3 Reasons to Use an Escrow Service on Domain Deals
101 Domain

3 Reasons to Use Third Party Escrow Service When Selling With Brokers

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Domain brokers are an important part of the domain industry, and there are many fantastic brokers whose dealmaking skills bring revenue to domain owners. When using a broker or brokerage service though, I recommend using a third party escrow service such as Escrow.comAfternic’s escrow service, or Sedo’s escrow to be an intermediary, and I’ll share a few reasons why this might be a wise idea.

Keep brokers honest

I’ve heard stories about brokers allegedly taking money off the top when closing deals on behalf of domain sellers. For instance, if I told a broker I want $50,000 for ElliotsBlog.com and a broker tells me he has a $40,000 offer, if he’s in the middle of the deal, he might actually have sold it for $50k and pocketed the remainder. If you work with a third party, the sales price will be transparent.

Ensure swift payment

After I transfer a name to a buyer or to a broker, I expect to be paid ASAP. There would be no reason for the broker to keep the buyer’s funds any longer than it takes to set up a wire transfer online (or get to the bank to do it in person) once the domain name is transferred to the buyer. With a third party escrow service, once the domain name is in the buyer’s possession, your funds are released.

Licensed, insured, and bonded

Generally speaking, US-based escrow services are licensed by state regulators, insured, and bonded. You don’t have to worry about them running off with your money and your domain name. When dealing with an unprofessional broker, you may give up the domain name and not receive the funds and you don’t have much leverage, especially if they aren’t based in the same jurisdiction as you (and litigation is probably very expensive).

I don’t see why a domain broker would have an issue using a third party escrow service to facilitate a domain sale. If they are concerned about their commission payment, you can ask them to have the buyer pay that directly and take it out of your payment.

Using an escrow service makes for a cleaner transaction and can ensure fairness for all parties.


About The Author: Elliot Silver is an Internet entrepreneur, and he is the publisher of DomainInvesting.com, a website that shares domain investing news, insight, and strategy. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (15)

    Donna Mahony

    This is probably the single best piece of advice you could ever pass along.

    July 24th, 2012 at 1:17 pm

    JS

    great post Elliot,

    this is something a lot of people, me included, would not have figured out by themselves until after they experienced first hand a difficult brokerage deal. Hopefully this will save a lot of people future hardship.

    July 24th, 2012 at 1:27 pm

    Elliot Silver

    Andrew Rosener brokered a deal on my behalf a couple of weeks ago, and he suggested using Escrow.com for the deal. I think it makes things more transparent and it can help ease any anxiety the buyer or seller may have.

    As a seller, it might be troubling to send someone $100,000 cash for “escrow,” especially if the broker isn’t licensed. Imagine if the funds got held up by the bank, IRS, or other creditor. That would be no good.

    July 24th, 2012 at 1:30 pm

    Mike

    Great advice.

    July 24th, 2012 at 1:33 pm

    Ms Domainer

    *

    Elliot, I think I would take this post more seriously if an Escrow ad weren’t splashed on your page.

    ;)

    There are no guarantees with Escrow; one can still lose a domain to a determined scammer (chargeback, etc.). From what I understand, Escrow does not get involved in transfer/chargeback disputes.

    A scammer can change Whois info without actually transferring a domain from his/her account, and Whois info is what Escrow uses to determine ownership.

    Will Escrow protect its customer from a scammer?

    I prefer Sedo. Never have had a problem with them.

    *

    July 24th, 2012 at 1:34 pm

    Elliot Silver

    “Elliot, I think I would take this post more seriously if an Escrow ad weren’t splashed on your page.”

    @ Ms. Domainer

    It’s a small industry, and those company’s advertisements are the only reason I am still willing to share my insight and advice on a regular basis. I can think of a lot of better things to do with my time :-)

    That said, I added a third service (Sedo) to the recommended third party escrow services for some variety. I tend to stick with Escrow.com since the company has supported my blog for many years, I’ve never had any issues using them, and they are recommend by a variety of large companies like Ebay and Cars.com.

    July 24th, 2012 at 1:38 pm

    Aggro

    Eliot said “As a seller, it might be troubling to send someone $100,000 cash for “escrow,” especially if the broker isn’t licensed. Imagine if the funds got held up by the bank, IRS, or other creditor. That would be no good.”

