Flipping websites can be an extremely profitable business, but some people seem confused about whether or not website flipping is legal. Website flipping is 100% legal. I’m not sure where any contrary claims have come from!
That doesn’t mean there aren’t particular considerations and regulations to be worked around. Don’t let these scare you off!
Let’s dig into the full story!
What Is Website Flipping?
Website flipping is buying a website, ramping up the traffic and earnings, and then selling it for a profit.
Since websites tend to sell for a 32X to 40X monthly earnings on average, even a modest revenue increase of $100 a month leads to $3,200 to $4,000 of extra value.
While the concept is relatively simple, executing it well takes a lot of knowledge and skill. Because of that leverage from monthly earnings to sales price, the potential profit margins are huge.
Website flipping is completely legal. It’s a different practice from domain flipping, and needs to be treated differently.
Domain Flipping vs Website Flipping
Domain flipping is buying and selling domain names. These often take two forms:
- Expired domains that used to host a live website and have backlinks pointing to the name (and Google history) as a result
- Brandable domain names that escaped the eye of other domaineers or investors
The value here isn’t an existing site and the earnings but the domain name. Whether that’s because it’s history allows a new site to rank fast in Google or because of the brandability of the name varies on a case-by-case basis.
Domains are worth what a buyer is willing to pay for them.
Website flipping involves the buying and selling of an actual built and currently established website. Buying a website only making $100 a month for $4,000 and ramping it up to $2,000 a month for an $80,000 sale is what a good flip is all about.
Both practices can be profitable, but there is far more control with the website flipping since you have control by acquiring the right website, using proven skills & methods for growing the traffic and revenue numbers, and then working out an agreeable deal.
What Is Cybersquatting?
Cybersquatting is the practice of squatting on a known name with the hope of selling the names to a company for a profit. This is a gray area that can cause legal problems with trying to flip, but it usually applies to domains versus developed websites.
An example would be if someone somehow had Google.net and then tried to sell it to Google. Since this is a trademarked company name, that’s a problem.
If the person who owned the .net version put up a questionable website that could damage the reputation of the company Google then there are potential grounds for lawsuits.
Trademark
One of the biggest issues that can come up with a website is trademark. If a domain name infringes on a trademark that a company owns, that company can take legal action to force the website to be taken down or
I like to use a tool like the United States Patent and Trademark Office’s online trademark tool to search for trademarks. I want to make sure no part of a domain name is infringing on any trademark or could even be accused of infringing on a trademark.
It can also be worth your time to use the World Intellectual Property tool to search for internationally recognized trademarks.
Avoid buying or building any websites whose names infringe on existing trademarks.
Domain Name Restrictions
One of the few legal rules/regulations around website flipping involves domain names. When a domain name transfers to a new owner, ICANN’s regulations state that it must be in the account of the buyer for a minimum of 60 days before it can be transferred again.
Considering that the monthly average income used to figure out a sales price is from the last 6 months or 12 months, it doesn’t make sense to flip a site after only two months – but if someone tried that would be an issue.
Domain ownership can’t be transferred earlier than that. In a normal website flip, this won’t be an issue, but it is technically one regulation that applies to the practice of buying and selling websites.
Frequently Asked Questions
There are several questions that frequently pop up when looking at website flipping legality.
Are there any laws regarding website flipping?
There are no laws that block flipping websites. The biggest potential hurdle outside of trademark issues would be if someone from one country was attempting to buy a website on a national TLD that required citizenship or a company based out of that nation to own such as .ca.
Can a website flip be legally blocked?
Unless there is a trademark issue, there isn’t. Website flipping is legal so as long as the website wasn’t hacked, stolen, or some other illegal shady action is involved.
Otherwise a website flip can’t be legally blocked, these transactions are fully legal.
What are the most common issues with website flips?
The biggest issues tend to be growing the site, agreeing on the average monthly income numbers for valuation, and choosing the right broker (if any) for selling. On the legal side of things the biggest concern for most website flips is the legal contract and handling of Escrow for payments.
Takeaways
Website flipping is not only 100% legal but it can be an incredibly profitable practice. Keep a few basic takeaways in mind and you’ll be fine.
- Search for trademarks and copyrights to make sure there’s no issue
- Any domains you intend to flip must be held for at least 60 days
- Be wary of internationally based TLDs, especially if they’re not “open”
- Always use an escrow service for the payment
Website flipping is a profitable practice dealing in assets that are in incredibly high demand. Learning the skills to make this a repeatable process is a great way to create financial security through big and very big revenue numbers on the flip.
