How to Make an Offer on an Over-Priced Website
Many website sellers over-value and over-price their websites. It’s completely understandable as they invested a lot of time and money in their websites and want to cash out at the biggest price possible. But their expectations often do not match the market’s expectations. Buyers will simply not pay an unreasonable price.
Nevertheless, the seller owns the website and has a right to sell it at any price he chooses. He doesn’t have to sell it for less than he thinks it’s worth. As a website owner, that is the seller’s right.
So as a buyer, what do you do if you’ve completed your due diligence on a website, you’d love to buy it, but the website is grossly over-priced? Everything is perfect except the price.
Most buyers make one of these 2 mistakes:
1. The buyer walks away because he believes that he can’t afford the website.
2. The buyer tries to discredit the seller’s price by criticizing the business or valuation in order to justify a lower offer.
Walking away without making an offer is a mistake that most inexperienced website buyers make regularly. They’re too embarrassed to make an offer that is low relative to the asking price.
If you really want to buy, always submit an offer. It doesn’t matter if it is low. Submit your offer. It’s OK if it’s rejected. The most important thing is to submit your offer politely.
Never insult the seller by telling him how wrong and unreasonable he is and how intelligent and correct you are. This is a common mistake made by most buyers. Nobody wants to do business with anyone who insults their intelligence. The seller may decide not to sell to you out of spite.
It may not make logical business sense. But this is human nature at play. Emotions drive business decisions much more than business logic does.
But why submit an offer that you know will get rejected?
The reason is you’re probably not the only buyer who analyzed the website business and determined that it’s over-priced. A number of other buyers probably came to the same conclusion. This means that they probably never made any offers. They all walked away.
This is great for you because your offer may be one of very few offers that the seller received. In fact, the seller may have received no offers at all. You have little to no competition. Your offer stands out.
Just submit your offer politely. Don’t over-explain it. The seller doesn’t care about your long explanation or logical reasons why it’s a good offer. If it gets rejected, never take it personally. Thank the seller for taking the time to consider your offer. Tell him if he ever wants to talk about you acquiring the business in the future, you’d still be happy to talk.
Leave the door open for a future conversation. Your initial offer is just an introduction. It’s a way for you to establish a personal relationship with the seller. He will remember the polite buyer who made one of the few offers he received.
The asking price is never the sale price. Eventually, there’s always room for negotiation. The key to success in buying a website business at a great price is timing.
Your offer was rejected, now what?
Next, keep track of the website listing regularly over time. It’s almost inevitable that the seller will eventually reduce his asking price. Most buyers would’ve analyzed the website and walked away. So the seller would’ve received very few, if any, offers. Never walk away and allow some other buyer to step in and buy the website at a price you could afford.
Once there’s a price drop, contact the seller again, and politely re-introduce yourself. Do not mention the drop in the asking price. Just state that you’re still interested in the website and submit a new slightly higher offer.
Any seller will realize that he has a serious buyer because you’ve returned. He will want to talk even if your offer is still low. This is where you must move fast, get the seller on the phone, and try to close a deal quickly. Increase your second offer a little again and include a deadline for the seller to accept it. Given the difficulty that the seller would’ve already faced in selling the website, you’re very likely to quickly close a good deal.
The price you get is often a price that many other buyers could have obtained. But they either walked away without making an initial offer or they insulted the seller’s intelligence.
Your objective is not to prove how intelligent you are. Your objective is to buy the website.
Introduce yourself with an initial offer to build rapport. Be polite. Don’t over-explain your offer. Don’t insult the seller by telling him how wrong and unreasonable his price is. Wait patiently for your second chance, move in quickly with a new offer, and buy it before anyone else.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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