What is escrow and how does it work?
In: Economics
You’ve got lots of good answers here. But escrow is basically a trustee person that can facilitate a transaction amongst two potentially untrustworthy people. When I sold my software company to another company, it had to go through escrow. I think escrow charged 1% of the purchase price. But they took the contract and made sure both sides lived up to it. The buyer sent all the money to the escrow agent, and we sent all the domain names, software packages, code, etc to the escrow agent as well. Once they verified both parties did what they said they would do, they gave us the money, and they gave the seller all the software. If one of us would have not fulfilled the contract, they would have reversed it (but kept the 1%).
Without the escrow agent, you can get into issues as one side has to make a move before the other. Like if I sent the seller the domain name for my business, but they never followed through with the cash, now my company is dead but I have no money.
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