Escrow Services: Every Thing You to Need to Know About
“Escrow” is a word that causes misunderstanding for many individuals. The definition of the word is often mystified by the fact that it has various meanings, insinuations and purposes. Individuals often struggle to understand escrow service and gaining a fuller sense of its meaning. It is important to understand that once you become aware of the concept of Escrow and the services, it will help you to move forward with the transaction without any risk.
According to the Merriam-Webster dictionary, the word escrow means “a deed, a bond, money, or a piece of property held in trust by a third party to be turned over to the grantee only upon fulfillment of a condition” or a “fund or deposit designed to serve as an escrow.”
When two parties are involved in the money dealing matters there might doubt of trusting the parties. This is a very common situation in the financial domain where two parties are involved in the money dealing matters. Here, the only third-party offers the solution by providing assurance to both the parties for transparent money transaction.
Understanding the concept and learning about Escrow services become even more important when you are involved in cryptocurrency deal, an online sale or a real estate transaction. By understanding ‘escrow services’ you also get to comprehend Bit coin or crypto currencies escrow services as well.
What is an Escrow Service?
Escrow is referred to as a structure or a financial arrangement where there is a third party involved apart from two parties, one buyer and another seller. The Escrow provider is neutral and doesn’t care much about the competition between the buyer and the seller. In a safer and more comfortable environment” An Escrow Service Provider” aids in the transaction between the seller and the buyer. This is most significant in deals like those of cryptocurrencies which require a lot of faith, for which escrow is optimum option.The job of an Escrow service provider is to make sure that the parties abide by their terms of the bargain and there is no sort of any fraudulent. It assures that both the parties (buyers and sellers) cater to their responsibilities in the best possible manner.
When Can a Transaction Get Complicated?
Generally, when you plan to buy or sell anything, you give consent to do a number of things to execute the deal successfully. Being a buyer you need to make a payment upon the agreed price within a stipulated time frame. Similarly, as a seller, you have to hand over the asset to the buyer within the time as agreed upon. You might not have the idea, but the majority of the transactions that take place between the buyers and sellers are quite complicated.
Some things that might arise and make the whole transaction process really complex are like:
Ø If you are a seller, you might need an assurance from the other party (buyer) that he/she has the potential to make the payment right on the agreed time frame whereas a buyer, you might want to assess the entire property before investing the money.
Ø There is a chance that the item that is up for sale is a service, not a product.
Here comes a question in mind that who will keep an eye on complex agreements and judge on such complex cases. This is the exact situation, where an Escrow service provider can be the best option, as it assures that both the parties act as per the agreed upon agreement. Basically, this service provider act more as a middleman and safeguard the assets involved in the transaction process. It becomes even more important to seek the services of a trustworthy and reliable Escrow provider while dealing with an online transaction.
How Does The Escrow Service Works?
An Escrow provider acts as a reliable and trusted third party reducing the instances and the risks associated with frauds and scams. The Escrow provider will collect, hold and distribute money only both the buyers and sellers are contented and happy. Let’s explore step by step that how does the Escrow works?
- The parties, a buyer and a seller will start with the transaction. They agree to the terms and conditions set and thereby register to the Escrow services.
- The buyer will pay the Escrow service provider via an approved payment method. The Escrow service provider will verify the payment.
- After then, the seller is given a notification that the transferred payment has been verified and secured by Escrow.
- Once the payment is verified, the seller ships the merchandise and also includes tracking information so that the buyer can monitor the shipment.
- The Escrow provider verifies that the buyer has received the shipment.
- The buyer gets the option to evaluate the merchandise with a fixed number of days to accept or reject it.
- The Escrow service provider will pay the funds to the seller after the buyer accepts the merchandise.
- This completes the whole transaction process in a safe and secure way.
Keep Parties Updated With All Steps of the Transaction
After you have created an account with an Escrow service provider, it will keep you updated on the transaction process. Furthermore, it also keeps you informed if there are any actions that you need to take. No matters, you are a buyer or a seller, it ensures that you will have full access to the step by step implementation with a proper timeline as well as you know exactly what next you need to do with the transaction.
Keeps a Track over the Transaction
In case of a seller, you might want to explore a wide array of potential buyers and the situation is visa- versa for buyers too. The question arises that how it is possible? Especially, when you for making the safe and secure online transaction? It is absolutely not possible for the luxury items and even practical to ask the buyers to sign a safe form of payment. In fact, there are several online scammers who take the undue advantage of the sellers.
Here, Escrow service provider acts as a third-party referee that keeps a watch over the transaction process completely. Both the buyers and the seller can really benefit from this service as there is an agreement on several terms and conditions. Some of the common terms that an escrow services provider tracks include:
- The amount that the buyer is entitled to pay.
