Buying and selling web sites can be a profitable business but there are many pitfalls that you should be aware of to avoid buying a lemon. These are so numerous that I will be adding to this post as I become aware of new elements and will only start with a brief skeletal outline.

This should be an evolving exercise and your comments are welcome if you have anything to add.

Firstly, I would mention that sitepoint.com runs an excellent and orderly marketplace and there are many useful tips available just by browsing the web site marketplace itself. Sitepoint has recently revamped their marketplace and is now calling it Version 3. Currently it costs around $20US to list a web site for sale.

There are several categories including developed sites, turnkey(made for mass sales without uniqueness) sites and also domain names.

Websites are currently being sold for anywhere between $100 and $100000. There are many sites available right now.

Firstly I would like to summarise the ideal situation:

• the seller provides complete information without conflicting data including but not limited to statistics, revenue, time on line, number of backlinks, quality of backlinks,
  internal structure of site, such as whether as an admin panel, whether uses a custom script
• The revenue details provided are accurate and do not include hidden spikes due which are then pro rata’d into an inflated revenue, or if this is the case it is disclosed fully, so that an accurate market price can be obtained.
• Accurate revenue and statistics shots are posted and these are authentic and the seller is willing to post any proof required ( if the seller baulks at this, then be very wary)
• A fair and safe means of handling the money exchange is highly recommended. Consider services such as escrow.com
• The seller is willing to answer any and all questions about the site, except for those that obviously give away proprietary secrets. In cases like these discretion needs to be observed, to determine if this is a valid point.

Points to Consider about the Price the   Web Site Seller is expecting:

The price should be a multiple of the monthly revenue, for example 6 times the monthly
revenue, or 12 times the monthly revenue, depending upon the nature and quality of the site.

Competition Trends and Changing Laws:

Why is the seller selling? You must consider this. It is possible that a new competitor has entered the market and the owner has determined that the future of this business is not as bright. Thus he wants to get out of it.

Trends in the internet move very quickly and this site may now be passe, meaning income in the future will not reflect past earnings.

Laws may change, meaning that the business method that the site owner is using can not be legally done now, or is expecting to be not valid withing a short time frame.

If you are paying 6 months income and the site becomes illegal within 4 months you have just bought a lemon.

Copyright, Licensing and other issues when buying a web site.

The owner should be upfront about any material he is selling on the site and whether he is legally entitled to sell or distribute it, if the monetization model of the site depends upon this.

Additionally, any license leasing requirements, such as bulletin board software should be disclosed, since you may be up for extra expenses.

You should also do a good job in determining if the whole site has been ripped off another established site, since this can happen.

Web Site Sale Scamming Techniques

Most web site sellers on sitepoint are legitimate, but occassionally scammers do attempt
to pass off shoddy sites.

Some common (amongst scammers) tricks are:

1) Trying to fake the page rank with scripts
2) Artificially boosting Alexa rank using software designed for this
3) Artificially creating huge numbers of backlinks that have very poor quality - all from one site, or from link farms.

I am sure there is more to write and that is why your contribution to this document would be appreciated. Your comments will be included in the main document at my discretion if I think they contribute to the post.

Icooltools Coolness note:
P.S The bright side - if the site passes all checks buying a web site can be a great foot in the door saving you countless hours of work and time sitting in the sandbox.

Good luck!