Best Online Escrow Service for Buying Websites: Why Use One, Common Questions (2022)

As a website flipper, Escrow is a staple service. I do not do a deal without using Escrow; it’s just not worth the risk. Escrow is a third-party middleman that is used to protect all parties in a sale transaction.

When I buy a site, I ensure the seller is OK with using Escrow. When I broker a site through The Website Flip brokerage, Escrow must be used. If a seller or buyer is not willing to use Escrow, I do not do the deal.

In this write-up, I go in-depth on:

  • What is Escrow
  • Why website flippers need to use it
  • Favorite Escrow service
  • Common questions

Let’s get into it!

Table of Contents

What is an Online Escrow Service?

Best Online Escrow Service for Buying Websites: Why Use One, Common Questions (3)

An online escrow service is a way for both buyer and seller to protect themselves when transferring payment for an asset. Basically a third party (the escrow service) holds the money from the buyer and only releases it to the seller once

This is a common legal practice that is meant to protect the buyer in particular from being scammed or ripped off, but it offers important protection for all parties involved.If you are buying or selling a website or online business there should always be escrow involved in the process.

Since the escrow will be holding the money used for a purchase it’s critical to only use a reliable and trustworthy service.

Why Do Website Flippers Use Escrow?

Best Online Escrow Service for Buying Websites: Why Use One, Common Questions (4)

Transferring a website is a delicate process. For a profitable website, a lot of money can change hands and thus protection is key here.

When that much money is involved you don’t take chances. You don’t want a situation where you lose the website and don’t get paid.

This also protects the buyer, keeping the money safely secured until they receive the website. If the seller doesn’t deliver the website, the escrow doesn’t release the funds.

Escrow is standard policy for these deals because it clearly defines what is expected from each party, protects everyone’s interests, and puts in a legal framework in case things go wrong. Or someone isn’t acting in good faith.

That safety net is worth the small commission that an escrow service will charge to oversee the sale.

How Does Escrow Fit Into The Flipping Process?

Best Online Escrow Service for Buying Websites: Why Use One, Common Questions (5)

Escrow is a crucial part of the flipping process. First of all it establishes trust between the buyer and seller. Whether or not you believe most people act in good faith, the escrow is a way to help secure the process so even if someone wasn’t, the damage they could do would be limited or none.

Escrow services also take away amount limits. On some common platforms there might be additional restrictions, paperwork, or just some that won’t process more than a certain amount of money per transaction.

By having a verified escrow in place, you circumvent all of those potential headaches.

Securing escrow is an important part of the process and should take place very early on. For those of you new to the website flipping process, this is what an escrow buy/sell process would look like.

  1. Find a site you’re interested in buying and reach out to the website owner
  2. Negotiate with the owner and agree upon a price
  3. Both buyer and seller need to register with Escrow.com
  4. The “Terms of Transaction” are agreed upon by both parties. This includes the domain name, the sales price, and any other important details that are a part of the transaction.
  5. The buyer pays the agreed-upon amount in the Escrow
  6. Escrow.com verifies the payment has been made and secures it
  7. Seller backs up the website and keeps a zip file of the content as a backup for themselves and one to transfer to the buyer
  8. Begin the domain transfer process from seller to buyer
  9. The buyer accepts the domain name and receives the saved content
  10. Seller transfers any remaining assets (e.g., social media, email lists, etc)
  11. Escrow.com begins the inspection to make sure every part of the agreement has been met by both parties
  12. Any details that need to be steamed out are at this point, and then Escrow approves the release of the funds (minus their cut)
  13. The funds are released

While this can seem a touch overwhelming for a complete newbie, when you look at it the step-by-step process is actually very easy and direct.

(Video) What is Escrow? — Escrow Accounts Explained

This escrow process makes the buying and selling of websites a much easier process for both parties.

My Recommended Escrow Service: Escrow.com

Best Online Escrow Service for Buying Websites: Why Use One, Common Questions (6)

There really is one exceptional escrow service that I feel confident recommending. There’s a reason they’re the go-to for online escrow services. Escrow.com, currently owned by Freelancer.com, is who I recommend when you’re looking for escrow services.