- The time and way the seller will ship the merchandise.
- The time frame was given to the buyer to inspect the merchandise.
- Buyer’s right to reject the product if not satisfied with the quality.
Advantages of Using an Escrow Services
There are numerous advantages of using an Escrow service. Let us have a look at what benefits it can render while transacting.
Ø Escrow is a reliable third party service provider, and the buyer and the seller can be assured of the fact that their respective funds are absolutely safe, without any scope of any frauds
Ø An Escrow service will assure that the rights of both the buyers and sellers are protected without any partiality during a valid transaction.
Ø Escrow handles and deals with almost everything, starting from the quality inspection, delivery and shipping. Hence, the buyer has to just make the payment and the rest will be handled by the Escrow service provider. If there are any disputes, between the buyer and the seller are handled and managed with the best possible ways.
Ø The payment made the buyer is verified by the Escrow service provider and kept in a secured manner for the seller.
Ø The seller can be assured of the payment of the merchandise shipped to the buyer when Escrow confirms of the payment from the buyer.
Ø The Escrow service acts as the reliable and trustworthy third party agent, ensuring the secure, interactive and safe transaction for both the parties. The huge fees and charges need not be concerned much because of the sliding revenue scale of Escrow service.
Ø When you make use of the licensed Escrow service in order to buy or sell merchandise, you can be assured that you are executing the transactions online in the most hassle free and convenient manner.
Ø The buyer has to make sure that the inspection is executed only within the time frame agreed upon, or else the seller will get the payment when the time comes. Unless and until the buyer accepts the merchandise after fully inspecting, the seller will not be paid by Escrow.
Ø The Escrow service ensures that the merchandise is tracked so that it gets delivered right on time as per the conditions and terms agreed upon by the parties.
Ø The entire process of the transaction takes place under the strict supervision and evaluation of Escrow service providers. Hence, there is nothing to be concerned about.
How Much Time Escrow Process Takes to Complete The Transaction?
- The payment method of the buyer
- The required delivery time frame
- The time period for evaluating merchandise.
- The payment mode opted by the seller.
- In most the cases, the purchase can take time from 5 days to 20 days.
Escrow will support and accept only credit cards or PayPal payment methods in the rare case where you have premier service transactions. When you are considering this service transaction, the limit is set to US$ 5000 every active transaction that takes place. Additionally, there are rigorous policies that regulate PayPal payments and the recognition of the credit cards. However, there are certain cases when both the credit card and the PayPal payments will not be accepted for your transaction process. When:
- You are a seller, and the amount paid to you in the last six months exceeds the maximum limit of US$20,000 either by credit card or PayPal.
- You are a buyer, and your payment in the last six months exceeds the limit of US$ 5000, either by credit card or PayPal.
- The transaction has not been converted into US Dollars.
- The transaction includes the buying of a service, merchandise or an automobile.
- The use of the credit card and PayPal is often limited to certain merchandise.
- The transaction will not include the shipping to the confirmed address of the credit card and PayPal.
- When you are not reachable on the contact number as mentioned and the information provided in the Escrow account is incorrect.
- There is an indication of a fraud in the transaction.
Escrow Services Do Wonders in Different Trading Sectors
As it indicates above that an Escrow service is immensely helpful for both the parties to handle the transactions and for protecting their rights, it works wonderfully in different trading sectors such as:
The Escrow services are good for the sale and purchase of real estate property. An Escrow officer takes up the responsibility to verify and evaluate that all the agreement terms and the disclosures get completed in the stipulated time period. The Escrow service provider ensures that the conditions of the contract or agreement are satisfactory for both the parties and he resolves the dispute if there is any. The transaction seems to be complete once the property gets transferred to the buyer and the seller received the payment.
If you are thinking that the Escrow services are beneficial in real estate just for the sale and purchase of property, you are absolutely wrong. Escrow services are really helpful in online sales and purchases.
The online sales are very risky, as you are dealing with an absolute stranger, and you don’t know anything about him/her. Moreover, the stranger might be located miles away, which makes taking legal action in case of a dispute or a fraud way expensive and something impossible.
Banking and Other Financial Investments
The escrow service provider holds the funds or assets whether it is stocks, insurance or other financial investment, specially in the field of cryptocurrency until it receives the appropriate instructions. Money, securities, funds and other assets can all be held through escrow services until predetermined contractual obligations have been fulfilled.
Here the Escrow service provider takes the charge and ensures that the products and investment are tracked as per the conditions and terms agreed upon by the parties. But In case, the buyer doesn’t approve that the shipment has arrived, the Escrow service provides will make the payment to the seller. In the other situation, when the seller doesn’t send anything, the buyer will get back the money from the escrow service provider.
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