Should you auto-accept bids on Flippa?

Should you auto-accept bids on Flippa?

While every seller hopes to receive a large number of bids on their Flippa web business, domain, or app auction, managing these bids can be a time-consuming process. In an effort to save time, some sellers are tempted to simply choose the “Automatically accept bids for most users” for their listing. Is this a good idea?

Flippa bid management basics

First, a few clarifications. Even when the auto-accept function is selected, sellers have to manually accept or decline bids placed by new Flippa users (who have signed up less than six months ago and have never made a transaction on Flippa).

If the auto-accept option is not selected, the seller must manually accept or decline each new bid. These new bids expire and are automatically declined if the seller hasn’t actioned the bid after three days. During these three days, the bidder has the option to withdraw their offer at any time, so it’s a good idea to keep a close eye on bids and action them as soon as possible.

The only exception to the three-day expiry is Buy It Now (BIN) bids. If the seller doesn’t respond to these after three days, the BIN bid is automatically accepted. If the seller has opted to request PayPal payment for a BIN bid, the bid is automatically accepted once the PayPal transaction has been processed.

Preventing non-paying bidders

The number-one frustration of sellers on Flippa is highest bidders who either disappear after the auction has ended, or wind up changing their mind about their purchase. While this happens in a small proportion of auctions, it can be maddening for the seller.

One of the best lines of defence against non-paying bidders is communication, both in public comments and direct messages during the auction. Sellers can communicate with bidders by clicking the “Talk to this buyer in private” link in comments and in the bid management page.

Should you auto-accept bids on Flippa?

Should you ever auto-accept?

If auto-accepting bid is such a good idea, why, then, is the option to auto-accept bids even offered?

For auctions with a low reserve and a low Buy It Now, sellers may decide to sacrifice the extra peace of mind in order to speed up bid management.

Some sellers also opt to auto-accept bids early in the auction, before their reserve has been met, and then switch to manually accepting bids. The risk in this strategy is that the reserve may be reached earlier than expected.

You can find more information on bidding here.

Do you find it safer to manually approve each bid? How do you decide which bids to accept? Let us know in the comments!

DN Attorney: Legal considerations when buying a website

DN Attorney: Legal considerations when buying a website

The “DN Attorney” Zak Muscovitch’s last post on domain trademark laws and website copyright issues was wildly popular and prompted a great discussion in the comments. He has agreed to expand on his original post with his perspective on buying a website. 

After spending about 12 years as an Internet lawyer who specializes in website and domain name transactions and disputes, it is my pleasure to share some of the knowledge that I have accumulated with the Flippa community so that you can learn about some of the considerations involved in purchasing a website business.

1. How much time should you spend on website due diligence?

There are all kinds of website purchase transactions. Some high value and important website purchases would normally entail teams of lawyers, accountants, and business advisors spending months on due diligence prior to closing a website purchase transaction.

At the other end of the spectrum, it would not normally be prudent to spend any money or much effort at all on a website purchase that had a value of only a few hundred dollars and was not all that important to the buyer in any event, as the cost and effort required would not be proportionate to the risk involved.

In the middle area however, are the transactions that involve a significant amount of money, are important to the buyer, and therefore deserve a proportionate degree of time, effort, and expense in performing due diligence prior to closing the transaction. In other words, the rule of thumb is to invest a degree of due diligence into a transaction which is proportionate to the degree of risk involved. The more the risk in terms of money and importance at stake when buying a website, the greater the due diligence required.

2. Website Purchase Agreements

Determining the kind of legal agreement that is appropriate involves a similar kind of assessment of the importance and value of the deal as is undertaken with regards to the appropriate degree of due diligence required. The most basic legal agreement for the lowest value and least important kind of website purchase often involves no terms or document, other than a buyer clicking on a button, thereby agreeing to purchase the website listed for sale at the agreed price.

The most sophisticated type of legal agreement is prepared by a qualified lawyer who is familiar with the particular kinds of legal issues that arise in a website purchase and sale transaction. Such a document is often over 30 pages long, and contains all kinds of provisions protecting a website buyer and is often referred to as an “Asset Purchase Agreement”, a “Website Purchase Agreement”, or a “Website Sales Agreement”.

