What is a Website Broker?

Written By Alex

If you’re researching how to buy or sell a website, you’ll likely hear about website brokers. But what is a website broker? They are individuals or companies whose purpose is to connect sellers of websites (owners or webmasters) with potential buyers. They work in a way similar to real estate brokers in that they receive a commission (a percentage of the sale) once a sale is made.

Hiring a website broker can be useful (for example, if you’re struggling to find potential buyers or don’t know where to begin on your search for a website business). This article will go through what you need to learn about website brokers (what they do, how they do it, and how they can help you). We’ll also outline several factors you’ll need to consider before choosing the right broker. Let’s get to it!

What Do Website Brokers Do?

Picking a reputable website broker means all the potentially complicated and overwhelming issues surrounding the buying or selling of websites will be dealt with for you by an experienced professional. These processes include valuations, marketing, negotiating, paperwork, technicalities, legalities—anything related to website buying and selling. We’ll look at these in more detail now.

a) Valuation

Website brokers can help evaluate the value of websites (either your own or someone else’s). They use their market knowledge, combined with the specifics of the website(s) in question, and use it to determine a competitive asking price. We’ll go into the details of website valuation a little later on in this article.

b) Marketing

With their experience and knowledge of what buyers are looking for, a good website broker will be able to create appealing marketing tools and materials faster and more efficiently than a novice seller.

These marketing resources act like a publicly-traded company’s prospectus. Their contents will advise potential buyers on what your website will offer them regarding value for money—with data and statistics to back these claims up.

If you’re selling a website, a broker will advertise it for you, informing prospective buyers of what your website is, its price, etc. Like a realtor, they may even give potential buyers a “tour” of your website to give them a better idea of its content and quality.

c) Negotiation

A broker can reduce the stress and extra work that goes into negotiating directly with interested parties. Additionally, they’ll be able to give a better quote as to what your website is worth. An experienced broker is more likely to obtain a higher price for your website than you would—therefore, more than making up for what you paid in broker fees.

d) Paperwork

Aside from marketing materials, paperwork also includes buyers’ offers and letters of intent, seller responses, and money and property transfers via escrow. A broker will deal with all these details while maintaining your privacy and protecting your confidential information from prying eyes.

How Is a Website Valued?

Roughly speaking, a website is worth 12–48 times more than its monthly earnings (1–4 years’ worth). Generally, most websites will be valued between 24 and 36 times their monthly earnings (2–3 years’ worth).

To obtain a more accurate website valuation, we need to look at four influencing factors in greater detail. These are market, earnings/income, visitor traffic, and effort, and we’ll go over these now.

(i) Market

We need to look at websites in the broader market context for valuations. For example, there is less money to go around in a global recession, and a lower price will be commanded for assets. However, during the financial boom, the same assets can ask for higher prices. And the same applies to websites.

One way of assigning value to your website is by comparing it to similar websites (in terms of traffic and income) and finding out their valuations. This method is similar to the one used by city assessors when valuing homes.

(ii) Income

A website’s income/earnings refer to its profit, calculated by subtracting its expenses from its revenue.

Its revenue is the money it obtains from all sources, including advertising, eBooks, sponsored posts, affiliate marketing, etc. Meanwhile, a website’s expenses are what it costs to run it, such as hosting, domain, virtual assistants, SSL certification, etc.

Working out your website’s profit is a more accurate calculation of its worth than merely looking at its revenue. Even if your website’s revenue is high, it’ll be a less savvy investment for a potential buyer if your expenses are also. Profit gives buyers a better idea of how much value your website actually has.

Additionally, prospective buyers will be looking at your website’s historical trends. Ideally, a buyer would like to see that your website has had a steady income for at least one to two years. Any unexpected spikes or dips will make the buyer wary, and they’ll be left wondering where the extra money suddenly came from or why there was an uncharacteristic loss in income.

Seasonality can influence a website’s income; certain websites may do more business at specific points of the year. For example, Christmas-themed sites will conduct most of their business from October to December, whereas outdoors-based websites may see more business during the summer months.

Most buyers will be attracted to websites with a steady income and, therefore, minimal seasonality. However, some buyers are willing to build up a website portfolio, i.e., several websites with varying seasonality that can even out any potential fluctuations in income.

Furthermore, prospective buyers like to see websites demonstrating diversity in sources of income, much like it’s prudent to own several stocks of various companies and not just one stock from a sole one. For example, a pet-related website that is centered on selling training eBooks could also:

Use Google AdSense or other ad brokers to run pet-related ads

Provide in-depth pet training-related courses (either online or in-person)

Use affiliate links (using Amazon, PetSmart, Petco, Walmart, etc.) with pet care products mentioned on the website

Sell self-manufactured products (training aids, treats, etc.)

The above points are by no means a definitive list of alternative ideas. There are many ways a website can diversify its income and therefore be more appealing to prospective buyers. If for whatever reason, one source of income is lost or not profitable, a buyer will want to see other sources that can compensate for this.

