Keep Some Funds in Escrow | DomainInvesting.com
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Keep Some Funds in Escrow

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On Friday afternoon, I agreed to buy a domain name for what I think is a good price. It was getting late in the day, and there wasn’t much of a chance of getting the deal done that day, unless the money was already in escrow. For a situation like this, it might be good to have funds in your escrow account.

It doesn’t happen regularly, but I have had buyers and sellers back out of deals on me. They take a bit more time to think about the deal, and they decide they don’t want to close the deal. It sucks, but it happens. I have found this to be the case more regularly on deals that are agreed to prior to a weekend and are expected to close the following week. People either get cold feet about spending money on the domain name or they have second thoughts about selling a domain name for the agreed upon price.

When you keep funds in an escrow account, you can transact nearly immediately. You don’t have to wait hours or days (international) for the escrow company to receive your wire transfer. This is precious time when an important deal is on the line.

This past Friday afternoon, a seller agreed to sell a domain name to my company, and I didn’t want to risk losing the deal over the weekend. Prior to agreeing to the escrow transaction at Escrow.com, my account was fully funded, and I was able to pay instantly upon the seller agreeing to the transaction. Being quick to fund the transaction allowed the domain transfer to start before the weekend, and the deal will hopefully be wrapped up in the next few days once the domain name is released by Moniker.

If you transact regularly using using an escrow service, it might be beneficial to pre-fund your account or keep money in the account. Interest rates at the banks are low, and as long as you trust the escrow service you use, it can be wise to have your account funded in advance.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. 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 (35)

    Francois

    Removed per Francois’ request.

    February 21st, 2015 at 1:01 pm

      BullS

      Is Ecop FDIC insured and “Made” in USA?

      In reply to Francois | February 21st, 2015 at 2:18 pm

    Ron

    To be more clear is this something escrow.com offers?

    February 21st, 2015 at 2:52 pm

      Elliot Silver

      I don’t think this is a “feature” offered by any escrow service, but it’s something that can be requested.

      In reply to Ron | February 21st, 2015 at 3:09 pm

      Francois

      Removed per Francois’ request.

      In reply to Elliot Silver | February 21st, 2015 at 3:14 pm

      Andrea Paladini

      As far as I see, eCOP is owned by a French private company, Cybertonic Sarl, based in 18 Rue de la Calade – 34990 Juvignac, France, authorized and issued capital 10,000 Euro, so it’s not FDIC insured.
      According to its 2012 accounts (Source: Societe.com), it has a negative shareholders equity (- 36,300 EUR) and financial debts for 154,600 EUR, net revenues for 195,800 EUR and a loss of 47,300 EUR …
      Furthermore, deposits at eCOP have not the French equivalent of FDIC insurance for bank accounts, called Fonds de garantie des dépôts et de résolution (FGDR), so no protection in case of bankruptcy, fraud or other mismanagements.
      No way we are going to deposit our funds in such a type of company.

      We feel much safer with Escrow.com, which at least is licensed, insured and audited, that’s why we are working only with them for our/our clients domain transactions.

      In reply to Francois | February 21st, 2015 at 4:24 pm

    Brandon Abbey

    Many of our buyers and sellers choose to hold funds in a transfer account, your funds we are just the custodian. And yes, unlike most other escrow services we are insured, licensed and government audited. We also offer this to marketplaces to save on wire fees and simplify their accounting process by sending one payment with a detailed ledger of all their transactions. For additional information please contact me directly. Babbey@escrow.com

    February 21st, 2015 at 3:27 pm

    Elliot Silver

    Because Francois requested that I delete his comments, I deleted the two other associated comments that were made in reply to his comments.

    Update: In retrospect, I shouldn’t have deleted someone else’s comments, so they were re-approved.

    February 21st, 2015 at 6:19 pm

      Andrea Paladini

      Elliott,
      Yeah, right … he asked to delete his comments because he admitted being violating the law, and he didn’t want people to know the truth about his company … and you are helping him … unbelievable …
      I’m going to re-post my previous comment about eCOP, because we are talking about escrow here …
      And I’m keeping copies on paper of all the posts, just in case …

      In reply to Elliot Silver | February 21st, 2015 at 6:26 pm

      Elliot Silver

      As you can see, your comments were restored.