If you decide to use a template agreement (such as the website purchase agreement available via Flippa’s Sale Completion Area), it is crucial that you understand the provisions in the agreement. An agreement is not intended to be used just for the sake of using ‘something that looks professional’; the purpose is to actually record the parties’ understandings and intentions. Accordingly, it is not a good idea to use, or even revise, a template unless you are comfortable with the often complicated concepts and terminology used. Otherwise, some people may find it preferable to record the parties’ understandings and intentions in a manner which they understand without recourse to a template. As previously stated however, a buyer’s decision on what kind of a legal agreement to use should be considered in light of the value and importance of the transaction in particular.

3. Important Legal Considerations and Provisions

After years of helping buyers with website purchases, qualified Internet law lawyers would usually pay particular attention to certain aspects of a website purchase which might not be apparent to a novice purchaser. By recognizing these important aspects, care can then be taken to include particular provisions in a legal agreement so as to avoid a dispute arising, or at least setting out how a dispute is supposed to be resolved. The following are some examples of these kind of aspects and the legal provisions that are often considered in relation to them:

a) Trademark and Copyright issues (as discussed in previous post)

b) Maintenance of Inbound Links

One of the great things about buying a website is that often one can purchase a website with a good Google PageRank without having to build up that ranking from scratch. One of the ways a website enjoys a good Google PageRank is as a result of inbound links from other websites. Sometimes these inbound links may be on websites that are not owned or controlled by the seller, but sometimes the seller does own and control the websites which provide the valuable inbound links. Accordingly, a buyer may want to ask a seller to agree to continue to maintain the valuable inbound links for an agreed period of time, thereby ensuring some PageRank juice that does not evaporate soon after the purchase.

c) Holdbacks and Consulting Agreements

Sometimes a great way of ensuring that the purchased website business is as promised by the seller is to agree to hold back a portion of the purchase price for a period of time and only release that portion at an agreed time if all promises are kept. Another way is to agree to pay the seller a consulting fee for a period of time, so that the buyer has time to learn the business and the seller has a financial incentive to deliver a website business as promised.

d) Non-competition and Non-soliciation

Sellers can often create amazing websites that a buyer will be very pleased with. For example, an ecommerce website that drop ships dog food to the Los Angeles area may rank on page one of Google and thereby attract a lot of traffic and revenue. But what if the seller sells this website to the buyer, and the next day creates a new dog food ecommerce website for the Los Angeles market? Well, this is not necessarily wrong on the part of the seller, unless the buyer and seller have specifically and clearly agreed on non-competition provisions for a certain geographical area and for a certain length of time. Accordingly, for some transactions, a buyer may want to consider whether asking for such non-competition provisions, and probably paying a premium price as a result, is appropriate and justified in the circumstances.

What about when a website is run by a few key persons who agree to work for the buyer after the buyer buys the website from the seller? Can the seller hire these people away from the buyer? This issue is often covered by “non-solicitation” provisions in a website purchase agreement. It is something to be negotiated between the buyer and seller and special care must be taken to ensure that these provisions are fair and legal since it is often difficult to enforce them.

e) Transfer of the Website and Purchase Funds

Flippa Escrow is offered as a free service to help buyers and sellers facilitate a transaction. Sometimes however, a buyer or a seller may want to have a domain name lawyer or Internet lawyer assist the parties by acting as an escrow agent. This might be the case due to the value or importance of the domain name, or due to complicated terms of the closing arrangements for the deal. Such assistance may be financially justified in certain circumstances as it adds an additional lawyer of protection and assistance for the parties however in many cases, Flippa Escrow can get the job done just fine.

When it comes to transfer of website content however, care must be taken to ensure that the release of funds in escrow either by Flippa Escrow, another escrow service, or an escrow attorney, waits until the domain name and the full website is under the full control of the buyer as confirmed by the buyer. Sometimes a “migration period” is required to be established in an agreement, as the full website and associated business cannot be transferred to the buyer right away.

Conclusions

There is perhaps more opportunity for small business people in buying and selling websites than in any other business in the history of the world. I see people who have only recently just began creating quality website businesses, selling them at handsome prices to very eager buyers. The Internet has created a whole new playing field that allows for virtually unlimited creativity and opportunity to make money.

