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escrow.com is incredibly cheap to use.
You can probably use paypal and get away with it ... it depends on the size of the transaction imho.
You can pay using paypal on escrow.com
My general rule is this <500 use paypal. >500 and a random individual i use escrow.com
Steps to take -- make sure the person actually owns the domain you want, and further that they have given you valid contact information that is consistent with linkedin/xing/facebook/whois/ and other information.
Since I mostly buy domains, I generally research the person on linkedin/xing/facebook/whois to ensure they are a real person -- after that it depends on whether you want to spend the money for escrow or not.
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