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SitePoint Market Watch |
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| Issue 13: News, Rants and Case Studies for Web Entrepreneurs | |||||||||||||||||||||
Introduction
The Marketplace is generally very clean, but there are bound to be misunderstandings, miscommunication, and unfortunately, an occasional bad apple or two. There are approaches, however, that you can adopt when faced with a problematic transaction. I've also gained some input from Matt Mickiewicz, one of SitePoint's co-founders, to help guide you along. Naturally I'll follow up again with some handy tips for using SitePoint's Marketplace. I hope you enjoy this issue.
Peter T. Davis Summary Dealing with Problematic TransactionsI rarely see accusations of outright fraud in a Marketplace transaction. They do come up, but they're rare. One of the most common criticisms I do see is when a buyer fails to complete a transaction and the seller complains that they still had to pay the listing fee. I asked Matt Mickiewicz about this, who explained that from SitePoint's perspective, "the listing fee is for the exposure to a potential audience of buyers." Even if there was a failure to reach a successful transaction, the exposure was still delivered to the seller. A Marketplace listing "give(s) a great deal of power to the auction holder, including the option of accepting or rejecting individual bids." Matt went onto add that if SitePoint started refunding listing fees for unsuccessful transactions, sellers could then decline all bids, have the fee refunded, then arrange a transaction behind the scenes -- and the Marketplace would collapse.
SitePoint does track the percentage of listings that result in a successful bid. However, there is no mechanism in place that would track whether the transaction beyond the auction listing was completed. Only the buyer and seller really know if money changed hands. We obviously encourage buyers and sellers to leave feedback for each transaction. Auction giant, eBay, which also has a section for buying and selling web sites (though, it's of a much lower quality than SitePoint's, in my opinion), charges a nominal listing fee but a substantial back-end fee based on a percentage of the winning bid. SitePoint is exploring the introduction of a percentage-success fee which might appease the sellers who feel they've wasted their listing fee; I'm of the belief though, that lowering the listing fee to eBay's level would be bad in the long run for the Marketplace. The SitePoint listing fee as it stands is a strong enough barrier to entry for the lower-quality listings that now swamp eBay. They make eBay virtually unusable for high-end buyers and sellers, the very people that make SitePoint's Marketplace what it is today. Matt (as well as myself) puts a great deal of stock in both buyers and sellers doing their due diligence. The good news, Matt tells me, is that "the upcoming relaunch of the Marketplace introduces multiple new features to make due diligence easier and faster." In addition to the basic tips -- such as researching who you're transacting with and using an escrow service -- you'll find countless other valuable tips in the How to Buy and Sell a Web Site section in SitePoint's Forums. I suggest starting with the following thread. When the worst happens, what do you do then? Even the most experienced and sophisticated buyer can fall victim. We're unable to offer legal advice and even if we were lawyers, there are so many jurisdictions involved that it would be impossible to be familiar with all relevant legislation. SitePoint does offer a basic contract for web site sales, though, which is a good starting point. Do consider a lawyer for higher-value transactions. But, when it comes down to it, Matt says, "we co-operate with all law enforcement requests for information."
Be careful. Be safe. Only enter into transactions if you're sure you can handle the worst case scenario: losing everything -- the money, the site, your time -- everything. Having said all that, I do want to reassure you that it's rare; there is very little outright fraud in the Marketplace. The more common complaints are those of miscommunication, which can usually be solved by being patient and talking it out.
Tips for Buyers and SellersAlways use an escrow service. I use mostly Escrow.com and Sedo.com but there are others. Look in the forums for recommendations from other members. Know who you're transacting with. At the very least, Google the person, but also consider doing background checks. Verify everything. Obtain independent, third-party verification of statistics, revenue figures, and any other detail you're relying on when buying a site. Don't "bait and switch". When you're selling, and the buyer tries to talk you into an alternative payment method, be very skeptical. Know the history of the web site. Look it up in Archive.org. Look it up using Domain Tools. Google the site name. Give honest feedback. Use the Marketplace feedback system wisely -- as an honest measure of transacting, rather than a tool of revenge. That's all for this issue -- thanks for reading! I'll see you in a few weeks.
Peter T. Davis
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Hello SitePoint Marketeers! This week in Market Watch we'll jump right into a difficult topic: what do you do when a situation turns pear-shaped?