      In reply to Andrea Paladini | February 21st, 2015 at 6:33 pm

      Andrea Paladini

      Thank you, good choice. :)
      Got scared? You should have been … lol
      Looking as someone who is somewhat “helping” (by trying to conceal the truth about a person/company situation) a person who is illegally conducting a regulated/licensed business is not something good for your reputation and business … plus possible legal implications if something bad happens …

      In reply to Elliot Silver | February 21st, 2015 at 7:03 pm

    Andrea Paladini

    Now on François Carrillo (eCOP and Domaining.com owner) posts I see “Removed per Francois’ request.” …
    Let me guess why he asked to remove his posts … IMHO he suddenly realized that his company is not licensed in France (or elsewhere) to offer its online escrow service … LOL! 😀
    According to the European PSD (Payment Services Directive, see 2007/64/EC), European companies offering Online Escrow services have to be properly licensed and government-regulated.
    And eCOP, as far as I see, is not licensed/authorized.
    Furthermore, collecting and/or managing third parties money is subject to license by local authorities, financial authorities in this case.
    So basically he was admitting to have illegally conducted for at least 5 years a licensed/regulated activity …
    As regards the US, at the moment, as far as we know, there is no license offered by the Federal Gov for online escrow services, while certain states, as California and Arizona, offer their own license.
    For CA check here: http://www.dbo.ca.gov/Consumers/finance/OnlineEscrow_FAQs.asp#1
    “Genuine online escrow companies will be listed on a government register, and it is advised that users should never use an online escrow service without first verifying that it is genuine, by independently viewing a government on-line register.”
    Brandon, about CA regulations, correct me if I’m wrong.

    The funny thing is that the term “Escrow” comes from Old French “escroue” which means “scrap, roll of parchment”, basically a deed delivered to a third person until a future condition is satisfied, which led to sense of “deposit held in trust or security” …

    February 21st, 2015 at 6:20 pm

      Brandon Abbey

      California has many requirements regarding getting an online escrow license. We have had our CA license for 15 years and successfully completed many government audits. The reality is without a license and government oversight you have no protection, no matter who you are dealing with.

      In reply to Andrea Paladini | February 22nd, 2015 at 4:22 pm

    Francois

    Mr Paladini, FYI I simply asked Elliot to remove your comment because you listed my personal postal address (the same as Cybertonic) that I prefer to keep private.

    At the same time I suggested to erase my comments as it was obvious this post was simply a public way for Elliot to request escrow.com to add this new feature and realized my comments may looks an attempt to get this opportunity to promote my own services which is not very nice.

    February 21st, 2015 at 6:49 pm

      Andrea Paladini

      François, your personal postal address (same as Cybertonic) is publicly available on the Web … anyone can get it … you should invent a better excuse … 😀

      In reply to Francois | February 21st, 2015 at 6:53 pm

      Andrea Paladini

      If that was true (but it’s not) you should have asked him to blur or “XXXXX” only your address, not my entire comment …
      IMHO you should be more worried about your company illegally conducting a regulated business (online escrow services) without being properly licensed, which configure an unlawful activity, than about your private postal address, which is public on the net …

      In reply to Francois | February 21st, 2015 at 7:00 pm

      Francois

      Maybe, but if you check it is not indexable in any of my sites, the evidence it’s a privacy aspect that counts for me.

      In reply to Andrea Paladini | February 21st, 2015 at 7:01 pm

      Andrea Paladini

      If you simply search for “Cybertonic”, which is a term included in your sites (since it’s the company behind your business), you can immediately see your address … company data, including its postal address, are public in France (and Europe), so there is no privacy here, you are totally wrong …

      In reply to Francois | February 21st, 2015 at 7:07 pm

    Logan Flatt

    Elliot,

    Your theory of rushing to get an escrow deal started before the weekend to avoid having the seller back out of deal didn’t work for me and I got stung in the end.

    I won a GoDaddy auction. I wired the funds to Escrow.com on Friday afternoon to hurry the deal along and show good faith. On Monday morning, the seller — a Texas-based criminal defense attorney who should know better — informed GoDaddy.com that she would not honor the auction and refused to transfer the domain name. Of course, as many of us have learned, GoDaddy simply tells me, “It’s out of our hands, blah blah blah”.

    The catch to all this? Escrow.com’s policy: once you have wired funds to the Escrow.com account, the buyer has to pay the Escrow.com fees in full if the seller backs out. So guess who had $180 deducted from his funds before getting his money back? All because GoDaddy didn’t enforce the outcome of an auction on its platform with a domain name under its control as the registrar.

    I attempted to collect the $180 from the attorney. She never responded to my emails or voicemails. She’s a class act.

    February 22nd, 2015 at 9:12 pm

      Elliot Silver

      That’s pretty crappy.

      I appreciate your sharing that lesson with us though.

