When you start out to do SEO the first step is to make your website rank for specific keywords or phrases. Tips on how to do this are on the page Planning your SEO process.
You might well find, as you do this, that there is someone out there who has built a website and that it already ranks for your chosen keyword(s) and is ready to sell so perhaps it is faster, simpler and cheaper to just buy it.
It's a viable option but the only great unknown you have is whether those keywords actually have any value. There may be thousands of searches every month for Keyword X according to Google's Keyword Tool and the competition might also be high but it doesn't mean there is anything positive about Keyword X.
The real question is "Do users who carry out the search 'Keyword X' convert? In other words do they buy a product, click an advertisement, sign up to a newsletter - whatever it is that makes your website worth having.
You won't know this until you buy the website and see what happens but that could be an expensive mistake.
You can set up your Google analytics to monitor whatever user behaviour you consider a success, say buying a product. But because Google encrypts it's search now you cannot see what keyword or phrase those visitors who converted to customers searched.
The only concrete way to do this is to use Google Adwords and run a PPC campaign for that keyword. Google allows you to link your Adwords and your Analytics accounts together so you can see how many visitors you received from a certain keyword campaign and how many of those converted into customers.
Only then can you conclude if a keyword is worth pursuing in the organic search. If it is, and the price for buying the website is not excessive compared to the return you have seen using PPC, then buying a site that ranks well organically may not be a bad move.
I'm Tim Hill, a Search Engine Optimisation and Online Marketing specialist. I created this site to help others understand that SEO is not a mysterious black art!.
If your a newbie try the Getting Started in SEO page, otherwise feel free to dig around and learn more.