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Flippa Due Diligence Gotcha - $8k for a dud.

Discussion in 'Site Flipping' started by bryanon, Sep 18, 2013.

  1. bryanon

    bryanon Executive VIP Premium Member

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    Hey all,

    Since sub-par sites being sold and gullible buyers buying them are a recurring topic over here, I thought I'd draw you guys' attention to a post that I recently published on Flippa's blog. It's a full due diligence case study on a site that sold on Flippa for $8k a couple of weeks ago but in my opinion is certainly not worth $8k, or $8 for that matter.

    Check it out here - http://flippa.com/blog/due-diligence-contest/ - and as usual, any feedback/comments/discussion is much appreciated!

    Cheers,
    Bryan
     
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    Last edited: Sep 18, 2013
  2. Panther28

    Panther28 Elite Member

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    Interesting read thanks, Why does flippa not provide due diligence on all purchases? Its like ebay not caring about replicas.
     
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  3. bryanon

    bryanon Executive VIP Premium Member

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    This is a question only Flippa themselves can answer but if you asked for my best guess then it's simply because it's not financially feasible. Performing due diligence is a costly and time consuming task, and even though basic DD can be done in a day and won't cost an awful lot, it's still a lot considering the low listing fees.

    With that said, based on what I've seen and heard, they're certainly moving in the right direction in trying to increase buyers' awareness of DD issues, which is the first step and something that they can do without having to increase the listing fee from $19 to $190.
     
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  4. kvmcable

    kvmcable Supreme Member

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    With all due respect the MAJORITY of listings on Flippa don't need hours of research to discover they're fraudulent.

    With the brain trust Flippa has on staff there is no excuse for the blatant fraud they allow to be listed and sold. I can scroll down any 30 listing page on Flippa and tell you what listings are 99% suspect of fraud without doing more than a 2 second scan. Hell if Flippa just enforced their OWN RULES they'd yank half the scammers.

    Citing financial ruin or large financial commitment is cutting Flippa way to much slack. They could toss me $500 a week and I'd clean that shit off there in no time if they wanted to really clean the site up. Of course their listings would drop to a couple hundred and most of the staff would get walking papers because without the scammers their revenue would drop at least 50% and probably closer to 80%.

    I understand you contracted with Flippa so that doesn't allow you much critique of their broken system; with that in mind I understand your gloss-over with your business partner allowing fraud and your business self promotion to detect it.
     
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  5. baseballfan1

    baseballfan1 Registered Member

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    Nice post. I would never do business with Flippa. That place is one big scam. Everybody boycott Flippa!!! Do business elsewhere or even here for that matter. At least on BHW a seller is held accountable to what they are offering. You may still get scammed but the seller will get banned and usually his alias's will be found. There is plenty of folks on this forum who love doing CSI work for free. It's a game for them and I enjoy reading their findings.
     
  6. bryanon

    bryanon Executive VIP Premium Member

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    I agree with you to an extent, however the situation isn't as simple as it may first seem.

    For the record - I do fully agree that there's an obvious problem with scammy/fraudulent listings, but I also know that Flippa are working on addressing the problem. Starting to offer their buyers our due diligence service alone was a bold move from their part but this obviously helps only on a small scale. With that said, they're likely to take more (and more influential) steps towards cleaning up the place in the near future, as they've clearly realised that the issue exists - which wasn't the case some time ago.

    There are two points I wanted to quickly bring up, though:

    1) I don't agree with you on the "It would be as easy as 1-2-3 to clean up the marketplace" stance. Sure, Flippa could pay you a couple of hundred bucks to "clean the place up" but this would result a ton of false positives, which would be both a legal nightmare and a publicity nightmare. For any kind of moderation that has financial consequences the rules have to be VERY strict and to the point, and there can be 0 room for error, which is the main reason why this is a difficult and expensive task.

    2) Thinking that Flippa are intentionally ignoring the issue because "if they would address it, they would lose revenue" is a little bit short-sighted as that would indicate that they're making plans for not more than 6 months or a year in advance (which I doubt is the case), as unless their upper management are completely blind, they can clearly see that allowing fraud may make them a few extra dollars in the short term but at the same time it alienates buyers from their platform daily and on a rapid speed, meaning that in the long run it's a losing strategy.

    Having seen what I've posted over the last couple of years, you should know better than anyone that I don't defend anybody unless there's a good reason for it, and this certainly applies to Flippa as well. I've critisised Flippa very often in my articles and posts and will naturally continue doing so if and when it's necessary. And no, the fact that they're sending me a couple of sales per month is certainly not an influencing factor. Neither Flippa nor their mother company have enough cash to "buy" my opinion, I'm afraid.

    Bryan
     
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  7. collywolly

    collywolly Registered Member

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    I have to say only a complete moron would buy a site like that especially for 8K I feel sorry for the buyer but then again there are so many stupid buyers out there it begs belief people like that can actually function in this world.

    Thanks for the post!
     
  8. harshareddy

    harshareddy Power Member Premium Member

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    Or may be seller created a fake account and bid on it, hoping some one will counter bid?? as i see only one bid for that auction. If not the guy who bough is real moron.
     
  9. kvmcable

    kvmcable Supreme Member

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    Well Bryan we'll have to agree to disagree. Speculation of false positives is something I would expect Andrew or Ophelie to say. I know for a fact they get a shitload of false positives with their shill bidding algorithm with incorrect system generated suspensions and bans but they stand 100% behind that false positive mechanism.

    Clearly a website claiming large amounts of traffic without any Alexa rating isn't a false positive.

    Clearly a website claiming revenue without any proof whatsoever wouldn't create a false positive.

    Clearly a website claiming months of revenue that was registered a week ago wouldn't create a false positive.

    Clearly enforcing the no revenue claim rule on a website less than 60 days old wouldn't create a false positive.

    Clearly removing traffic and revenue screenshots that don't have any reference to the website or seller wouldn't create any false positives.

    Clearly looking at a Most Active listing that has 26+ bids with a current price around $100 wouldn't create any false positives.

    Clearly watching the Ending Soonest page for listings that get bumped every 55 minutes for DAYS waiting for a real bid wouldn't create any false positives.

    Clearly looking at the exact same affiliate codes on possible linked sellers copies or websites wouldn't create any false positives.

    I could go on all day long about the OBVIOUS shit Flippa ignores but 99% of this has been put right under their nose a thousand times and completely ignored. I wrote a script that found listings and reported them to Flippa over a year ago. It was reporting absolute violations of Flippa's rules (not guesses or speculations). It was averaging more than 300 reports a DAY to Flippa. You know what their response was?

    "Please stop we're having meetings about whether we're going to enforce those rules so in the meanwhile please stop reporting those violations. We don't have the staff to deal with this volume of reporting."

    That was from Danny the Marketplace Integrity Officer over a year ago. So I killed the script and now comment on most threads about Flippa's lack of integrity. While they'll not hesitate to ban a seller "suspected" of shill bidding (duh, like sellers can't create new accounts in minutes), they'll ignore most other rule violations and let sellers openly fleece ignorant buyers without a second thought.

    I think we both see Flippa pretty much the same but you're using a sponge hammer while I prefer a sledge hammer. :)
     
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  10. bartosimpsonio

    bartosimpsonio Jr. VIP Jr. VIP Premium Member

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    With just a glimpse any moderately experienced IM'er can tell rotten offers from the good ones.

    There was a website supposedly sold(may have been shills) for $15.000 and Flippa deleted the page after the sale for some reason. I knew it was rotten, but I have no idea how it went through. If it was a real sale, then someone got scammed out on 15 grand. Said website is gone from existence now....