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Flippa Due Diligence - Case Study

Discussion in 'Site Flipping' started by meathead1234, Feb 11, 2013.

  1. meathead1234

    meathead1234 Moderator Staff Member Moderator Premium Member

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    It's early on a Monday but have been browsing Flippa for some sites to buy. I was just talking about this on another forum but thought my analysis might be of some use to members here, too.

    This listing caught my eye as the multiple is low and the traffic is claimed to be from sources outside of Google: https://flippa.com/2885566-pr-3-physics-education-site-800-mo-adsense

    I did a bit of digging into the stats and it is showing 1.02 page views per visit. That is extremely low and a massive red flag. I can't think of any legitimate reasons for that unless stats are only installed on one page.

    Referring sites are also hidden in histats and that is apparently the main source of traffic. I would imagine he is buying traffic, diverting it through TinyURL to disguise it from Google and then benefiting from the untargeted traffic clicking on ads.

    The Google Adsense data isn't broken down into channels (although I have asked so he may well do that). That is another red flag.

    The biggest red flag is his way to "verify" income: "You can test your ad code on the site to verify earnings for a few day."

    This is a classic scam. The buyer will take over the site, put up their ad code and the seller will continue to buy traffic. The buyer will be happy and release the funds. A few days later the traffic will drop to nothing.

    I may be missing something or jumping the gun, but this is a classic case of something being "too good to be true". I have reported the listing to Flippa, but I would imagine they will take my [professional] opinion as subjective, and with such a low asking price I would assume it will be "sold" by the time they get round to looking at it.
     
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  2. bpmik

    bpmik Newbie

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    I was just thinking something similiar this morning, there is so much required due diligence in buying a website, I am not experienced with flippa but it's a market I may like to get into this coming spring as I start working 60+ hour weeks at my job and getting tons of overtime. I lose most of the abilitiy to do development on the side but I could buy websites that are profitable with the money I'm making.... but you have to be so careful. One of my top concerns is a site claiming a high income, how do I verify they aren't simply buying massive traffic for 3 months from a few 3rd party sources to massively boost their income. I think the top 'scam' on flippa is probably buying a site that claims 1000/month income, then getting it in your hands and it flops to 50/month. I'm sure there are ways around that with hardcore due diligence but its a concern for sure.
     
  3. JokerNikx

    JokerNikx BANNED BANNED

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    I Is Missing In The DOmain Physcs :)
     
  4. meathead1234

    meathead1234 Moderator Staff Member Moderator Premium Member

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    It's something that is quite hard and time consuming to do properly. I have been doing this for a living for a number of years so I will pick up on things in <2 minutes that less experienced buyers wouldn't notice at all. I probably wouldn't have noticed (or looked at the listing) if he wasn't asking such a low multiple.

    As it's only a few thousand dollars, he knows he's more likely to get away with ripping someone off as most people will just assume it's something they did wrong rather than being a scam.

    Never buy a site if you can't be sure where traffic is coming from. The links may well be legitimate, but he could be paying $1000/month for them to just make $800 in return. These expenses are almost impossible to verify, especially if you can't verify where the links are coming from.

    He is using "people copying him" as a reason not to disclose his data, which can be a perfectly legitimate reason for sellers, although you would expect to have a completely open book before releasing funds in Escrow. I would imagine this will go something like:

    - Newbie buys the site
    - Seller adds the buyer's Adsense code to the site for a few days while cash is sitting in Escrow
    - Seller will continue buying/driving traffic to keep the earnings stable
    - Seller will remain quiet about his "secret" traffic methods claiming he has been scammed before by a buyer
    - Newbie buyer will be intimidated and release the funds thinking that earnings are okay, so site (and seller) must be okay
    - Few days later traffic will drop off and the seller will say "no guarantees" or blame some obscure Google/whatever update
    - As it's only a few thousand buyer won't bother complaining
    - Seller will rinse and repeat until a buyer leaves negative feedback
    - Seller will open a new Flippa account with a bullshit stock photo of someone in a suit (like they have done with this account - another red flag). People building and selling $2000 Adsense sites don't wear suits.
    - Repeat process
     
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  5. meathead1234

    meathead1234 Moderator Staff Member Moderator Premium Member

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    I think you're missing the point of due diligence. The seller isn't claiming to have the domain physics.com, and if they did, something would obviously be up if they were selling it for a few thousand dollars. If the traffic and earnings were legit, it would be an excellent buy, regardless of domain.
     
  6. kvmcable

    kvmcable Supreme Member

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    The website is brand new and built Feb 1, 2013. All the other BS is just that BS. Take a look at Google cache of the home page

    http://webcache.googleusercontent.c...m/&hl=en&client=firefox-a&tbo=d&gl=us&strip=1

    35 indexed pages total for the website and notice some of them indexed are the Lorem ipsum filler text from the template provider.

    https://www.google.com/search?q=sit...s=org.mozilla:en-US:official&client=firefox-a

    This site was built just over a week ago. Alexa traffic number supports this one week old scam. Typically with the sort of traffic this seller is claiming the Alexa number would be under 1 million. 19 million is easy to do in two days and a bot.

