ProBlogger: Selling Without Website Broker? You’re Leaving Money on the Table

Selling Without Website Broker? You’re Leaving Money on the Table

Posted: 13 Oct 2011 07:02 AM PDT

This guest post is by Jock Purtle of brokercorp.com.

So you want to sell your blog?

Your site is probably making more than $3,000 per month and you know that it might be worth a decent amount of money.

Image copyright Rido - Fotolia.com

Recent sales like that of the Huffington Post give you confidence that your content-based site has value to other webmasters or investors. And with the growing move of advertising dollars to the web, you could be the next person in the sights of cashed up buyers.

You have collected all the basic information that you think might help sell it, like domain age, monthly revenue, monthly expenses, growth trends, time to run the site, unique visitors and page views, income sources, and income proof.

You think you’re ready to sell, and are looking forward to a big payday.

You've heard of sites like flippa.com and you are thinking about listing the site yourself. However, have you considered using a website broker?

There may be some hidden benefits that you have not accounted for when selling your site this way.

What is a website broker and what do they do?

Full disclosure here: I am a website broker, so I can answer this question in full. A website broker is a business broker for websites. They help webmasters sell their ebusinesses. They evaluate the website, and position it to sell for the highset price possible for the vendor.

Here’s a list of general tasks that a website broker performs:

determine an appropriate value
compile a business memorandum
prepare a marketing strategy for the sale
interview, educate and show the website to potential buyers
assist in negotiation
assist with due diligence
draft and present offers
control information flow
protect sellers’ confidentiality
look after paperwork
help complete the sale (including contracts and funds transfer)
provide after-sales support.

What’s involved?

Website brokers assist in the entire sales process. When selling a site, the brokerage process is similar to that of a real estate agent. There is an agreement between the agent (website broker) and the vendor (website seller) for selling an asset (the website).

A broker will normally do their own due diligence before listing a site for sale, to make sure it is saleable in the current market. Once both parties are happy, and the seller gives instructions for the broker to sell the site, the broker will then prepare a sales memorandum (sales document) to be used to market the site and create competition between buyers. This document contains the website financials, traffic stats, and a general overview of how the website works.

Buyers then view this document and decide whether they want to make an offer for the site. They sign a letter of intent (LOI), and then get a set period for final due diligence. Then, if all parties are happy and a price is agreed on, contracts will be signed, the seller will receive their funds, and the buyer will take ownership of the website.

Why would you hire a broker?

Brokers normally have a unique method of selling a site. This includes specific marketing channels that the average webmaster doesn't have access to, like a network of buyers, subscriptions to business classified sites, and investment firms.

Generally, a website broker will fetch higher multiples than auction sites or owner listings. If you look at our websites for sale you will see the general asking price is around multiples of two to three and a half.

An example of this is a site we recently sold. The owner was a single mom who built up a great blog about parenting. It had over 4000 pages of unique content, 30,000 monthly uniques, a strong community with lots of repeat traffic, and was monetized through advertising and affiliate sales.

The site was getting to a point where the business was putting pressure on her family time, and she wanted to sell. Her 12-month net income was $25,203. She came to us thinking that the site was worth about $30,000. We eventually sold the site for $68,000.

How long does it take?

It normally takes about two months to finalize a website transaction. However some sites can take a week and some six months—it really depends on the site in question. The longest part of the sales process is normally the due diligence and the back-and-forth between buyer, seller, and broker.

Some buyers need more time than others. If buyers request things like tax returns or older financials, it usually takes a little while longer.

How much do they cost?

On average, a broker will charge around 10% of the total selling price for handling the sale of your property. Some charge more, some charge less, but that figure is a good signpost to run buy.

This fee is due after the site is sold, and you have the money in your bank account.

Do they charge fees up front?

No. Brokers work on 100% commission basis. If you don't get paid, they don't get paid.

What type of sites are good for a website broker?

The best sites to sell through a broker are those valued between $50,000 and $5 million. That’s generally a site with $2,500 or more in monthly revenue.

What happens if they can't sell my site?

A typical exclusive agency agreement lasts around 90 days. Good brokers will provide you with a 30 day out clause that basically means that in the first 30 days if you aren't happy with them you can cancel your agreement, no questions asked.

Have you ever used a website broker, or bought a site sold through one? We’d love to hear your experiences in the comments.

Jock Purtle is a Senior Broker at Brokercorp.com. They are a full-service website brokerage specializing in website sales and acquisitions. Jock is currently offering a free website valuation at http://brokercorp.com/sell/.

Originally at: Blog Tips at ProBlogger