From a "doing it right" standpoint, this is what you're looking at to set it up:
From a legal standpoint, like anything else, you need to be a business, with insurance, just to start. If you already have a business license, that only takes care of step 1. And Btown is step 5. The tricky stuff is in the middle, takes time and money for all of the insurance / bond (for whatever you're escrowing), along with insurance for the operator. All of this needs to be recovered in escrow fees.eHow.com wrote: How to Start an Online Escrow Business
By David Ferguson, eHow Contributor
updated: October 13, 2010
An online escrow service accepts a fee to act as a neutral party to hold payment until transaction conditions have been fulfilled to the satisfaction of buyer and seller. Using a third party to handle the money, securities or documents can inject the trust needed to complete a deal. Your service must meet minimum capital requirements and conform to regulations designed to create a standard that protects the integrity of the escrow indus
Difficulty: Moderately Challenging
Instructions
1. Register with local authorities. Online escrow businesses are required to register in the jurisdiction where they are based. Usually they can only operate with a license granted by the body where they are registered. The regulator is an arm of the state government in the U.S., for example the Department of Corporations in California.
2. Learn more about industry guidelines and practices that govern escrow service providers. An escrow provider must understand how the market works and how it is regulated. The American Escrow Association is a good source of information for new online escrow businesses.
3. Raise the required amount of capital to satisfy the minimum capital thresholds applying to your jurisdiction. For example, escrow regulators in California and Hawaii in 2010 demand a minimum threshold level of $50,000. California requires another $25,000 as a surety bond. Requirements will vary from jurisdiction to jurisdiction.
4. Complete filing application. Expect to present several forms of identification, including your passport and finger print records for every senior stakeholder in the escrow service. There will be a background check and you need to demonstrate past experience in financial services. You may be required to post a fidelity bond for each of your company officers. State filing fees range from $500 to $1,000.
5. Set up your Web site and begin marketing your escrow service.
Filing fees and insurance are probably on the order of $3k to $5k. If you look at doing 100 escrows a year, that's $50 minimum just to cover the cost of setup, plus another $50 (minimum) for labor costs (processing, receiving, inspection, repacking, reshipping), for a total of $100 in added cost.
Are there 100 deals on Btown in which members are willing to pay an extra $50 each for the surety of Escrow?
