A General Information on Escrow Service

Introduction to Escrow Service

Escrow is a process where a buyer puts money into the custody of a trusted third party with a guarantee that funds are available for payment to the seller once the specified set of conditions has been met.  Escrow occurs between the time a seller accepts the offer and the buyer gets the keys to the new house. So how does one prepare for it? Here is a walk-through of the process, so that you get a better idea about how it works.

The Escrow Service Process

It’s a very simple process, where the buyer deposits funds into the escrow’s custody. The seller then ships the item or performs the required work and once the buyer approves, the escrow service pays the seller.

• The escrow process occurs between the time a seller accepts an offer to purchase and the buyer get the possession.
• The first stage of the escrow process involves the opening of an account in which a deposit is to be held.
• The buyer will then have to wait for approval of the bank, procure the financing, complete the inspections, purchase any insurance if required, then go on with the closing.
• The buyer has the privilege of walking away from an agreement if conditions are not met satisfactorily.
• Opt for an unbiased mutually agreeable escrow service. This will prevent any disputes, favouritism or unfair and partial practise to occur.
• Escrow can never be applied to own self and own their employees. If such a scenario takes place, it is advised to call upon another legitimate escrow service.

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Benefits of using an Escrow Service

• For Sellers

The Sellers are safeguarded from chargebacks, insufficient funds, rip-offs, fraud and hoaxes. It is specially useful for intangible services and for any business transactions. This results in added security for both the parties. It also helps in minimizing the occurrence of any dispute.

• For Buyers:

The buyers can inspect the products before they finalise the payment. It gives the advantage of checking and then buying the items. If a buyer pays the escrow fees and requests escrow, there is no reason for a seller to refuse the services. With an escrow service, the buyers have the advantage of the right to return unsatisfactory services if it is proved factually. This takes the worry out of buying from unknown providers, without disclosing personal information to the unfamiliar party.

Types of Escrow Services

There are basically two types of escrow services: Tangible and Intangible.

• Tangible escrow services apply to physical items such as jewellery, electronics, hardware, goods, etc.
• Intangible escrow services are applied for the employing and work performance, duties and intangible products and services such as source code, software programs, graphic design, etc.

How does Escrow Work

1. Start a transaction
2. Both parties agree to the terms
3. Payments are held in the Escrow account till delivery
4. Payments released upon delivery

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