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A domain name escrow company acts as a third-party agent in the selling-buying process. The escrow agent connects the buyer to the seller, and ensures that both parties receive exactly what was agreed to before the purchase. In other words, the buyer will only receive the domain name once the seller has paid the escrow. And the seller will only receive the compensation for the domain name once it has been transferred to the buyer.
Domain name escrow companies charge various amounts for this service; usually a percentage of the domain name selling price.
For more information: How Does Domain Name Escrow Work?