Escrow is a term that describes a financial arrangement where a third party holds and regulates payment of the funds required for two parties involved in a given transaction. It helps make transactions more secure by keeping the payment in a secure escrow account which is only released when all of the terms of an agreement are met as overseen by the escrow company.
In the context of domain name investing, escrow services are often used in the sale and purchase of domain names, particularly for high-value domains. The buyer sends the agreed-upon payment to the escrow service, and the seller transfers the domain name to the buyer. Only when the escrow service confirms that the domain has been transferred as agreed does it release the funds to the seller.
This helps protect both parties: the buyer can be confident that they’ll receive the domain they’re paying for, and the seller can be sure they’ll receive payment if they uphold their end of the deal. Well-known escrow services in the domain industry include Escrow.com, Sedo’s Transfer Service, and DAN.COM’s domain transfer service.