AW Daily - Tips & Tactics - After the Auction: Using Escrow

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After the Auction: Using Escrow continued ...

The Right Time
As a buyer, you should not shy away from using escrow services, but you should be aware of the signal it sends to sellers. Sellers, in general, would rather not use escrow for the simple reason that it adds another layer to the transaction. They would rather get your check or money order and send you the goods. Right or wrong, buyers who opt to use escrow can turn off thin-skinned sellers. If you're not dealing with an item of significant value and the seller's feedback checks out, you might opt for a money order instead. If you would like to establish a lasting relationship with particular sellers, do not require escrow on every auction of theirs you win. In general, reserve escrow for items above $75 that you would typically pay for via C.O.D. (collect on delivery). Escrow and C.O.D. are actually quite similar, except with escrow you actually get to inspect the item.

Interested Parties
Some online auction users complain that escrow services hold the buyer's payments for extended periods of time (two to three weeks) in order to earn interest from it. Legitimate escrow services do not do this. Financial services must abide by stiff regulations, and this practice is illegal. Make sure that the escrow service you choose is licensed and does not require such delays. If they do, jump ship. Licensed escrow services will release payment the day after an item is approved or the day after an inspection period ends.

Clock Watchers
Contrary to popular opinion, escrow services do not let buyers take their sweet time reviewing an item. The buyer must agree to a strict inspection period, which is normally two days. As a result, the buyer cannot delay payment to the seller. If the buyer does not respond to the escrow service within the allotted time--either approving or declining the item--the escrow service will forward the payment to the seller, assuming the sale is final. If you hear otherwise, you are considering the wrong escrow service. Moreover, if a product is returned to the seller, the buyer--not the seller--is obligated to pay the escrow fee.

Value Added
Most escrow services offer some nice perks. For one, buyers can pay for the item and any escrow fees using a credit card since they are, in effect, paying the escrow service. This can be quicker, easier, and safer for both parties. On the seller side, for example, licensed escrow services screen for bad credit cards and checks. Moreover, the seller will not be held responsible if a bad card or check slips through the cracks.

Also, most escrow services provide shipping insurance, eliminating the need for paying UPS or USPS insurance. If the item is damaged, the escrow service will cover the expense, eliminating any possible funny business on the buyer's end--namely, the buyer cannot claim the item is damaged, send back a fake, and then try to score a refund.

Identifying Questionable Auctions
Verifying Items
Researching Sellers