About Escrow.com

Escrow.com is usually the first name that comes up when looking for online escrow services. Founded all the way back in 1999, they have been providing online escrow services for over over 20 years.

That’s a long track record and the overall ratings from users are extremely positive. While commonly used for the buying and selling of online businesses or websites, they actually provide escrow services for a variety of online services.

They are a fully licensed escrow company and currently operate out of California.

The strong track record they’ve made for themselves is the reason they’re often the go-to for large online transactions for website or online business flips.

Features

The features on Escrow.com are pretty simple and focused on the process. Your account has a dashboard for any deals that are being set up or are currently underway. If you have multiple websites flips going on at once this is very handy.

1. Fee Calculator

The fee calculator is another great tool. Want to know the cost or expense of an escrow deal? Just put in the details and you can see what the fees are going to be using Escrow.com.

2. Transaction Tools

Escrow.com has a specialized API that can be used to create a way for customers on your site to pay you through Escrow.com. There are additional tools to create purchase buttons to connect with the API.

This can be a big boost for flippers who plan to increase the value of a site they’re buying by creating a store or product to sell.

Full Disclosure: I haven’t personally used these tools myself so I can’t say how they compare to WooCommerce or other potential options, but these are features worth mentioning.

3. Tracking Tools

There are tools for tracking every deal at every step of the process. Records are kept for previous deals, as well. There are many entries on the left-hand column of your Escrow.com account, but it does a great job organizing all the data in separate places by steps.

That means everything is organized and easily accessible to you. Both for past deals as well as current ones.

(Video) How to Sell Your Domain with Escrow.com

4. Escrow ID Verification

Escrow.com can only make money if its reputation as a top escrow providing service remains strong. The verification feature is a great way to help make sure each of these transactions is as secure as possible.

Fee Structure

The fee structure is the same regardless of location however the amounts differ based on whether you are paying in US Dollars, Australian Dollars, Euros, or British Pounds. The full up to date free structure can be found here.

Generally with fees there will be three things to look at. They are:

  • Transaction amount
  • Standard vs concierge service
  • Payment processing fee

The first is transaction amount. There are different rates for:

  • $0-$5,000
  • $5,000.01-$25,000
  • $25,000.01 and above

The second point is whether the standard service is being used or the concierge service. Obviously the concierge will cost more. In all my website flips, I’ve never used a concierge service. The process of transferring a domain is simple and honestly I do not see the value in the concierge service.

Finally, there’s a payment processing fee that depends once again on the size of the deal.

So what are the overall pros/cons of all these features that Escrow.com puts at your fingertips?

Pros

  • Generally very professional customer service help
  • Long track record as a reliable escrow service
  • Excellent array of tools at your fingertips
  • Simple-to-use fee calculator
  • Widely trusted service
  • Selling tools through Escrow’s API are available

Cons

  • Enough complaints of slow or spotty support – responses could be slow
  • The layout of the user dashboard isn’t completely intuitive – it can take a while to get used to
  • Less support if you don’t choose the concierge service
  • Not supported in countries like Russia and Pakistan

Common Questions about Online Escrow Services

What countries are typically not supported?

Most countries are supported that have stable infrastructure, but there are some exceptions. For Escrow.com the full list is there. Most countries on the list are obvious ones (North Korea, Afghanistan, Congo, etc.) or poor countries that don’t have internet infrastructure. A few notable exceptions on Escrow.com’s no-serve list are Cambodia, Russia, and Panama.

Can I just use PayPal to do a deal?

While PayPal does offer some buyer and seller protection, you absolutely should not rely on these. There are many stories of a person paying, receiving what they paid for, then claiming they didn’t receive it and PayPal refunding their money regardless of evidence. At that point, you’re out what you sold and you’re out the money and you likely have no recourse. PayPal does not offer the same protection as escrow and should never be used in its place.

(Video) Became a Real Estate Marketing Monster with John Gluch

Can you get scammed on Escrow?