      In reply to Logan Flatt | February 22nd, 2015 at 9:13 pm

    Surya

    For people from some countries, which are not supported by Escrow.com, Carillo’s ECop still a good idea for transactions which sold not in domain Marketplaces…

    February 23rd, 2015 at 3:40 am

      Andrea Paladini

      Dealing with an escrow services which is not licensed, audited and insured is always a bad idea … unless you don’t care about the risk of losing all your money in case of bankruptcy, fraud, mismanagement, etc …
      Plus, as far as we can see (last available accounts online are 2012 ones), Cybertonic/eCOP financial situation and results don’t look good …
      Guess why he was so in a rush to sell Domaining.com …
      All this smells like a company in financial distress …

      Maybe we should inform French financial authorities about Cybertonic/eCOP situation and see what they think about it …
      IMHO they are unlawfully operating a business (online escrow services) which in Europe has to be properly licensed and government-regulated, so they should be sanctioned and closed by the local authorities.

      In reply to Surya | February 23rd, 2015 at 3:00 pm

      Brandon Abbey

      We do not do business with countries specifically called out by the US Government. Also, due to high Internet fraud we have chosen to not do business with a few others. We recently added Indonesia to the list of approved countries.

      In reply to Surya | February 26th, 2015 at 11:38 am

    Chris

    I like the strategy behind funding escrow before the weekend, I lost a deal last month that might have gone through had it been funded. Of course I’m using escrow.com who I fully trust, know where they are licensed, and I know that Brandon and support will take care of me if there’s an issue. Wouldn’t recommend this strategy using other escrow services, I was set up to test a transaction through escrowhill recently and noticed the note on their site about not doing business in Texas (total red flag). A couple quick google searches led me to why: http://www.dob.texas.gov/public/uploads/files/Laws-Regulations/orders/2014-027.pdf
    Nice. Andrea’s got eCop taken care of in the above comments, no need to keep beating a dead horse. I liked agreed, but they’re under escrow.com now so no reason to use anyone else.

    February 23rd, 2015 at 5:57 pm

      Andrea Paladini

      Nice find Chris :)
      As far as I see, Escrow Hill is neither licensed to provide online escrow services to European citizens, I don’t see any license or authorization according to the European PSD Directive on their website.
      And what about other US States (excluding CA and Texas) and other locations worldwide (excluding New Zealand)?
      No money transmission license, no escrow service license … it’s unlawfully conducting a government regulated/licensed financial service …

      In reply to Chris | February 23rd, 2015 at 8:46 pm

      Andrea Paladini

      P.S.
      As regards Arizona, California, Idaho, Texas and Washington, Escrow Hill partnered with a law firm, Greenberg & Lieberman, which I guess owns a license for operating online escrow services when required, maybe they should confirm this in writing.

      In reply to Chris | February 23rd, 2015 at 9:01 pm

      Charlotte Gilbert

      I did my research too being a resident of Tennessee and in Georgia with many transactions throughout the states and from what I have seen ( i am not a legal expert and just searched the business license database of each state) Escrow-Hill is not licensed in my 2 states… I’ll stay protected and use Escrow.com

      In reply to Andrea Paladini | February 25th, 2015 at 12:41 pm
    February 23rd, 2015 at 9:04 pm

      Andrea Paladini

      Unless Greenberg & Lieberman has a partnership with one of the licensed escrow agents listed on the AZDFI site, they are not authorized either to provide escrow services to AZ residents …
      what a mess … 😀

      In reply to Donna Mahony | February 23rd, 2015 at 9:29 pm

    BullS

    You all can thank me aka BullS for opening a new can of worm.

    February 23rd, 2015 at 9:36 pm

      Andrea Paladini

      Thank you BullS, but the can of worms was already open … and I think there is more than one open can …
      I was thinking to the same expression indeed 😀

      In reply to BullS | February 23rd, 2015 at 9:54 pm

      Andrea Paladini

      and some more cans are waiting to be opened … 😉

      In reply to Andrea Paladini | February 23rd, 2015 at 9:56 pm

    BullS

    This is like an escrow company or a domain registrar in Nigeria or China and you want to do business with them?

    Have you heard about Ali Baba in China being hacked by Chinese Hackers?

    Oh wait, the fox guarding the chicken coop.

    February 23rd, 2015 at 10:00 pm

    U F Schultz

    Hey I’m an attorney – why don’t I take over the online escrow world. I knew that attorneys were allowed to conduct escrow transactions that are needed in the course of doing business. Does that right then license them to conduct escrow in the states that require a license? That would make every attorney an escrow company. Sounds like somebody is trying to skirt the law.

    February 24th, 2015 at 6:22 am

    Andrea Paladini

    It’s really meaningful, or revealing if you prefer, seeing that none of the bloggers (I’m not talking about Elliot) which are sponsored by eCOP or EscrowHill wrote anything about this relevant case …
    Vested interests, as usual, are really a bad disease …

    February 25th, 2015 at 1:06 am

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