To implement a traditional escrow you need an escrow agent and an escrow agreement, as you rightly note. In the event of a dispute, the escrow just holds onto the money until the question is resolved in arbitration or litigation.

Expenses involved is such a process include legal fees to draft and negotiate the agreement; paying the escrow agent for their bother; paying for litigation in the event of a dispute.

Escrows can be implemented on a blockchain as well. If the use case is suitable, you can save a lot of money and hassle! And if settlement is on-chain and is indisputable, you might not even need any escrow at all.

And what if the escrow runs off like SBF and spends your money on personal property in the Bahamas?

Then the legal system deals with them and your business insurance covers you (or doesn't). This stuff is a solved problem. Business transact in a low trust environment all the time all over the world.

A blockchain can perform escrow services in a more secure manner, 24/7.