While it is possible, it’s extremely unlikely and usually happens via some type of activity outside of the actual escrow transaction itself. While it’s hard to say anything is ever 100% fool proof, when you’re using a reliable escrow service it is much, much harder for anything to go wrong. It’s not perfect, but it is a serious measure of added security for both buyer and seller.

Who pays fees if the buyer backs out of the deal?

If the deposit is made by the buyer to Escrow, and the buyer decides to back out (i.e., ask for a refund), then the buyer will pay the Escrow fees. Specifically, the wording is as follows, “The buyer is responsible for 100% of the escrow fee in the event the transaction is canceled or the merchandise is returned.”

Who pays fees if the seller backs out of the deal?

Legally, once you are in Escrow as the seller, you are obligated to follow through with the sale. The buyer is allowed to back out freely without repercussions (except for paying the Escrow fees). If for any reason, the seller decides to back out no one pays the Escrow fees.

Wrap Up

Using Escrow, specifically Escrow.com, is a must if you are buying one site or hundreds of sites. Through my 175+ website transactions, I’ve used Escrow.com and Flippa’s Escrow services.

I’ve done details through Paypal directly, however, every time I’ve done one, it’s always cause anxiety and stress. This is why I’ve stopped using Paypal for any transaction even if that means I lose out on the deal because the seller insists I use it.

Always make sure to protect your asset and money in any deal and Escrow is the way to do that.

FAQs

What is a trusted escrow service? ›

Security. With Trustap escrow-style service, you create an account which holds money as a 3rd party on behalf of the buyer and seller in a transaction.

What is escrow website? ›

Domain and Website Escrow: An escrow process that ensures buyers get the domain or website and sellers get paid. Domain Name Holding Escrow: A service designed for domain name buyers and sellers who agree to hold the domain(s) in escrow while the buyer makes scheduled payments.

Is it safe to use escrow com? ›

Escrow.com collects the financial details of the purchaser and stores them within a fully encrypted framework. Due to government audits that a regularly conducted on Escrow.com safety protocols are in place and adhered to which ensures that financial details of all users are never compromised or misused.

What is the best escrow? ›

Probably the best-known is Escrow.com, which is the only online escrow service licensed in all 50 U.S. states. Epik is a great choice for international transactions, as it handles many national currencies as well as the top cryptocurrencies.

What is the purpose of escrow? ›

It's used in real estate transactions to protect both the buyer and the seller throughout the home buying process. Throughout the term of the mortgage, an escrow account will hold funds for taxes and homeowner's insurance.

Who owns the money in an escrow account? ›

Escrow refers to a neutral third party holding assets or funds before they are transferred from one party in a transaction to another. The third party holds the funds until both buyer and seller have fulfilled their contractual requirements.

What is escrow & How does it work? ›

Escrow is a legal agreement between two parties for a third party to hold onto money or assets until certain conditions are met. Think of escrow as a mediator that reduces risk on both sides of a transaction. In the case of home buying, it would be the sale, purchase and ownership of a home.

What is an example of escrow? ›

Let us assume that company A takes over company B. Now company A does not want to make full payment to company B till the transition is complete. In this case, company A will deposit the payment into a third-party account. This third party is an escrow.

Is escrow com owned by eBay? ›

eBay decided to partner with Escrow.com to provide Buyers and Sellers with a secure way to transact high valued items. Click here to learn more about Escrow.com and click here to learn more about the benefits of paying with escrow.

How can you tell a fake escrow? ›

Fake escrow company sites often display logos from the Better Business Bureau, VeriSign Secure, TRUSTe, and even the Internet Fraud Complaint Center. Check to make sure the escrow company really is endorsed by these organizations. Avoid escrow company sites with domain names ending in . org, .

How do I know if my escrow is legit? ›

The best way to find out if an escrow company is legitimate is to look it up with your state's Attorney General's office or the Department of Business Oversight in California. EscrowOne, Inc. is registered, regulated and does business under the Department of business Oversight.

