First of all, using an Escrow service is a must. Don’t do it without one.
Even if you don’t use a broker and find a deal on your own. This will ensure that you don’t get in trouble when buying digital assets. Imagine you transfer the money to the seller and never hear back. Yes, that kind of trouble. 💣
What is an Escrow service
Simply put, an Escrow service is a neutral middleman in your transaction. A middleman, which holds your money until both sides are happy with the transaction.
If you would use no middleman there would effectively be no guarantee that the seller actually fulfills his obligations (e.g., transferring the asset) after receiving the money from you.
What does the process look like?
- You and the seller agree on the terms and conditions of the transaction.
- You share the agreed conditions with the Escrow service and transfer your funds to the Escrow account, which will be held there.
- You complete the asset transfer. Only when the seller has met all agreed obligations, you notify the Escrow service of the completed transfer.
- Only then the funds will get released.
If the seller suggests any workaround from the standard Escrow process I see this a serious red flag.
What are the costs associated with it
That really depends on the service you decide to go with. And make sure to choose a good Escrow service (as they can be crooks too).
Example: in the Example above the Escrow fees amounted to approx. 1% of the original purchase price. A sum well-invested.
Anything to keep in mind?
How long does the Escrow process take?
That really depends mainly only on the following:
- The inspection period agreed upon by both you and the seller.
- Your payment method.
- The delivery time from Seller to you, the Buyer.
- The seller’s selected disbursement option.
Generally, most escrow purchases can take from five to 20 days.
Who is responsible for paying the fees?
That entirely depends on your agreement with the buyer. You might split the fees, but any party could effectively offer to pay the fees.
This is an example how Escrow.com would allow you to split the fees: