flip websites
free website flipping guide

The Nuts and Bolts Of How To Buy And Sell Websites: Part 1 of 3

How to Buy and Sell WebsitesThe majority of the posts I publish on this blog are written with the assumption that the reader has “some” experience on how to buy and sell websites, or is at least familiar with the concept. I take it for granted that there are actually a lot of newbies to website flipping who are reading this blog and are being introduced to this online business model for the first time.

Sometimes it takes a flood of emails from folks asking specific questions on how to buy and sell websites to realize I may have been overlooking the basics and ignoring those new to this industry. For that, I apologize for being a knuckle head and will strive to be more balanced with the topics I’m writing about.

With that said, I am going to write a three-part series that covers the nuts and bolts of how to buy and sell websites. Specifically, I’m going to cover the actual process of the deal itself. Here are the basic steps of the process and what I’ll be covering in each part of this series:

Step 1: Buyer & Seller Agree To A Deal
(Part 1 of the series)

Step 2: Buyer & Seller Agree To A Payment Method
(Part 1 of the series)

Step 3: Getting The Domain To The Buyer & Determining The Hosting Arrangement
(Part 2 of the series)

Step 4: Handing The Keys Of The Site To The Buyer OR Transferring The Site
(Part 3 of the series)

Step 1: Buyer & Seller Agree To A Deal

When you buy and sell websites, the first step of the process is obvious – buyers and sellers have to agree to a deal. The seller puts a website up for sale and a buyer steps forward and agrees to buy it. This can be done through a public marketplace like Flippa.com, or it can be done directly via a private deal. The bottom line is, the buyer and seller agree to move forward with a deal.

Step 2: Buyer & Seller Agree To A Payment Method

After a deal has been made, the buyer and seller need to agree on a payment method. There are essentially two ways for the buyer to get the money to the seller. One way is to use an escrow service and the other way is to do a direct payment via PayPal, bank wire, or even check or money order.

Using An Escrow Service

For deals over $1,000, I strongly advise using an escrow service. The most popular escrow service for website flipping is Escrow.com. The company has become so popular that it is now even integrated into the Flippa marketplace. There are some that argue Escrow.com isn’t the best option for website transactions but I disagree. I’m not going to get into that debate here as that would be another post entirely. The point is, you should use an escrow service you are comfortable with. I prefer SafeFunds.com myself because they are much cheaper than Escrow.com. I have used both services with success and I have never had an issue with either service.

Regardless of the escrow service you choose, you will need an account at the escrow service you’re going to use. It’s quick and easy (and FREE) to create an account at Escrow.com and SafeFunds.com. I can’t speak to the charges and the processes involved registering an account at other escrow services so you’ll need to do your own leg work if you’re not comfortable with these two companies. Whether you’re going to be flipping one website per year or several, you should have an account with the escrow service you are comfortable before you do any deal so that you can familiarize yourself with the service.

How The Escrow Process Works

Every escrow service will have its own process but for the most part, they are all very similar in how they work. Here is a diagram that outlines the escrow process:

The Escrow Process

Escrow Process

Let’s tackle the process in greater detail. For the purposes of this post, I am going to assume Escrow.com or SafeFunds.com will be used. Here are links that outline the Escrow.com process and the SafeFunds.com process. After an escrow service has been selected by the buyer and seller, they will enter into what is a called a “transaction.” Both Escrow.com and SafeFunds.com allow either party to initiate the transaction. The buyer and seller will just need to discuss who will initiate the transaction. It will be that person’s responsibility to then initiate the transaction and to detail the terms of the deal.

After the transaction has been initiated and the terms of the deal have been outlined and agreed upon by both parties, the buyer will fund the escrow account. Both escrow services offer different methods to fund the account. You’ll note that the seller hasn’t transferred anything to the buyer at this point!

After the escrow account has been funded by the buyer, the escrow service will verify those funds. If the funds come from a bank wire or electronic transfer, the funds are instantly verified when the money arrives. If the account is funded by a check, then the funds aren’t verified until the check clears. Once the funds are verified, then and only then will the seller proceed to transfer the domain, website, and anything else to the buyer.

After everything has been transferred to the buyer, the buyer will essentially notify the escrow service that everything has been received as per the terms of the deal. At that point, the money held in escrow will be released to the seller. The seller will then be able to get the money via bank wire or check from the escrow service.

Dispute Resolution Process

In the event the buyer doesn’t receive all the goods as per the deal, the buyer can file a dispute via the escrow service’s dispute resolution system. Both parties will attempt to resolve the dispute and if it is, then the transaction will move forward and the funds will be released to the seller. If the dispute can’t be resolved, the transaction will be canceled and the goods and money will be returned to the respective parties.

