What is a Domain Escrow Service?

A domain escrow service is a third-party service that creates a secure and transparent sale and transfer of a domain between buyers and sellers. Used as an impartial party in a domain transaction to protect interests of both the buyer and seller, a domain escrow service holds the domain and acquisition funds in a secure manner until the sale and transfer is complete.

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Understanding Domain Escrow Service:

How Does a Domain Escrow Service Work?

After the buyer and seller agree on the terms of the domain name sale—including purchase price, payment methods and any additional considerations—they will engage with a domain escrow service to complete the deal.

The details of the domain sale will be provided to the escrow service that the buyer and seller have agreed to use. After providing these details to the domain escrow service, essentially preparing escrow, the transaction will go through the following five steps:

  1. Verification: The escrow service will verify important essentials surrounding the sale, including domain ownership and the buyer and seller identities. This is done to prevent any kind of fraud or scam.
  2. Deposit of Funds: The buyer submits the agreed-upon payment to the escrow service, and the escrow service holds onto the funds until the transaction is complete.
  3. Domain Transfer: After funds are securely transferred to the escrow account, the seller transfers the domain name to the buyer’s registrar. The transfer only happens after escrow service has confirmed the buyer’s payment is secure in the escrow account.
  4. Inspection and Acceptance: Once the domain is transferred, the buyer will have a set amount of time to inspect the domain and asset transfer. If there are issues between the buyer and seller at this point, the escrow service can help facilitate negotiations between buyer and seller.
  5. Release of Funds: After the buyer confirms that they’re satisfied with the domain name, they will notify the escrow service and escrow will release the funds to the seller in order to finalize the transaction.

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How Much Do Domain Escrow Services Cost?

Most domain escrow services charge a percentage of the domain sale amount. Many fees structures look like this:

  • For transactions up to $5,000: 3% fee
  • For transactions between $5,000 and $25,000: 2.5% fee
  • For transactions above $25,000: negotiable fee (lower percentage or a flat fee)

Again, fees and fee structures vary depending upon the service provider, so it’s a good idea to shop around to find the best, most trusted provider at the best rate.

When Should I Use a Domain Escrow Service?

You can use a domain escrow service for any domain sale or acquisition, but you’ll find some scenarios below where a domain escrow service may be highly advantageous:

  • Buying or Selling a High-Value Domain
    If there’s a lot of money on the line, an escrow service generally provides an added layer of security for both parties.
  • Transactions with Unknown Buyers or Sellers
    Unless you know the buyer or seller, an escrow service will verify the identities of both parties and help establish a transparent arena in which to conduct a sale and transfer with no funny business.
  • Transactions with Layers of Complexity
    If the domain transaction involves anything beyond just cash—for example, if there’s a trade, real estate, or other property—you’ll probably want an impartial third-party like an escrow service to make sure all assets are transferred in accordance with the purchase agreement and that both parties adhere to the terms and conditions.
  • Cross-Border Transactions
    If the domain transaction involves international parties, a domain escrow service can help both with navigating communications, currency conversions, and any legal or regulatory concerns.
  • Dispute Resolution
    Arguments happen and a domain escrow service can help resolve disputes between buyer and seller and help work out a fair resolution.

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