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Escrow is the single most important protection in a website acquisition. It ensures the buyer's funds are only released after the seller has transferred all agreed assets — and gives both parties a neutral third party to resolve disputes. This guide explains how escrow works, which service to use, how to handle holdbacks, and exactly what to do on transfer day.
Quick reference
Website acquisition fraud most commonly occurs in one of two ways: a buyer wires funds directly and the seller disappears without transferring assets, or a seller transfers assets and the buyer claims they never received them to avoid paying. Escrow eliminates both risks by acting as a neutral intermediary that holds funds until both parties confirm the transaction is complete.
Without escrow, your only recourse if something goes wrong is civil litigation — expensive, slow, and often impractical when buyers and sellers are in different countries. With escrow, the dispute resolution process is built in. See the fraud prevention guide for additional red flags to watch for during a website acquisition.
Before initiating escrow, finalize and sign the purchase agreement (APA). It should specify the total price, any holdback amount and duration, the inspection period length (typically 3–7 days after the seller completes the transfer), and a complete list of all assets being transferred. Do not open escrow before the APA is signed — escrow confirms receipt of funds, not agreement on terms.
Either party can create the transaction on Escrow.com. Select "Domain Name" or "General Merchandise" as the transaction type (for full websites, General Merchandise or Domain Name + website are both used). Enter the agreed purchase price, set the inspection period, and invite the other party by email. Both parties must create free accounts and accept the transaction terms. Escrow.com will email instructions for the next steps.
The buyer transfers the purchase price (or down payment portion if seller financing covers the rest) by wire transfer or ACH to Escrow.com's holding account. Escrow.com confirms receipt and notifies both parties. Wire transfers clear in 1–3 business days. Funds are held in the escrow account — the seller cannot access them until the buyer releases them.
Once Escrow.com confirms fund receipt, the seller begins transferring every agreed asset. Typical transfer checklist:
During the inspection period, the buyer logs into every transferred account, changes all passwords and two-factor authentication, updates recovery email addresses to their own, and verifies the site is live and functioning as described. Use the acquisition checklist to tick off each asset. If anything is missing, contact the seller immediately — do not let the inspection period expire without raising the issue.
If all assets are transferred and the business is as represented, the buyer clicks "Approve" in Escrow.com. Escrow.com releases payment to the seller — funds typically arrive within 1–3 business days. If assets are missing or materially misrepresented, the buyer raises a dispute within the inspection period. Escrow.com mediates and, if the seller is at fault, can return the funds to the buyer.
An escrow holdback is a portion of the purchase price — typically 5–15% — withheld after closing for a defined period (usually 30–90 days), released to the seller only if stated conditions are met. Holdbacks protect the buyer against claims that prove false after the inspection period.
Use a holdback when:
Holdbacks are distinct from earnouts. An earnout is future contingent consideration based on the business hitting new performance targets post-close. A holdback is withheld from the already-agreed purchase price as security against claims that prove false. For advice on when to use each, see the website negotiation guide.
Escrow.com charges a fee based on the transaction value and payment method. As a rough guide:
| Deal size | Approximate fee | Typical split |
|---|---|---|
| $1k–$5k | ~$70–$160 | 50/50 |
| $5k–$25k | ~$160–$500 | 50/50 or buyer pays |
| $25k–$100k | ~$500–$1,500 | Negotiated |
| $100k+ | ~1–1.5% of deal | Negotiated |
Always check the current fee schedule on Escrow.com directly, as rates change. Wire transfers carry a lower fee than credit card payments. Agree who pays — and in what proportion — before opening the escrow transaction.
Escrow confirms funds — it does not define deal terms. Open escrow only after both parties have signed the APA specifying the asset list, holdback terms, and inspection period. Ambiguity about what was agreed makes disputes harder to resolve.
A 24-hour inspection period is not enough time to verify all transferred assets, change credentials, and confirm the site is functioning. Use at least 3 business days for simple sites, 5–7 for anything with significant infrastructure or multiple revenue streams.
Domain transfers via the registrar-to-registrar EPP process take 5–7 calendar days. Sellers should initiate this before or at the start of the escrow process — but buyers should not release funds until the domain is confirmed in their registrar account. The site content is worthless without the domain.
If a seller retains access to transferred accounts — even accidentally — they can reset passwords, withdraw ad earnings, or access customer data post-close. Change every password, update every recovery email address, and revoke all existing admin access during the inspection period, before releasing funds.
Most website acquisition fraud involves sellers who appear legitimate — established social media presence, verifiable listings, detailed financials. Trust does not eliminate risk. Use escrow for every deal where the purchase price is meaningful to you.
Escrow.com is the dominant choice for peer-to-peer website acquisitions because it explicitly supports domain name and online business transactions and is licensed and regulated. For deals over $250k, some buyers and sellers use attorneys holding funds in trust or specialized M&A escrow agents, which offer more customizable terms. For most deals under $500k, Escrow.com is the simplest, most cost-effective option.
Typically the buyer and seller split the escrow fee 50/50, though this is negotiable and should be agreed before opening the escrow transaction. For buyer-initiated deals on marketplace platforms, it is common for the buyer to pay the full fee. Agree upfront — disputes about who pays the fee are a common friction point at closing.
If the seller fails to deliver all agreed assets within the inspection period, the buyer raises a dispute through Escrow.com. Escrow.com mediates — if the seller is at fault, funds are returned to the buyer. This is the primary value of escrow: neither party can be harmed by the other acting in bad faith after the transaction begins.
Escrow is advisable for any purchase where you cannot afford to lose the amount at stake. For very small deals under $2,000–$3,000, some buyers accept the risk of a direct transfer when the seller has a verifiable public reputation and a history of completed transactions. However, escrow fees on a $3,000 deal are approximately $100 — a small price for protection. When in doubt, use escrow.
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