ESCROW.COM: A Cheap, Real World Skin in the Game
How Does Escrow.com Work?
I decided to take the plunge and buy a content site on Flippa using escrow.com as the transaction handler, instead of Flippa. Unless you know the seller, every transaction is an experiment, in my opinion–ratings and reviews of that particular seller from other buyers serving only as a rough guideline. Each transaction between buyer and seller is unique and may or may not reflect prior interactions with others besides you. It’s best to do your own due diligence for each situation.
Escrow.com Review: The Experiment Begins
The Flippa site was an outsourcing content site using the very common outsourcing model of an email marketer who “feeds” jobs to the owner of the site, who then contacts inexpensive content writers (suppliers) to do the actual work, giving the owner the ability to set a profit margin. As a former writer, I had negative feelings about aiding and abetting this “race to the bottom” for writers. There are other ethical and global issues with this model, but I actually didn’t really care about the domain and I didn’t care about the site or its model so much.
I really just wanted from the sale on Flippa was the contact information for the email marketer to use for a different business I was launching. That was really the crucial thing for me. Websites are a dime a dozen and so easy to design with WordPress. Month revenues and the like were not my concern.
▶︎▶︎▶︎How I Use Flippa to Buy and Sell Online Businesses, Domains, Apps, and Other Digital Assets
Here is the process in a nutshell for buying and selling on escrow.com. As you can see, it is based on the domain name transfer and not anything else you might have in your agreement:
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Why Pull the Trigger?
It’s crucial to understand your goals in buying a site. I had already analyzed dozens of these kinds of sites. The reason I was interested in this one in particular was the site was decent-looking (most of them are not), which showed some care on the seller’s part. I was also interested in this particular site because the email marketer reportedly costs a reasonable amount–$300 as opposed to $100, which seems too low to be good enough quality. (Note I said “reportedly” as everything is conjecture before you actually buy and verify it all yourself.
TIP: Look beyond the number of bids, which can be a high number. At first glance, a high number can make you feel as if you are bidding against a lot of competitors. Often (at least from my experience looking at smaller sites), there are really only a few serious bidders to contend with and the early bottom-feeders drop out fast.
It didn’t take long for me and the seller to come up with a price. It was a simple auction with a clearly stated Reserve Price and I was only bidding against one other person who clearly was reluctant to go much higher. I bid a dollar over the reserve price. And the seller contacted me. With a buy it now price of $950 I countered with 750, as that was how much I was willing to pay for that information, and save myself days of time by going through suppliers, trying them one by one.
I also really wanted to see how well this email marketer could work—and IF this model even works (it’s a common setup for smallish websites on Flippa.) I wasn’t particularly concerned with whether the revenue was exactly accurate. I just was curious about the process and I wanted an inside look at things. I am a tactile learner: I learn best when I try things out myself and go through an actual, real-live process.
All Was Going Swimmingly…
The sale was done through escrow.com rather than flippa.com, which I had agreed to early on, having worked with Escrow.com once before for a sale of a simple app written in PHP. Setting up my payment credentials (again) took a few minutes, but the processing of the payment credentials took almost five days.
It is important to plan ahead for these time requirements in the negotiation process, as that kind of time lag could impede the negotiations and get them off on the wrong track. Consider that in my case, the seller essentially “suspended” the auction to transact with me, taking valuable attention and resources away from the current auction, trusting that our deal would go through for this auction which had not ended yet, but would be ending in two days. (And timing could be even more crucial for an auction that had ended, where the other bidders are “cold” and no longer interested or in the middle of buying an alternate site by the time our transaction either happened or not).
TIP: Payment Processing (such as verifying credentials and issuing refunds) is extremely slow on escrow.com, taking up to five days.
Note that domain ownership and registrations are two different things. A new domain can be transferred to a new owner within the same host registrar (in this case, NameCheap) fairly simply by simply exchanging login information from the seller to the buyer and then changing the name to the buyer. Changing registration of the domain name is more complicated and involves a handshake between hosting providers.
TIP: New domain names cannot be transferred to a new registrar until they have been at the first registrar for 60 days, as per ICANN rules.
The seller transferred the domain name from namecheap.com, where it was registered to me and I accepted it. I then changed the DNS to point to my hosting and set up WordPress there, which was maybe not the best thing to do at that point, I admit, as I couldn’t see the website files using my browser because the site was not secure (using the https protocol).
This was the first red flag for me. A seller who didn’t even bother to make the site acceptable to Google at the simplest level is not worth dealing with. And since the transaction on escrow.com was hinged on the domain name as the property we were exchanging, why would I accept a faulty domain? (of course, I can add an SSL for free on Siteground, which is my host, but still…) What other problems might there be? The seller agreed to transfer the files to my hosting.