That being said, as you grow your business and become more experienced, you will undoubtedly face larger transactions that involve more money and more importance to you. As you grow, keep these legal considerations in mind to avoid pitfalls along the road. The degree of care and caution you exercise is dependent on the nature of the particular transaction. I also have to, of course remind you that there is no substitute for seeking the counsel of an experienced website attorney, and accordingly the information provided here is for general education purposes only and should not be relied upon by you for any business purpose.

About the Author

Zak Muscovitch is respected and well-known domain name lawyer who has represented domain name and website owners for since 1999. He has assisted buyers and sellers in website transactions worth millions of dollars and has set numerous precedents in domain name dispute law. He represents clients from all over the world. His website is http://www.DNattorney.com.

Have you sought an attorney’s advice for a website purchase before? Will you use Zak’s advice in your next purchase? Let us know in the comments!

DN Attorney: Domain Trademark Laws & Website Copyright Laws

DN Attorney: Domain Trademark Laws & Website Copyright Laws

After last week’s guest post on website due diligence with the Domaining Diva, we bring you a guest post by Zak Muscovitch, also known as the DN Attorney, on domain trademark laws and website copyright laws. I hope you enjoy Zak’s post as much as I do!

Buying a website, domain, or online business can be an exciting experience. It would be terrible if you spent a lot of money and time on purchasing a website only to find out that the seller didn’t have a license for the website content or the name associated with the website was the target of a domain trademark infringement or cybersquatting claim (thereby, possibly resulting in you losing the domain name.) Stay up to date on domain trademark laws and website copyright laws by giving the following beginners guide a read!

Domain Trademark Laws

Domain trademark suits can be time consuming and a major headache for those involved. In some cases, defendants were unaware that they were infringing upon any trademarks before they were hit with big money lawsuits. The sad part about that is, there are simple steps that can be taken to ensure that you are compliant with domain trademark laws before you even purchase a domain.

Domain Trademark Search

The first step in avoiding such a predicament would be to conduct a search of both registered and unregistered trademarks. Trademarks can be “words” or “logos”. Trademarks are generally registered in specific jurisdictions and only valid where so registered, so one may want to check out several national trademark registries, such as the USPTO, the CIPO, IP Australia and the UK Intellectual Property Office, for example.

It is not always simple to determine if a registered domain trademark is problematic for a buyer because it is identical or similar to the domain name associated with the website being purchased. For example, a registered trademark for ABC, in connection with clothing, may not be a problem if you are buying ABC.COM for a website dealing with say electronics.

Of course, there are plenty of exceptions to the general rules, such as in the case of famous trademarks. For example, COCACOLA.COM could probably not be used by anyone except the famous Coca-Cola Company, for anything even if it is not related to soft drinks, because their trademark is so well known that people would naturally assume that the domain name is related to the famous soft drink manufacturer. Accordingly, often a buyer should run the proposed domain name by a qualified domain name or trademark lawyer, prior to expending a significant amount of money on a website and associated domain name.

Registered trademarks are not the only kind of trademark to be aware of however. There are also “unregistered trademarks”, often referred to as “common law” trademarks. These are trademarks that have been used by a person or company without being formally registered, but are still distinctive enough and have been used long and wide enough, to qualify as a trademark for the purposes of stopping someone else from using an identical or similar mark in certain circumstances. They are however, more difficult to prove than a registered trademark. Accordingly, a simple Google search can often reveal third-party use of an unregistered trademark.

It is important to bear in mind that when it comes to trademark infringement, it does not usually matter whether a seller “intended to infringe” or was merely “unaware” of the existing registered or common law domain trademark rights. Likewise, for a buyer, it likely won’t be a defense to a domain trademark infringement claim, if you were not aware of the third-party’s trademark rights when you acquired and began using the domain name and/or trademarked logo. Accordingly, caution must be exercised depending on the value and importance of the transaction.

A buyer may also decide to check court and arbitration databases in order to determine whether a trademark owner has previously commenced legal proceedings regarding a particular trademark or something similar. This would give the buyer an idea of whether the domain name and/or logo are already the subject of legal proceedings, or alternatively, the degree of vigilance a trademark owner has shown in protecting their mark in the past. For example, one can check the PACER court database in the United States, the National Arbitration Forum’s Domain Name Dispute Database, and the World Intellectual Property Organization’s Domain Name Dispute Database.