How do I verify an escrow account? ›

You can verify your identity on Escrow.com by visiting the Verify Your Identity page and select 'Verify as Company'. On this page you must confirm your personal details and address. Then you must upload a valid government-issued ID and a proof of address document such as a recent utility bill or bank statement.

What is escrow fee? ›

What Are Escrow Fees? Escrow fees are a portion of the closing costs that come with buying a home. These costs are paid directly to an escrow company, real estate attorney or title company to conduct the closing and distribute funds to the third parties involved in the real estate transaction.

Why is it called escrow? ›

The word “escrow” originally comes from the Middle English word “Escrowl” which translates to mean “scroll;” essentially meaning a checklist. All through history, buyers and sellers have used trusted third parties to hold money, important documents and deeds until the obligations of the parties were met.

Is escrow better than PayPal? ›

With PayPal, sellers are at risk of having their payment reversed after the transaction has been completed. With Escrow.com, chargebacks never occur. For buyers using PayPal, if the received merchandise is fraudulent, is not as described or never arrives it may be difficult or impossible to get your money back.

What should you not do during escrow? ›

What Should I Not do During Escrow?
  • Do not make large purchases which could be viewed as debt.
  • Do not apply to or open any new lines of credit.
  • Do not make finance related changes, like a new job or bank.
14 Nov 2019

Why do we need escrow agreement? ›

Most escrow agreements are put into place when one party wants to make sure the other party meets certain conditions or obligations before it moves forward with a deal. For instance, a seller may set up an escrow agreement to ensure a potential homebuyer can secure financing before the sale goes through.

What are the different types of escrow accounts? ›

There are two types of escrow accounts that are part of the homebuying process: The real estate, or pre-closing escrow account, and the mortgage escrow impound account.

How long does money stay in escrow account? ›

So, while a "typical" escrow is 30 days, they can go from one week to many weeks. A: The length of an escrow can vary widely depending upon the terms agreed upon by the parties.

Can you withdraw money from escrow account? ›

Escrow accounts offer the benefit of security. No party may withdraw money from the account. One party makes payment into the account while another party receives payments form the account. Neither may withdraw money from the account at any time, meaning the money held in the escrow account is completely secure.

Do banks make money on escrow accounts? ›

Aside from possible service fees that cover administrative and insurance costs, banks do not make a direct profit from typical bank accounts, including most savings, checking and escrow accounts.

How do I use escrow service? ›

How Does Escrow.com Work? - YouTube

Is escrow safe for sellers? ›

Escrow protects all of the relevant parties in a real estate transaction, including the seller, the home buyer, and the lender, by ensuring that no escrow funds from your lender and other property change hands until all of the conditions in the agreement have been met.

Should I set up an escrow account? ›

Generally, an escrow account is a prerequisite if you're not putting at least 20% down on a home. So unless you're bringing a sizable chunk of cash to the closing table, escrow may be unavoidable. FHA loans, for example, always require buyers to set up escrow accounts.

How are escrow payments calculated? ›

For example, say your yearly property taxes are estimated to be $3,000 and your yearly homeowners insurance, $1,200. That's a total of $4,200 for the coming year. We divide that by 12 and there's the escrow portion of your total monthly mortgage payment: $350.

What is another name for an escrow account? ›

An escrow account, sometimes called an impound account depending on where you live, is set up by your mortgage lender to pay certain property-related expenses. The money that goes into the account comes from a portion of your monthly mortgage payment.

What is escrow in simple terms? ›

Escrow is the process by which a neutral third party mediates a real estate deal, holding money and property "in escrow" until the two sides agree that all the conditions are met for a sale to close.

Does PayPal offer escrow services? ›

A Buyer can send funds from their PayPal account by choosing the PayPal option on the transaction screen. This offers the convenience of PayPal with the protection of Escrow.com.

What is eBay protection plan? ›

eBay Buyer Protection Program

Generally speaking, eBay Buyer Protection is a promise to shoppers on the U.S. eBay site—eBay.com— that eBay will intervene in disputes between buyers and sellers to rectify issues when the seller has failed to act adequately to resolve the dispute.

