Escrow Services, Everything You Need To Know
When purchasing or selling high-value items whether online or through direct contact in Singapore, there are bound to be risks involved particularly if the individual concerned is unknown to you. As the seller, you may end up losing your expensive item and receiving no money. If you are the buyer, you may end up losing your money and not receiving the item you intended to purchase.
In other words, both parties are vulnerable to these risks, and that’s why Escrow services are there; to protect both the buyer and the seller financially and allow you to transact comfortably with a peace of mind that no one is going to play any monkey business with your assets or finances.
When you sell your car, your old house or invest in the new market venture, you are exposing yourself to the risk of asset loss. Therefore, corporates and financial service providers have found a way to mitigate these risks by coming up with an escrow service.
What is escrow
An escrow service is a financial arrangement where a third party regulates and holds payments of the funds required for two parties involved in a given transaction. It makes operations more secure by locking the cash in a secure escrow account which is only released when all terms of the agreements are met and overseen by the escrow company.
Escrows are very useful primarily where vast sums of money are involved, and a certain number of obligations require to be fulfilled before payments are released. For instance, in a case where a website developer is hired to build or design a website, the business owner, may want various confirmations of the quality of work done before releasing the payments. The developer, may also not wish to proceed with the work unless a certain amount (upfront payment) is set aside as assurance of full pay after the job is successfully done.
There exist both traditional and online escrow services. Traditional services are typically more stringent and strenuous as they must be obtained through lawyers and banks. Online escrow services are more flexible and may not require too much work when setting up an account. Both services are relatively safe, though the traditional methods are considered more reliable as they do not share personal data like online services.
How does escrow work?
Many Singaporeans do not have an idea of how escrow works; others state that it is another pyramid scheme. However, escrow is the best way of securing what is yours. The process starts with the drafting of a contract between the seller and the buyer, whereby the terms and conditions from both parties are noted and spelled out in detail.
Upon coming to a mutual agreement of the terms and conditions, the escrow contract is handed to both parties for signing. The escrow agent in charge also has a space to sign to verify that the two parties have made an agreement. The funds to be involved are then taken to the bank or held on a mobile account if it is an online escrow service provider and deposited in the account created by the escrow agent, who will henceforth manage and monitor the account till the transaction is over. The direction of the agreement can go either one of the following ways:
- If the terms and conditions of both the seller and the buyer are met, the funds will immediately be safely disbursed to the seller.
- If the agreement has not been honored or met for any reason, the funds will immediately be released back to the buyer.
So why should you consider escrow services in Singapore?
Escrow companies have agents who help ensure that both parties agree and are genuine to proceed with the contract. For the buyers, escrow ensures that the seller has in possession of the item to be sold and that he or she will not take money before the agreement is fulfilled. For the seller, escrow ensures that the buyer has enough capital to pay for the item in question before it is handed over to them.
In Singapore, you’re not limited on the type of agent to approach as there very many agents available in the country both online and bank providers. However, it is always prudent to go for escrow providers that will benefit you with professional consultation and advice. You also want services that offer mediation services in case of challenges in between the sale. Financial advice is quite essential as it may help you detect fraud in future, fake goods and even learn how to make good use of the money you will receive after selling a big item such as a home.
If you are unsure of which escrow service provider to approach, you can contact your local bank and consult. It is most likely that the bank offers escrow services and actually have the safest ways of securing your funds. If you are new to escrow, banks have the best escrow services compared to other financial institutions. Another noteworthy point to put down is the service fee. Escrow services must be paid, and the amount charged varies from one institution to another.
Benefits of escrow services
Aside from offering consultation and financial advice, there are other benefits of using escrow services. Probably the most significant advantage is offering financial security to both the buyer and the seller. Transactions that involve large amounts of money may suddenly turn risky not only for both parties but also for other uninvolved parties. If you are selling a car, it is bound to get stolen or the buyer’s money stolen before it gets to you.
Escrow ensures that both money and the items are safe for the benefit of both the buyer and the seller. Another advantage is that the buyer is able to verify the authenticity and originality of the item to be bought before releasing payments. The seller is also assured of full payments after the item has been confirmed, therefore, both parties walk home satisfied. Through the help of an escrow agent, transactions are made secure, comfortable, and faster.