Website Copyright Laws

The easiest way you can ensure that you are compliant with website copyright laws in a website transaction on Flippa is to verify that all website content and software is legally owned by the seller prior to placing a bid. By taking a few extra precautions beforehand, you can save yourself a world of hurt down the line.

Copyright Website Content

Copyright law generally protects the ownership of original content, such as a photograph, text, or song, whereas trademark rights protect brands. When considering buying a website that has content, such as images and text, it is important to ensure that the seller actually owns the content and thereby has the right to sell it to you.

Determining whether a seller validly owns content can often be difficult. Generally, the author of the particular text (the writer) or image (the photographer of graphic designer) is the party that holds the “copyright” over that particular content. Accordingly, the seller of a website with content should explain and certify that the seller created the content, or alternatively, has a valid license to use the content. A license to use the content could come from having paid for a license to use a stock photo, for example. Stock photo companies regularly troll the Internet looking for unlicensed use of their copyrighted images and then send out invoices or commence proceedings. Accordingly, care should be taken to ensure that all content was created by the seller or properly licensed by the seller and that the seller can properly transfer the license to the buyer in order to avoid copyright website content infringement issues. Additionally, if a seller used employees or contractors to help built out a website, those employees and/or contractors should have assigned all of their rights to the seller so that the seller becomes the sole and exclusive copyright holder in all respects.

Copyright Website Code

A similar issue arises in the case of copyright website code and software. If any software is used in a website, then a buyer may want to confirm that the software is owned and can be sold by the seller to the buyer, or alternatively, that a valid license is held by the seller which can be validly transferred to the buyer. Otherwise, copyright infringement may occur and the buyer can be held responsible once they take over the website.

I, of course, have to remind you that there is no substitute for seeking the counsel of an experienced website attorney, and accordingly the information provided here is for general education purposes only, and should not be relied upon by you for any business purpose. I strongly strongly encourage you to seek counsel if you need additional assistance with domain trademark laws or website copyright laws. 

Zak Muscovitch is respected and well-known domain name lawyer who has represented domain name and website owners since 1999. He has assisted buyers and sellers in website transactions worth millions of dollars, and has set numerous precedents in domain name dispute law. He represents clients from all over the world. His website is http://www.DNattorney.com.

Have something to say about domain laws or copyright laws? More questions for the DN Attorney? Let us know in the comments below!

The Domaining Diva weighs in on website due diligence

The Domaining Diva weighs in on website due diligence

Today’s guest post was written by Suzanne Bucciarelli, a graphic designer, blogger and website developer. Her main blog, Domaining Diva covers topics including buying and selling websites and domains and other related topics.

There are plenty of bargains on Flippa, but when you are considering buying a site (from anywhere), you must be careful that you perform website due diligence and research, and verify everything that is being claimed in the listing is in fact true. However, it goes further than just verifying all the claims in the listing. You have to delve even further if you want to avoid some unpleasant surprises after you purchase the site.

You’re going to have to play detective a bit, and there are some useful tools to help you perform more thorough website due diligence. Here are some questions to consider when thinking about buying a site:

  • Does the listing have a detailed, clear description of the site and its assets, traffic and revenue?
  • What stage in the Life Cycle of a site is this site in? Are traffic and revenue rising or declining, and is there room for expansion?
  • How much competition is there and how do they compare in regards to position in the serps, price, product quality, etc.?
  • Are there any obvious violations of FTC regulations, trademark or copyright violations, etc.? You can do a trademark search online at TESS (for US trademarks) and use Copyscape to check the uniqueness of the content.
  • Check the site’s reputation in places like Rip Off Report and Better Business Bureau.
  • If products or services sold on the site are outsourced, will you continue to have access to those vendors or suppliers?

In addition to asking the tough questions, you also need to get your hands dirty and dive into the data yourself to see what you can find.

Five steps to more successful website due diligence

1. Checking Out The Domain

Domain Tools is a great tool to help you find information about the domain, how long the domain has been registered, who the domain is registered to (if whois information is not protected), Whois history, Reverse Whois, and has DNS and IP Tools.

