Depending on the field of transaction, it is believed that both parties involved can benefit from escrow services. If discussing business transactions, both parties should be careful when choosing a proper and trustworthy escrow agent. As the funds are held by the third party, both parties involved need to be confident about their assets as they will be released when appropriate.
In real estate, it’s believed that the buyer or the borrower is at a worse position than the seller or the lender. As in case of regular deposits along with mortgage payments, the lender has to tie his funds instead of investing them, earning some return and paying the tax or insurance when needed. In addition, for people with fluctuating income, it could be difficult to ensure equal payments on a monthly basis.
It’s worth mentioning that while the depositing party is incapable to invest their funds, this option is typically used by escrow agents, who earn not only from service fees, but also by investing in short term financial instruments.