What is eBay Motors and how does it work? ›

Seller's decide at what price they want to start a vehicle, and some choose to use reserve prices. So, it the vehicle does not meet the reserve price, it goes unsold. Some sellers start the price at the least they are willing to take for the vehicle, again it is the seller who decides how they want to sell a vehicle.

Does Amazon have an escrow service? ›

Simply put, when an Amazon Pay user tops up the wallet, the money will go into this escrow account. When the user pays through Amazon Pay, the money will be held in the escrow account and released to the seller or merchant only after the customer has received the product or service.

Is escrow on eBay safe? ›

When making the transaction, the buyer and seller profile are verified to ensure both parties are protected during the transaction. With Escrow.com as the chosen payment method on eBay Motors, funds are held safely in escrow while the vehicle is tracked and delivery is verified.

What is escrow delivery? ›

A legitimate escrow service is a company that holds money during a purchase until the goods are received by the buyer. When the buyer has accepted the delivery, escrow pays the seller.

Is buying a car through escrow safe? ›

Car Escrow Services For Purchase Or Sale

Before the title is transferred, instead of writing a check for the purchase, you put the money in an escrow account. This guarantees your safety since your money is protected until the paperwork is complete.

Is escrow safe in Australia? ›

Escrow.com, the leading provider of secure online payments and online transaction management for consumers and businesses on the Internet, has launched Australian Dollar capability to its escrow service, offering a safe and secure sale for local both buyers and sellers transacting big-ticket items.

Which of the following expenses is paid from an escrow account? ›

When you take out a mortgage, the lender will usually establish an escrow account, which is sometimes called an impound account. The money deposited into this account will be used to pay for your homeowners insurance, property taxes, and private mortgage insurance, if it applies to your loan.

What is earnest money? ›

Earnest money, or good faith deposit, is a sum of money you put down to demonstrate your seriousness about buying a home. In most cases, earnest money acts as a deposit on the property you're looking to buy. You deliver the amount when signing the purchase agreement or the sales contract.

What is escrow account in Bank? ›

Definition: An escrow account is a temporary pass through account held by a third party during the process of a transaction between two parties.

Who can open escrow account? ›

Users of Escrow Accounts:
  • Lender and builder for construction finance.
  • Lender and borrower for rent / fee receivables.
  • Between Franchisor and franchisee under franchisee agreement.
  • Two parties who have a the contract under Joint Venture agreement.
  • Revenue/ profit sharing arrangements.

What is monthly escrow payment? ›

Escrow balance

Escrow is money set aside so a third party can pay property taxes and homeowners' insurance premiums on your behalf. Why? Each month, homeowners are required to pay a portion of their estimated annual costs, including principal and interest.

Why does escrow increase? ›

Why Did My Escrow Payment Go Up? As we previously mentioned, if your escrow payment goes up, it's typically due to an increase in insurance costs or taxes. However, if you don't already have an escrow account, adding one will come with some new costs.

What does no contingency mean? ›

A no-contingency or non-contingent offer means that a buyer's offer has been accepted by the seller and there are no further contingencies to be met in order for the house to be sold.

Does escrow have multiple meanings? ›

A mortgage escrow is an account for paying your property taxes and insurance premiums after your home sale has closed. Although both types of escrow are related to holding funds, the term “escrow” has multiple meanings.

How much escrow can a bank hold? ›

Under federal rules, a lender can collect enough escrow funds to cover your annual bills, plus two monthly payments, plus $50. In the example above, the lender could have in escrow as much as $5,200 (the expected size of the bills), plus $887 (an amount equal to two monthly escrow payments), and $50.

What online payment system is best? ›

Best Online Payment Processing Services of 2022
  • Shopify: Best overall.
  • Amazon Pay: Best for streamlined checkout.
  • Stripe: Best for API customization.
  • Square: Best for selling via social channels.
  • BlueSnap: Best for splitting payments with other vendors.
  • Clover: Best for integrations.
  • Adyen: Best for omnichannel commerce.