    I guess that rules out eCop.com then

    Since the are NOT licensed nor bonded in ANY juridiction anywhere

    OUCH

    July 24th, 2012 at 2:16 pm

    Elliot Silver

    @ Aggro

    I guess it depends on the dollar amount and where the buyer and seller are located.

    I don’t know foreign rules and regulations.

    July 24th, 2012 at 2:18 pm

    Ron

    Is it just me or does anyone else think the name ecop just sounds stupid, unprofessional, the name turns me off from the service, which based on the domainer backing it, would seem to setup very well, and does arrange for some unique payment scenarios.

    July 24th, 2012 at 2:21 pm

    rob sequin

    Work with a broker you know or know about. Talk on the phone and ask questions then trust him/he.

    However, if the client does not need to be anonymous, then I absolutely recommend escrow.com. If they buyer needs to be anonymous, I close the transaction directly or via escrow.com then move the domain to the client.

    I provide a screen shot of the escrow.com page to verify the amount of the transaction, other party, escrow.com # etc.

    I have never used another escrow service unless I was the buyer or seller at sedo or afternic.

    July 24th, 2012 at 4:52 pm

    Francois Carrillo

    Ms Domainer,

    Escrow.com has been advertising on many blogger sites these past years so it’s normal in a business point of view that bloggers give him some preference. As he outlined, this industry is so small… plus Elliot is not a journalist, he only talk about what he uses and knows, and it’s already great from him to share his experience.

    FYI, ECOP.com that was not referenced in this post escrows the domains and the money.
    Moniker escrow service also deserved to be referenced.
    Personally I find Sedo escrow extremely expensive compared with all the others.

    Hello Aggro,

    I don’t want to go to the jail, we only provide services that are legal.
    Like you I simply work hard to try to make a living and build something family can be proud.

    ECOP.com is up for one year now and nobody never lost money after thousands transactions. We had to deal with an identity usurpation issue the first month. The seller lost $7K that I given him back from my own pockets even if ECOP was not responsable the customer had his email hacked. This leaded to a serie of measures to fight this growing plague, so today (of what I know) we are the first/only escrow service that can pretend having strong measures to fight “identity usurpation”. I guess the other escrow services will implement them also in the future.

    Hi Ron,

    Find a great name it’s not easy, I did my best as you may imagine. Plus you know as me that names can be very expensive so you cannot always get the one you prefer. On Domainware.com there is a post where I explain how and why ecop.com was selected. And if it was not enough, have everybody like it is impossible. I am really sorry you find it so horrible.

    Now I must admit we got more people complaining about the old site design (SWAT) then complaining about the name.
    too expensive

    Hi Rob,

    For info, there is no need to use a broker if the only motivation is to be anonymous.
    ECOP.com allows to secure private (identity revealed when the transaction is completed) or totally anonymous (identity never revealed) domain transactions.

    July 25th, 2012 at 6:39 am

    adam

    Francois what laws/jurisdiction is ecop under and what registrar do you own that you are using to escrow the domain names too ?

    July 25th, 2012 at 5:30 pm

    mat

    @elliot

    would you use escrow if you were leasing? i.e you were receiving scheduled monthly payments?

    Thanks in advance!

    July 26th, 2012 at 7:07 am

      Elliot Silver

      @ Mat

      Depends on the value of the deal.

      I don’t really know if there’s an escrow service made for simply leasing domain names. Escrow.com has a payment plan option, but it’s not made for leasing (ie non-ownership change).

      July 26th, 2012 at 9:27 am

    Calvin Seymour

    Escrow.com also has a new service that allows a broker to make the deal between two parties. He can set it up as confidential, transparent to both parties, or transparent to just one party. There are several restrictions but it basically allows a broker to control who sees the transaction details [purchase price, seller's proceeds, contact information, and broker commission]. I just used this service for the first time on the closing of ChristianDating.com and it went very smoothly.
    The ability sort of nullifies some of the advantages that Elliot pointed out in this post though since a buyer/seller potentially are in the dark depending on how the transaction is setup.

    July 26th, 2012 at 9:25 am

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