Doing A Direct Payment

When you buy and sell websites, I don’t recommend a direct payment unless both parties have flipped at least one website and have a great deal of trust with each other. Even then, I personally won’t do any deal over $1,000 directly. That is my personal comfort level but you may have your own.

If you decide to do a direct deal, I advise using PayPal as it’s the easiest way to transfer money online these days. If you do elect to use PayPal, be sure to read my post about how to protect yourself when selling websites via PayPal. You can also do a bank wire, personal or certified check, or even money order.

The process of a direct payment deal is similar to using an escrow service except there is no dispute resolution option. As a result, there is little to no protection for either party. The buyer and seller are doing the deal strictly based on trust and hoping nothing goes wrong.

As for the actual process of doing the deal directly, the parties will ideally draft a contract that will be agreed on and officially signed. For big money deals, I consider a notarized signature an “official” signature. At the very least you want both parties to sign off on a written contract – with or without notarized signatures.

The contract doesn’t have to be written by a lawyer either. Remember, you should only be doing small money deals directly anyway so there is no need to involve the expense of a lawyer. You just want to outline, with as much detail as possible, what each party will do and what each party will get in the deal.

After the deal as been officially agreed upon, the buyer will send the money to the seller. Once the seller receives and verifies the funds, the seller will proceed to transfer everything to the buyer. Since there is no formal dispute resolution option when doing a deal directly, I recommend a 50/50 payment structure. Under this arrangement, the buyer sends 50% of the money upfront and the seller transfers “some” of the goods. For example, the seller might transfer the domain only and some files associated with the website. After that has been completed, the buyer sends the remaining 50% and the seller transfers everything else.

Now that you understand the first two steps of the deal when you buy and sell websites, it’s time to move on to the next step of the process – getting the domain to the buyer and determining the hosting arrangement. Continue to part 2 of this series…

About Travis Van Slooten

Travis is an affiliate marketer and website flipper who ran FlipWebsites.com until the Fall of 2010.

This entry was posted in Selling Websites and tagged , , , .

Related Posts

  • Marvin

    Travis:

    Thanks for your usually valuable material.

    Another important set of steps that need to be included in a four part (not three part) series about how to build a web site is how can the buyer perform the proper due diligence so that they know for sure that they are not getting scammed because the screen shots have been faked. Or the seller has set up a traffic driving system prior to selling so that the amount of traffic is essentially real but at the same time phony since it is not passive organic traffic. These kinds of things need to be covered also since the buyer knowing how to do due diligence on an expensive site protects the buyer from a not so honest seller. Thanks for including these kind of things in your three part series and perhaps you will need to make it a four part series if you include covering this ESSENTIAL STUFF.

    With much respect and appreciation of you, Marvin

    • Travis

      Marvin:

      You bring up some great points but I didn’t include due diligence because if you read this post, you’ll notice step 1 starts with the buyer and seller agreeing to a deal. In other words, the assumption is the buyer has already done all the due diligence and wants to buy the site. For the purpose of this series on how to buy and sell websites, I wanted to concentrate strictly on the deal itself – as in what the exact steps are after you agree to a deal.

      I have written a couple posts about due diligence, however, and will have more coming in the near future.

      Thanks,

      Travis

  • Luis J

    I am glad that you explain what is the different between the two forms of payment, advantages and why you recommend escrow for certain transactions. Great post of newbies in the website business. Sometimes takes forever to find useful information like this. Really enjoy your posts. Thanks for taking the time.
    So if a buyer decide to use pay pal and you didn’t get what you where expecting, there is no way to get your money back?
    How long it can take a dispute to solve?
    I can’t wait for next post…

    • Travis

      Luis:

      Glad you enjoyed the post! There is more good stuff to come – for both newbies and experienced flippers alike;)

      As to your question, you have limited protection with PayPal. PayPal offers two different kinds of programs to protect buyers that use PayPal. One program covers transactions on eBay and the other covers everything else outside of eBay. That program is called their “PayPal Buyer Complaint Policy.” IF you are a buyer and you take advantage of that program (because the seller didn’t deliver everything as outlined in your deal), you are at the mercy of PayPal finding in your favor. IF they find in your favor, they will only refund the amount of money they can recover from the seller’s PayPal account. For example, If you paid $2,000 for a site and sent the money via PayPal and then the seller immediately withdrew that money from their PayPal account and never kept a balance, you wouldn’t see a dime.

      If you’re going to use PayPal, send the money via your credit card. At least then you would have a chargeback option but even that option is iffy.

      The bottom line is, doing direct deals is high risk if you don’t know who you’re dealing with.

      Travis

  • Adam M

    Great post, exactly what I was looking for (and emailed you about)!

    • Travis

      Adam:

      Cool. Hopefully after this three-part series all of your questions will be answered!

      Travis