What is Escrow?
An escrow is a financial agreement and arrangement where a third party holds and regulates payment of the funds required for two parties involved in a business transaction. It helps make transactions more secure by keeping the payment in a secure escrow account which is only released when all of the terms of an agreement are met as overseen by the selected escrow company.
Escrows are very useful in the case of a transaction where a significant funds are involved and a certain number of obligations are required to be fulfilled before a final payment is released as in the case of a website being built where the buyer might want confirmation or personal sign off of the quality of work being done before making a full payment, and the seller doesn’t want to extend the commitment of all work without any assurance that they will receive full payment. While traditional escrow service must be obtained through banks and lawyers, Digital based Escrow services provide online escrow services at affordable rates. While the payment is ‘In Escrow’ the transaction can be securely carried out without risk of loss due to fraud. This greatly reduces all legal issues and allows for secure transactions providing confidence for both buyers and sellers.
How does Escrow Work?
Escrow functionality reduces the risk of fraud by acting as a trusted third-party that collects, holds and only disburses funds when both Buyers and Sellers are completely satisfied.
- Buyer and Seller agree in advance to terms… Either the Buyer or Seller begins a transaction. After registering at digital escrow agency, all parties then pre-agree to the terms of the transaction.
- Buyer pays escrow agency…The Buyer submits a payment by approved payment method to a secure Escrow Account, Escrow agency then verifies the payment, the Seller is now notified that the funds have been secured ‘In Escrow’.
- Seller transfers property to Buyer…Upon agency payment verification, the Seller is authorized to transfer and submit tracking information. The escrow agency then verifies that the Buyer receives the property.
- Buyer accepts property…The Buyer has an agreed number of days to inspect the property and the option to accept or reject it.
- The escrow agency then pays the Seller…then it releases the agreed funds to the Seller from the Escrow Account.
Transaction is now complete