Buying and selling websites can be extremely lucrative. Over a decade of experience has taught me that proper due diligence when starting the buying process often makes the difference between a blockbuster deal and a bad dud of a deal.
Most website flippers have their own specific way of doing due diligence, but all of our processes will have certain things in common. The following 8 topics in this article are things I always look at during the due diligence process no matter the site or niche.
By making sure to incorporate these steps into your own informational gathering and due diligence process when buying a website you’ll tip the scales in your favor to find a great deal versus a dud.
Let’s get started!
Research the Domain History
When I’m looking at potentially buying a website, whether through a website broker or a private off-market deal, I want to see the domain history, and I’m looking for any excuse not to buy.
It’s very important not to overlook red flags that could come back to cancel out all your hard work improving a site with a single Google update.
Bad Domain History
When a domain name has a history of being used for what’s colloquially referred to as “bad neighborhood sites” like piracy, adult entertainment, gambling, or spam, that history will often cancel out any promising backlinks, age, or branding that could otherwise make it attractive.
Even Search Engine Journal reported on big names at Google discussing the issues bad domains could have, and how those with a long “bad neighborhood” history could be difficult to overcome.
Repeat after me: Never tender an offer without checking the Internet Archive for a domain name’s full recorded history.
Bad Backlink Profile
The next place to look is at the backlinks pointing to the site. I’m not just looking for potentially strong backlinks, but I want to see if there are bad backlinks that I should be worried about.
- Obvious spam links
- Obvious PBN or other blackhat SEO links
- Links from bad neighborhood sites
- A suspicious proportion of dofollow or exact keyword anchor links, especially from weaker or questionable sites
Ahrefs is my tool of choice and the paid one is outstanding, but even if you’re on a really tight budget the free Ahrefs backlink tool still offers some good information, but you will want to check out other free backlink checkers like Uber Suggest if you only have the free version – since this won’t give a complete picture of the backlink profile.
I strongly recommend having a fully paid tool for this step as trying to piece together a link profile can cause some crucial missed information that changes how the deal should be viewed.
Is the Niche Profitable?
Some niches have massive traffic but very few opportunities for monetizing. I’m not a big fan of this scenario. While some website builders are okay with low display ad RPMs and few affiliate opportunities because of sheer traffic numbers, that’s not the type of niche I’m personally interested in.
When analyzing a niche’s profitability I like to ask questions like:
- Are advertising rates on the low end, high end, or somewhere in the middle?
- How many big company names are in the niche?
- What are the affiliate opportunities?
- Is the niche evergreen or something that could disappear over time?
- How open is the niche to new emerging sites or players?
Looking at a niche through the lens of these questions, and some others, can really help bring into focus whether the site is in a niche I’m excited about or not.
What Are The Traffic Trends?
Traffic trends are crucial because they give some insight to the current health of the website I’m looking at. I’m looking at both short and long-term traffic trends for the site.
I ask questions such as:
- Is the traffic falling, growing, or stable?
- If stable, how long has the traffic been stable (looking for signs of possible stagnation)?
- What percentage of total site traffic does the top article account for?
- What percentage of total site traffic do the top 10 articles account for?
- How many deadweight articles are there on the website?
Answering these questions and looking for any signs of past or present Google penalties helps me determine how excited I actually am about the potential buy.
Niche Traffic Trends
Aside from seeing the traffic trends of the site, I also want to see what the overall traffic trends for the niche look like. Is this a niche that is continuing to grow over the last several years, or is it at least stable?
Or did the niche peak a decade ago and now is on a long and steady decline as it gets replaced by something else. This is an example I’ve used before, but it illustrates this issue perfectly.
Let’s take a look at the term “Paintball” in the outdoor niche. If we only look at the last 12 months in Google Trends, it doesn’t look that bad:
But if we use Google Trend’s extremely handy tool, we can adjust the time from “Past 12 months” to “Since 2004” to get the full picture, and this graph paints a far different story:
Safe to say, Airsoft and other similar sports have won the battle among outdoor enthusiasts over paintball, but without looking at the full niche trend data I wouldn’t have seen this.
Even a five-year trend chart would have looked stable – and that could have led to a poor buy because of the clearly limited ceiling in a stagnating and possibly even dying niche.
Current Revenue & Profit
The income reports matter. A high revenue number is great, but if only a very small percentage is profit then that could very possibly be a red flag. How much is spent on maintenance content versus ramping up?
Looking at the revenue numbers in-depth can reveal potential red flags, potential easy wins I can fix, or possible niche-related challenges that aren’t obvious at first glance.
Total revenue is a crucial part of any website valuation, but so is knowing what percentage is actually profit.
Any Easy Wins?
When looking to buy a website I want to spot easy wins that can quickly lead to big jumps in traffic, revenue, or both. Since buying a website is a major investment, I want to see the ability to create big returns early.
This not only helps pay back the initial investment faster but if the purchased site can quickly make a solid monthly income, that monthly income can be reinvested into new content to grow the website for the future flip.
Sites with easy wins often indicate better deals since it’s a site that could be making much more (and therefore selling at a higher per month average) but isn’t because the current owner hasn’t made these simple but powerful improvements.
Studying Backlink Profile
The overall backlink profile of a website is extremely important, and I never buy a website without doing a thorough investigation.
This goes above and beyond the bad backlink profile I discussed earlier of spam, PBN, or negative SEO.
I want the whole picture, which is why going with the paid version of Ahrefs is important since that gives me a much fuller and more complete list of the links than the free version.
Beyond potential red flags, I’m looking for special links. Are there links from trusted authority sources? Hard to get links from major news sources like The New York Times or from major authorities in the niche are extremely valuable and add to the value of the site.
I want to look at dofollow links versus nofollow, what type of keywords or keyword phrases link to the site, and what the ratios are. Does everything look natural or are there patterns that might cause Google to penalize the site?
How many links are from sites in related or adjacent niches versus others?
This helps paint a more complete picture of what the backlink profile is like and whether it adds or detracts value from the site.
Is There Any Reason the Site/Niche Would Be Hard to Monetize?
Sometimes the early due diligence looks good, but a little bit of research into the industry tells a different story.
Does the niche have a wide array of products? Are any of the products high-end? How many competitors are going up against one another for display ad space? Is this a niche where lead generation or digital products are a viable way to monetize?
If the niche is difficult to monetize that makes a site far less attractive in my eyes even if other elements were promising.
There are several actionable takeaways that readers can apply based on my own process of evaluating websites to buy.
- Check domain history
- Check backlink history & present day profile of the domain
- Check the overall profitability of the niche including long-term traffic trends
- Look for easy wins
- Study both site and niche for the full idea of what the actual potential is
I follow these steps every single time when buying a website, and making sure to pay attention to these details helps to ensure a profitable deal.