Whether it matters at all what the green bar shows is another question. I have PR 2 sites that dominate very expensive niches.
    Fippa has gotten really cluttered with junk. Nothing like the good old days when it was just sitepoint marketplace…

  4. No, it’s not. I said it’s not always set to 0. However, if you transfer a domain name and put up a brand new blog on it, it will eventually get set to 0.

  5. To be honest, I’ve bid on a few sites there but have yet to make a purchase. I do see Flippa becoming increasingly crowded though, with plenty of junk. You can also make purchases at the Warrior Forum…

  6. It doesn’t necessarily drop. It depends on what you do with the site you purchase. However, you are correct that PR has become less useful as an indicator of how a site will rank.

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