You also need to look into whether the domain has suffered from reputation problems. You’ll want to know if the domain has been blacklisted by anti-SPAM or anti-virus sites, or if the domain has been banned in Google. A simple search in Google using the operative site:domainname.com, replacing “domainname” with the site’s domain, can tell you whether or not the site is listed in Google and how many pages are indexed. You can enter the IP of the site at Spamhaus.org to check to see if the domain is currently listed in the live Spamhaus IP blocklists.

Flippa also has Due Diligence information on the listings, giving you a detailed snapshot of many important website stats from the “View extended due diligence data for this listing.” link. This includes links to the Wayback Machine – a pretty useful tool for checking out the history of a site. It has snapshots of the site, often going back years.

2. Checking Out the Owner

Flippa and webmaster forums will give you some information about the seller, but it is usually only what they want you to know, and very limited information. However, both Flippa and webmaster forums will normally give you a link to the feedback that a seller has received from previous transactions. This is very important information and you must take the time to check out their feedback. While it is not a guarantee that the seller is honest, it’s a good source of information on how the seller conducts business and if his customers are happy.

If the seller is new, you won’t have customer feedback to rely on. You will need to do some research yourself and Google can help you do that. Get the seller’s real name and type that in Google to see what kind of information you can dig up. You may find he/she has profiles in forums or social networks, such as LinkedIn, Twitter, Google Plus or Facebook. You can often find some very revealing information on these sites about the seller’s character and reputation.

In addition to how happy their previous customers are, you can tell a lot about a seller by checking out their other listings, including the ones that have already sold. You may be surprised to find that the seller sells this identical type of site many times over, and this may be something you would like to avoid buying.

3. Confirming Traffic and Revenue Stats

From the Flippa listing, you have access to the stats for hits, page views, and unique visitors, but those stats don’t tell the whole story. You need to verify where that traffic is coming from (referring URLs) and whether or not the seller has purchased cheap, untargeted traffic to inflate the traffic stats. Insist on either Google Analytics or access to Statcounter or AW Stats to confirm where the traffic is coming from. If some of the referring URLs are unfamiliar to you, check them out to see where that traffic is coming from. Be aware that a portion of those hits can be from the seller himself or from the search engine bots crawling the site.

If the seller provides traffic stats from one or more sources, cross-check the numbers with other sources, such as Compete, Alexa or Quantcast. The numbers will never be exactly the same, but if there’s a huge discrepancy, it’s worth investigating.

4. Website Due Diligence on Claimed Revenue

One of the most unreliable pieces of information about a site is often the sites’ revenue. It is possible to fake revenue screenshots so you cannot rely on them to verify how much money a site is making. If revenue is a selling point of the site, it is very important to be able to verify the accuracy of the information given in the listing without relying on screenshots.

One way to verify the revenue of a site that is more reliable than a screenshot is by using screen sharing tools, like Join.me or Skype. This is very helpful to get a more accurate picture of the revenue without the seller having to give you login details to his accounts.

Learn to distinguish between actual, verifiable facts about a site and just unsubstantiated claims, such as “potential $15,000 month income,” or “the main keyword has 50 million searches per month,” etc. Statements that are not verifiable are not relevant and are only a distraction.

A site’s revenue should be based on a solid earning history. If the site was established two months ago and is claiming revenue of $1,000 per month, take that information with a grain of salt. Quite often, a seller will launch a site with a sales page or offer, make some quick revenue and then list the site with revenue claims from the proceeds of the offer. Very often, the offer has run it’s course and the income level being claimed is not sustainable. Look for a consistent history of earning for at least six months.

5. Never take anything at face value, always investigate and validate claims

Buying websites can be an immensely exciting opportunity. Just be sure to bear in mind that some sellers may exaggerates or perhaps conceal important information about the site. It’s up to you as a buyer to distinguish between real, verifiable information and information that is incomplete or arguably misleading. Bear in mind that website due diligence will vary from site to site based on the type of site it is, traffic sources and revenue streams of the site. This effort up-front before you buy will be worth the effort in the long term.

Finally, when buying a website for any significant amount of money, always use an escrow service. Escrow services protect both the buyer and the seller.

Is this how you conduct website due diligence? Do you have any questions about the process? Let us know in the comments!

