Buying Websites Due Diligence Step 1: Checking Ownership of a Website

due diligenceWhen you buy a website the first step of the due diligence process is doing some basic checks on the owner of the website and on the domain itself. If there are any red flags during this stage, it’s probably best you walk away from the deal. At the very least, you’ll want to address any concerns uncovered before proceeding to the next steps of the due diligence process. So let’s get started…

Checking The Ownership of a Website:

The first thing you’re going to do is a simple WHOIS search. The best WHOIS tool is the one provided by DomainTools. They provide a lot of information for free but they also have paid services where you can get indepth information on domains. A basic WHOIS search will give you the domain registration information, contact information, and much more. You can then compare that information to the information the seller provides you. They should obviously match and if they don’t, the seller should be able to explain any discrepancies.

If you have any concerns after your search that the seller may not have control of the website, there is a way to verify he does. You could have the seller upload an empty file to the root directory of the website so that you can confirm the seller has control. For example, you could have the seller upload a text with a file name you choose (say verification.txt). After the seller does that, you should be able to get to the file by typing in the file path in your web browser: http://domain.com/verification.txt.

Important Note: Once you confirm CONTROL of the website, you don’t necessarily have confirmation they have authority to sell it. A designer, developer, or some other third party may be managing a website for a client so be aware of that.

Checking the Owner Himself

You want to be sure that the person you’re buying from is legit and someone you can trust. If you’re buying from a marketplace like Flippa, you can look over their seller profile to see how often they buy and sell websites and what kind of reputation they have.

If you can get the seller’s full name, you can also do a search online to see if the seller has any accounts on Twitter, Linkedin, Facebook, etc. You may also discover comments made about the seller in forums and blogs. Even if you can’t get the full name, you can do a search online for their seller username to see if they use the same username on other marketplaces, forums, etc.

Finally, don’t forget the simple things. Is the seller using a website email address when communicating with you or a free email account like one from Gmail. Free email accounts don’t necessarily mean anything but it’s worth noting. Also, does the seller provide a phone number and if so does the number work?

Checking Registrar History and Domain Status

Other information you’ll get from a WHOIS search using DomainTools is the registrar history and the domain status. If the website has recently been transferred to another registrar, it may not be able to be transferred again for 60 days – the waiting period after domains have been transferred. You’ll also see the domain status. It will typically be “locked” which simply means the owner of the domain has to unlock it before it can be transferred to a new owner.

Trademark Ownership Considerations

You’ll want to make sure that the domain for the website doesn’t contain a trademark, and if it does, you’ll want to make sure the seller either owns the trademark or has explicit permission to use it. Not addressing this can be a very costly mistake. Example: Microsoft is a trademark term. You are looking to buy MicrosoftRules.com. The seller better be Microsoft themselves or you better make sure you have proof – as in some kind of legal documentation from Microsoft – that the seller has permission to use it in the domain.

These are the quick and easy things you should check out before proceeding to the other steps of the due diligence process.