What is the most popular online payment method? ›

Paypal. Paypal is one of the biggest and most familiar of all the online payment options. The site has over 254 million users. That's a lot of people who would have an easier time making a purchase on your website if you let them check out with Paypal.

Who is PayPal biggest competitor? ›

PayPal alternatives
  • Skrill. A Paysafe company, this payment method is a lot like PayPal. ...
  • Stripe. Stripe is our choice for the best online credit card processor for online businesses. ...
  • Square. ...
  • Venmo. ...
  • Payoneer. ...
  • Shopify Payments. ...
  • QuickBooks Payments. ...
  • Google Pay.

Does PayPal offer escrow services? ›

A Buyer can send funds from their PayPal account by choosing the PayPal option on the transaction screen. This offers the convenience of PayPal with the protection of Escrow.com.

What's the meaning of escrow account? ›

Escrow Account Definition

An escrow account is essentially a savings account that's managed by your mortgage servicer. Your mortgage servicer will deposit a portion of each mortgage payment into your escrow to cover your estimated property taxes and your homeowners and mortgage insurance premiums.

Are escrow services regulated in UK? ›

This is certainly something to consider when looking at Escrow Service providers. Who are the FCA? The FCA stands for The Financial Conduct Authority. The FCA is a financial regulatory body in the UK who currently regulate the conduct of over 59,000 Financial Services firms and financial markets in the UK.

Is there escrow in the UK? ›

In the UK, escrow accounts are often used during private property transactions to hold solicitors' clients' money, such as the deposit, until such time as the transaction completes.

Will PayPal refund me if I get scammed? ›

You can also get refunded for unauthorized transactions made using your PayPal account as long as you report it within 180 days of the payment date. But if you sent money to a fraudster as part of a phishing scam or via PayPal's peer-to-peer payments system—you're likely out of luck.

Will PayPal cover me if I get scammed? ›

Buyer protection ensures you get what you pay for.

When something goes wrong with your eligible transactions, PayPal Buyer Protection has you covered. Get a full refund if an eligible order isn't significantly as described, or doesn't arrive at your doorstep.

Is escrow better than PayPal? ›

With PayPal, sellers are at risk of having their payment reversed after the transaction has been completed. With Escrow.com, chargebacks never occur. For buyers using PayPal, if the received merchandise is fraudulent, is not as described or never arrives it may be difficult or impossible to get your money back.

How do you use escrow? ›

How Does Escrow.com Work? - YouTube

What are the different types of escrow accounts? ›

There are two types of escrow accounts that are part of the homebuying process: The real estate, or pre-closing escrow account, and the mortgage escrow impound account.

How is escrow calculated? ›

For example, say your yearly property taxes are estimated to be $3,000 and your yearly homeowners insurance, $1,200. That's a total of $4,200 for the coming year. We divide that by 12 and there's the escrow portion of your total monthly mortgage payment: $350.

Is an escrow company a financial institution? ›

FinCEN has issued suspicious activity reporting requirements for a number of financial institutions; however, real estate title and escrow companies are not currently explicitly defined as financial institutions in the BSA.

Can solicitors hold money in escrow? ›

Law firms regularly act like an escrow agent in legal transactions by holding funds in the client account until completion. The vital difference is that the solicitor holding those funds will be acting for one of the parties on the transaction itself.

What agency regulates escrow companies in California? ›

The Department of Business Oversight licenses and regulates escrow agents, joint control agents and internet escrow agents in California.

What does no contingency mean? ›

A no-contingency or non-contingent offer means that a buyer's offer has been accepted by the seller and there are no further contingencies to be met in order for the house to be sold.

Is an escrow a trust? ›

On the surface, a trust account is the exact same as an escrow account. An owner deposits their funds via a third-party as a deposit or prepayment for a specific item, like mortgage insurance. But the term can also refer to a trust account that has been set-up for estate planning reasons.

Are escrow payments taxable? ›

Escrow Funds are Not Income, and an Escrow Refund is not Taxable. If you're like most other homeowners with a mortgage, your monthly mortgage payment includes more than just principal (the borrowed money you're paying back )and interest (what the bank is charging you for using its money).

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