We hit a snag in our negotiations.
It All Comes Down To Trust
It is interesting that even when dealing online, the issue of trust is still present. I was reminded of the warning on Flippa.com stating, “For your safety, do not agree to transact off the Flippa platform.” Had I made a fatal error? According to escrow.com, all I had to do to accept the sale and release my funds was to have the domain transferred to me—which it had been–but the domain was not the complete sale and frankly not the thing I really wanted. What I really wanted was the contact information for the suppliers and the marketer. I reminded the seller of the terms of the sale and waited.
TIP: Remember that sellers and buyers are reviewed on Flippa. A career Flippa reseller will not want to have a bad review as one bad review can really hurt sales. A bad review for a buyer is not as big a deal, which gives you an edge.
There were two routes for me to get the website files:
- Have seller FTP to my hosting
- Give the seller login and pass to my hosting (then change pass ASAP afterwords, of course)
In the end, the files were transferred but had issues. Even though the site was a WordPress site, they were not readable by WordPress on my host. The negotiation did indeed, “go south.” In escrow.com language, I “refused” the domain (although I was actually refusing the site, domain and all that went with it –the entire package deal). I “returned” ownership of the domain name to the seller at Namecheap, where it had been originally.
I left several messages with the seller explaining why I no longer wanted the sale. It took a bit of explaining, which was not exactly easy to do with a seller who clearly did not speak English fluently. I also called escrow.com to ensure that the process of getting my refund got recorded and was initiated. I was reassured on the phone that they would contact the seller on my behalf to make sure the refund process went smoothly–ie, if the seller was unresponsive, they would step in. I emailed escrow.com with the transaction ID as a follow up.
Issues with your transaction? Note that you have 180 days from the date of the transaction to open a dispute in the Resolution Center. I STRONGLY recommend opening a dispute within ten days of the transaction, or less.
Here is the first email I received from escrow.com about getting a refund:
Thank you for contacting us.
In case you, the Buyer rejects the merchandise and is asking for a refund, we follow this protocol:
1. You, the Buyer returning the item to the Seller within 10 days or rejecting (failure to do so will cause the funds to be released to the Seller).
2. When the item is returned, the Seller has to confirm receipt so the 5-day Inspection Period will begin.
3. If the Seller clicks "accept", a refund will be issued to you, the Buyer. If the Seller clicks "Reject", there will be a 14-day Negotiation Period.
4. If both parties agree to skip the negotiation period, we will proceed to the Arbitration Phase. During the Arbitration Period, the funds will be kept in our system until a final decision is made.
You can read more about this here:
Section 10. Dispute Resolution
We appreciate you cooperation regarding to this. Should you have any more questions, please feel free to message us again.
Thank you and stay safe!
And a Few More Emails…
I received several other emails that were more personal from escrow.com and intent on guiding me through the process of getting a refund. I believe that calling at the start of the refund process was key. I had drawn a line in the sand at a particular time and day. Here is one of the followup emails I got, outlining in basic (although not perfect grammar, but who’s counting?) simple, plain English how to proceed on a refund process. I appreciated having it spelled out for me in a clear way from an actual person, rather than just a regurgitated pasted content from their “rules book.”
Thank you for contacting Escrow.com support about this.
For us to be able to proceed with the refund for this, Buyer kindly update that you have already transferred this back already. This will allow the Seller to mark this as received and accepted on their end. After these are done, the transaction can be put in queue for the refund.
We appreciate your patience and cooperation regarding this. If you need further information, please do not hesitate to let us know.
At Escrow.com we are always trying to improve our product and service and we value customer feedback as part of this process. To help us make Escrow.com the best it can be, we need your feedback today. Will you take a few minutes to fill out our survey by going to the link below? We promise it won’t take long :)
I do actually think that the company is interested in improving their product and their customer service. After all, I had spoken to a real person (not an AI Chatbot who was clueless) and had gotten at least one personal email.
In the end, I was refunded $772.87, paying an Escrow Fee of 24.38.
All in all, it was a good $24.38 spent for an actual real-world lesson in both buying and selling a business online and using an outside escrow provider–a cut-rate cost for learning these days. You can’t get a decent meal for two for that kind of money these days. You can’t really get that kind of real live personal experience with “skin in the game” when you are being hypothetical. I will use escrow.com again but with the full knowledge of their transaction timelines and an awareness of their reasonably personal approach to customer service in this online world.
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