(iii) Traffic

Website “traffic” is the number of visitors that view one or more of its pages. “Pageviews” means the total number of times all visitors have viewed a page. “Unique visitors” means the number of people who visit a website. Each individual is only counted once in the reporting time period, regardless of how many times they visited the same site.

If a website has a similar number of unique visitors to pageviews, it indicates that most visitors are visiting only one of the site’s pages. When unique visitor numbers are significantly lower than pageviews, it suggests that a few visitors are looking at many of the site’s pages (i.e., showing high engagement). In certain situations, either of these scenarios can be desirable.

“Bounce rate” means the visitor percentage leaving the site after viewing just one page. An extremely high bounce rate is less desirable and may alert potential buyers to an issue with your site that may or may not have the potential to be rectified (at least not easily).

However, high bounce rates don’t always indicate gloom and doom. For example, a Google search may direct a visitor to a single web page where they’re then immediately sent to an offsite website (such as Amazon) to buy a product via an affiliate link. This process means your site will be earning an affiliate commission.

“Conversion rate” refers to the visitor percentage who enact a desired action, such as subscribing to your website’s newsletter, buying a product, etc. This rate can indicate that you have a highly-qualified visitor audience and/or effective marketing—one or both being appealing to a potential buyer.

Like the seasonality of income, prospective buyers will also look at the seasonality of traffic. If a website sees the majority of its traffic occur during the holidays, a buyer will want to be reassured that if they make a summertime purchase, the site won’t be dead six months later due to an update with the Google algorithm.

Sources of traffic are also key factors when buyers are considering a purchase. These include:

Referrals: visitors arrive at your page from other websites via a link
Organic: visitors arrive at your page after clicking on a link in a search engine result (Google, Bing, Yahoo, etc.)
Paid: visitors arrive at your site after clicking on an ad you’ve paid for to be placed on another site (Facebook, Instagram, another blog, etc.)
Direct: a visitor arrives at your site after typing your domain name into the search bar or by using a bookmark

Direct traffic is ideal but only tends to occur with well-established websites. As a website’s authority develops (through content that earns it a reputation for being helpful, accurate, and comprehensive), it’ll see more referrals and organic traffic. If you can pay for ads while still earning more than it costs to do so, that’s also a bonus for potential buyers.

(iv) Effort

The amount of effort it will take for a buyer to maintain the website will also influence their decision regarding its value. Although this is, in a way, subjective (you may now be a dab hand at it, taking a mere 10 hours a week, while a newbie may take 20 hours), a buyer will be put off by something they view as maximum input (the sale price) and effort with minimum output.

When it comes to analyzing the effort put into maintaining a website, a prospective buyer will be looking at:

The quantity and quality of the website’s content: If a website has a higher number of well-written articles, it’s a positive sign of potential income security. A high-quality, comprehensive website will put off any potential competition (they’ll try to find a less competitive niche to build their websites).

The amount of “evergreen” content: This type of content refers to articles or information that will be worth sharing and relevant to readers for many years. In other words, there won’t be the need to rewrite articles. Due to the nature of rapid advances in the technology sector, technology-based websites will tend to have non-evergreen content, as their information becomes more quickly outdated or redundant.

Systems you’ve put in place: The more automated you’ve made your website, the more appealing it’ll be to a potential buyer. For example, you’ve set up an automated system that automatically emails a PDF file to your eBook buyers (rather than doing so manually each time you make a sale). Automatic systems save time as sales increase.

Hiring and training employees: If you employ people to help manage your website, chances are a new owner will also need to. For example, online businesses often employ virtual assistants (VAs) to help with the everyday running of their websites. If you already have a system in place regarding searching for, testing, and training employees, it’ll be a bonus to any potential buyer. For instance, if you have training videos or other materials, your website will instantly be more appealing.

Dependence on the owner: A potential buyer will be looking at how dependent the website is on the owner (first you and then them). For example, if the website’s domain name and branding are centered around your name, it’s unlikely that the website will survive once you’ve left! Conversely, a more generic domain name, branding, and articles will allow for a smoother transition from one owner to the next. Low dependence on the website’s owner will not only make this sale easier but also any other future sale.

Buying and Selling Websites—Why Do People Do It?

If a website is profitable, why would the owner want to sell it? Why would anyone want to buy a website when they could just make their own? These are all fair questions, and here we have some possible answers.

1. Reasons for selling a website

In some cases, a seller needs to obtain cash quickly. There are several possible reasons for this, often due to personal circumstances. These include having to pay medical expenses, undergoing a job relocation, requiring money for a house down payment, etc.

Another possibility is that the seller has become bored after the novelty of starting a new website has worn off. Perhaps they’ve grown tired of writing content and feel they’ve done all they wanted to accomplish after formatting the site, hiring employees, and creating systems and procedures. It could be that merely maintaining a website is not what they want to do, and they’d now like to start a new website from scratch.