Understanding the Basics: How to Transfer a Website

Understanding the Basics: How to Transfer a Website

So you’ve just made your first purchase on Flippa, and now you need to know how to transfer a website so that you can get your web acquisition up on a different hosting company. The process of taking ownership of a site and completing a successful website transfer from one host to another can be daunting, but it’s a valuable experience and often a good idea.

We spotted a fantastic guide on the process of transferring websites by Clinton over at experienced-people.co.uk, and are re-publishing parts of it with his permission.

Pssst! There’s also a great discussion at the above link about deciding whether or not to transfer your site .

How to transfer a website step 1: Transfer of the domain name to the control of the new owner.

Contact your registrar and the site’s old registrar for details. Broadly, this is what you do:

  1. The buyer starts the process with the “gaining” registrar following their instruction.
  2. The gaining registrar sends an email to the administrative contact listed in the WHOIS.
  3. If the contact replies within the time limit, the gaining registrar sends a request to the registry (the controlling body that oversees registrars). The registry sends an email to the losing registrar.
  4. The losing registrar now sends an email to the administrative contact.
  5. Provided the contact approves, the losing registrar releases the domain to the gaining registrar.

How to transfer a website step 2: Getting/downloading all the site’s files and folders in the correct structure.

Getting a copy of the applications (if any), database/s (if any), and non-publicly viewable configuration files such as the “.htaccess”. Getting manuals, lists, instructions and passwords from the previous owner. You want to prepare a list of questions for him. I quote a small sample here:

1. What’s required of the hosting? For example,

  • What OS (Apache/Windows) is needed?
  • What bandwidth and storage allowance do I need?
  • What size of database is required?
  • Do I need access to set cron jobs or change conf files?
  • Do I need access to set size of the log files and rotation parameters?
  • Do I need to change default SSI extension names from shtml to something else?
  • Do I need Frontpage extensions on the server?
  • Do I need a dedicated IP?

2. What affiliate or other codes do I need to change? Adsense publisher IDs and other affiliate codes will eventually need to be changed to your own publisher ID/account number.

3. What about order processing and payment facilities? If these facilities are not transferring with the site, do I have something else in place?

4. What’s needed to transfer the mailing list?

5. What software licenses do I need?

6. If the site has affiliates, how are they managed? If it’s a third party application then can control be handed over to you or will you lose all the affiliates?

7. What about agreements with merchants or drop-shippers? Will they transfer their agreements to me?

8. How do I backup the site?

How to transfer a website step 3: Uploading all the files, databases etc., to the new hosting company’s server. 

These need to be placed in the right location following the instructions provided by the host (and doing all this while the site is still fully operational at the “old” location).

How to transfer a website step 4: Making the changes to take control.

These fall into three areas – management, technical and financial.

1. Management

  • Create email addresses for all the emails that are in use at this domain.
  • Change the code for any free statistics such as Google Analytics.
  • Transfer control of the mailing list
  • Transfer control/ownership of software licenses
  • Sort out the agreements with merchants or drop-shippers
  • Offsite changes: If the seller referred to his product on his various web 2.0 profiles pages and other pages or sites he controls has he updated the references?

2. Technical

  • If it’s a dedicated server, you may have to set a service plan, allocate space and resources, create users etc.
  • You may need to modify file or folder permissions: CHMOD
  • You may need to edit files that access the database
  • You may need to double check what’s in the htaccess file to ensure it does what you expect it to do
  • You need to double-check all forms, feedback and comment functions to verify the destination
  • You may need to setup cron jobs
  • You may need to install scripts
  • You may need to edit conf files
  • Use Google Webmaster Tools and carefully go through all the options. There may be unseen problems on the old site that you can now rectify on the new server.

3. Financial

  • AdSense or other affiliate codes need to be changed to your own publisher ID/account number.
  • Advertisers, link-buyers etc., paying members, paying subscribers etc., need to know the new contact address. If they are paying by PayPal subscription or some other regular automated payment, that needs to change so you receive the funds.
  • Payments-out need to be similarly altered to avoid a situation where your valued partners (such as affiliates) don’t get paid on time and withdraw their support.

How to transfer a website step 5: Changing the DNS settings at the domain registrar to point to the new hosting company thus allowing visitors to reach the new location of the site.

Have you used a different process when transferring a new website purchase to a different host? Do you have any other tips on how to transfer a website? Let us know in the comments below!