    If you have a paid version of Domain Tools you'll see the WHOIS changes verify my findings. This website was set up on GoDaddy hosting where it currently is hosted on Feb 1, 2013.

    Complete scam.
     
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  7. Hootz

    Hootz Regular Member

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    Wow VERY interesting because if you view the listing as a normal buyer without nosing too deeply into the details, it all seems fairly legit looking.

    I like how you've bombed his listing with a few comments pointing out these discrepancies.
     
  8. meathead1234

    meathead1234 Moderator Staff Member Moderator Premium Member

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    My first comment was actually a genuine question, I then did some more digging. It's obviously a scam, but I doubt Flippa will remove it (unless they see this thread) as it's not 100% clear cut just from the listing. Only more experienced buyers would spot it.

    IMO Flippa should have a system to automatically suspend listings if they got a certain number of reports. As Flippa don't work 24/7 support, this means sellers like this regularly get away with it. As you can see from his account history, he's sold a site like this a few days ago, with exactly the same model. Hopefully the buyer spots it, but I doubt it.
     
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  9. Hootz

    Hootz Regular Member

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    It's such a minefield for new buyers. I bought one site on there around 7 years ago and admittedly took a couple of chances, but I got lucky.

    In future I'd definitely use a service such as yours (just been browsing your site) to reinforce my due diligence.

    Interestingly a site that sold 11 months ago for almost $18,000 seems to now be down which goes to show people not only don't do their due diligence but also don't really think through their business decisions before investing!
     
  10. kvmcable

    kvmcable Supreme Member

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    Flippa doesn't broadcast it for obvious reasons but my own experimenting suggests if a seller's listings gets multiple reports from different buyer accounts there IS an automatic suspension mechanism that is triggered. I say this because I've seen a seller receive a suspension during hours Flippa typically is off duty and when Flippa returns the reason for suspension is like they are grasping for straws. No validity, nothing substantial for evidence and the seller is reinstated immediately.

    One such seller received 3 of these on weekends back to back. What I suspect is competitors with shill accounts entertained themselves using different accounts to file reports to watch the suspension code kick in and boot the seller. Once Flippa put eyes on it and forwarded the false claims to the seller the reports were quickly squashed and the seller reinstated.

    I suspect such a system as you describe exists but one or two buyers can't trip it off. There might also be additional code judging the reputation of the buyer reporting the listing so shills without reputation can't pick off competitors.

    Of course, I might be giving Flippa developers way to much credit and it was just coincidence one seller I know got booted 3 weekends in a row for completely BS violations that were squashed in minutes.
     
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  11. bpmik

    bpmik Newbie

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    I just looked at the listing again, you called him out hard on the 1 week old site. You can tell he is losing the war now and his last post reeks of desperation. He declares the reserve to be $3000, denies all knowledge, etc

    I took a better look at the site, what a joke. Images are probably ripped off, articles are very poor, there is a sign-in and I can't understand why (other then giving him all your info so he can spam you), the games are not related to the site content at all, just external links to pad his site with garbage.
     
  12. kvmcable

    kvmcable Supreme Member

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    He appears to be part of the first name scam group (my term). Flippa in 2012 had a small group that all copied each others style and listings using just a first name and last letter (i.e. PaulC, DavidM, etc.). They were reported over and over as scams, all members from India and at least 12 inter-linked accounts between them. Finally Flippa pulled the plug on them last fall. Now it appears they're returning and showing back up on radar.

    It appears they've gleaned some advice on here about buyers being careful with sellers from 3rd world countries; this seller is actually from India, although his account (IP), image and name says he's American.

    Domaintools is like the paparazzi, if you leave the house with your slip showing they'll snap a picture and archive it. Although this seller now has privacy enabled on this domain, before he listed it he didn't have privacy enabled and DomainTools snapped several images of his registration details. He's clearly from India, seasoned in scamming websites and most likely a member or former member of the what I called the first name gang.

    His days (hours) are numbered. This listing won't run its course. I'll be surprised to see this listing running tomorrow.
     
    Last edited: Feb 11, 2013
  13. kvmcable

    kvmcable Supreme Member

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  14. ijof9

    ijof9 Power Member

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    Funny what ads I get from AdSense after viewing that link.

    [​IMG]
     
  15. JCena

    JCena Junior Member

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    Thats called re-targeting ;)
     
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  16. Hootz

    Hootz Regular Member

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    Rename BlackhatWorld to ColumboWorld :D
     
  17. IamBlackhatter

    IamBlackhatter Jr. VIP Jr. VIP Premium Member

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    Thanks flip master for the update on classic scams while buying sites :D