Following on from this, it’s possible that a seller wants to use the money he makes from a sale to purchase a larger website to improve and either keep or sell on (working in much the same way as a property developer). After all, if you can make more money per hour working on a bigger website, you want to funnel your energy and time into that rather than have several sites taking up your day.

Perhaps a seller is setting up for retirement, wishing to sell their site(s) to invest in other ventures such as bonds, stocks, and real estate—something that’ll enable them to fund their stepping away from employment.

As you can see, there are various legitimate motives for selling a website. In many cases, this will be personal, and you shouldn’t always expect them to share their reason(s) with you.

2) Reasons for buying a website

We can look at the motives for buying a website as “opposite” or complementary to those of selling.

One reason may be that a buyer has a surplus of cash that they want to invest in something that gives a better return than bonds, savings, etc. Perhaps they’re looking to invest in a money-spinning enterprise that’s more hands-on than merely investing in shares on the stock market. In that case, buying a website may seem like an appealing prospect.

Then there’s the appeal of the challenge; perhaps a buyer wants to take an underperforming website with great potential and turn it into a more profitable one. They’ll likely be looking to “flip” the website, i.e., sell it at a higher price once they’ve made the necessary improvements.

Some potential website buyers may already own a competitor. They think that buying a competing website will enable them to redirect a substantial amount of traffic to their own site, narrowing the competition and building on and improving their market influence.

Another reason for buying is if an individual wants to diversify their portfolio. Adding a website can be a relatively easy and passive way to raise income.

As with the reasons for selling a website, you may not always find a buyer’s motives for buying forthcoming.

Is It Essential to Hire a Website Broker When Selling a Website?

In some cases, it won’t be necessary to hire a website broker when you’re looking to sell, and you can go ahead and do so on your own. However, hiring one may be prudent in certain situations, for example, when a website has a high income and a high valuation.

Here are a few reasons why hiring an expert website broker may be a clever idea:

1) Their value exceeds their cost

A decent website broker will enable you to accentuate your website’s positives and benefits and market these to potential buyers. Brokers also have connections to prospective buyers and are skilled in negotiating higher prices on your behalf. Overall, hiring a broker means they’ll be paying for themselves, plus more.

2) They’re connected with qualified buyers

As we’ve mentioned, a professional website broker will have connections to a large number of buyers. They’ll have a database of interested buyers who’ve signed up to an email list on the broker’s website and also a list of regular repeat customers.

In other words, a broker will have an up-to-date record of already-interested buyers—there’s no cold calling involved. Additionally, their repeat customers are already vetted as they’ve already been involved in one or more successful transactions. Having access to this register significantly reduces the risks involved as a seller.

3) They can make the selling process quicker

The right broker will be experienced in valuations, advertising, marketing, processing paperwork, and transferring property. Their experience, coupled with their skills and expertise, will significantly speed up the selling process for you. Additionally, they’re professionals in this sphere, which you’re likely not. The chances of any mistakes being made in the selling process are practically zero compared to if you were to attempt it alone.

A broker doesn’t have to start from scratch; they already have a database of interested buyers and don’t need to do any cold calling. A seasoned broker will act as a professional mediator for buyers and sellers, coming to a mutually satisfactory deal quickly and smoothly.

4) They can protect the seller

Without any prior experience selling websites, you could fall prey to scammers. Using technical systems, including escrow accounts, contracts, and legal paperwork, a broker will protect you from this risk. Furthermore, experienced brokers will have enough sales under their belts to know whether a buyer is genuine and trustworthy—or not.

Your broker will be able to value your website correctly, therefore saving you from wasting your time either attempting to oversell or undersell yourself. They’ll know what the pros and cons of your site are, how much the asking price should be, and how to get that across to genuine buyers.

How Do Website Brokers Get Paid?

Generally, website brokers work on commission only, usually obtaining 10%–15% of the purchase price. Sometimes, brokers will want to have sole rights to listing and selling your website and will ask you to sign an exclusivity agreement. Although you can usually name your own terms, some brokers will have their own conditions to ask you to agree with. After the agreed contract’s duration (usually 90 days), you’ll be able to either rehire that broker or go elsewhere.

Can You Recommend Any Website Brokers?

A simple Google search for website brokers will produce hundreds of results. The tricky part is separating the good and reputable from the bad. We can recommend Flippa, Empire Flippers, and FE International, but this is by no means a definitive list. It may be a good idea to ask around, approach other website owners, and find out if they’ve had successful dealings with brokers in the past.

You also don’t have to limit yourself to using a broker if you feel that you can engineer a good deal by yourself. Feel free to contact website owners directly (via email, blog, or social media).

The Takeaway

Like any other property or business, there is a range of factors to consider when selling or buying a website. While it’s possible to do so successfully on your own, hiring a website broker can significantly save you time and stress—and even money. A good, reputable broker will be able to strike a good deal for you, ultimately paying for themselves.

We hope you’ve found this article helpful and wish you every success in the future!

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