Real Estate Brokerages Now Accepting Bitcoin (#GotBitcoin?)
The rise of Bitcoin, a form of cryptocurrency, has piqued the interest of real estate brokerages. For interested sellers, some brokerages are now listing properties with the equivalent prices in Bitcoin. Across the nation, brokerages and clients are now exchanging cryptocurrency for properties. Real Estate Brokerages Now Accepting Bitcoin (#GotBitcoin?)
Bitcoin is an experiment for real estate brokerages looking for a competitive edge for their listings. Take a look at the brokerages who are paving the way to a cryptocurrency-ready real estate market.
Who Is Using Cryptocurrency In Real Estate?
Bitcoin usage is still in its initial phases and cryptocurrencies make up only a fraction of real estate sales in the United States. In 2017, Redfin reported about 75 listings nationwide accepting Bitcoin. This year, Realtor.com® has listed 37 single-family homes across the country accepting Bitcoin. The properties range from $114,000 or the equivalent in Bitcoin for a home in Kansas, all the way up to a Hawaiian mansion listed at $7,920,000.
Although real estate Bitcoin deals currently make up a small percentage of the market, brokerages who offer the option of Bitcoin operate in some of the country’s largest real estate markets. New York, Florida, and Texas have all seen cryptocurrency transactions.
So who is currently accepting Bitcoin in the industry? Good question. Though the acceptance of cryptocurrency within the market is still rare, the number of players is growing every day. Here are just a few of the trailblazers.
Listing agent Stephan Burke, of Brown Harris Stevens, reported that the seller of a 9,500-square-foot Miami mansion is accepting Bitcoin. The home is worth approximately $6.5 million. The seller has also reportedly said he will accept either Bitcoin or Zcash, another type of cryptocurrency. Burke had this to say about the transaction:
Industries, businesses, and careers are being affected by this dramatic globalization and modernization, and real estate is no different. It seems clear to me that banks and title companies will be doing everything in a crypto-recorded fashion within the next decade, and our transactions will eventually become faster — and safer — under this system.
A Clearwater, FL mansion, designed by a student of Frank Lloyd Wright, is also available to be purchased with Bitcoin. Nehad Alhassan is marketing the sale of the 4,000-square-foot home. Alhassan noted that since there are so few agents working with Bitcoin, a close relationship between buyer and agent is vital. He went on to say:
I think the seller has to grasp and understand it, and be comfortable in doing the transaction with me. You have to have that trust.
Magnum Real Estate Group believes the use of Bitcoin in real estate is linked to a younger group of home buyers — those who have invested in cryptocurrencies and are searching for alternative forms of payment. Ben Shaoul, President of Magnum, spoke to CNBC about his company’s use of Bitcoin and the relationship of cryptocurrency to the overall global market:
I think the demographic of the crypto user is a younger millennial, but, that being said, you have a lot of people coming over from other countries, who are buyers from different places, who like to trade in different types of currency. Not everyone wants to trade in dollars or yen or euros.
According to Blooming Sky, a New York City brokerage also dealing in Bitcoin, the majority of transactions require cryptocurrency to be exchanged for USD. Blooming Sky works with a team of real estate lawyers to help their prospects navigate the Bitcoin exchange process. Bernard Klein, Co-Founder of Blooming Sky, explained the practice this way:
We will help clients facilitate transactions with [cryptocurrency]. Underwriters who review the sources of a down payment tell me they increasingly see transferring Bitcoins into cash as similar to transferring stocks into cash.
Blooming sky has also published a guide on how to buy a NYC apartment with Bitcoin.
The first real estate transaction involving Bitcoin in Texas was brokered by Kuper Sotheby’s International Realty, a real estate brokerage firm operating in Central and South Texas. The broker associate, Sheryl Lowe, who represented the buyer remarked on the seamlessness of the Bitcoin process:
I honestly couldn’t have expected something so unique to go so smoothly. In a matter of 10 minutes, the Bitcoin was changed to US Dollars and the deal was done!
What Else To Know About Bitcoin In Real Estate:
- The U.S. government may recognize cryptocurrency as property in 2018. This leaves some interesting loopholes involving taxes on real estate transactions.
- Not all Bitcoin transactions go as smoothly as planned. A Bitcoin investor made an offer on a luxury home in California that was contingent on the sale of his cryptocurrency. Although the offer was accepted, the buyer had to back out of the deal when he couldn’t sell his cryptocurrency.
- Redfin recently published an infographic showing the dramatic change in the number of bitcoins needed to buy the typical American home.
What Is The Future Of Cryptocurrency In Real Estate?
At this point in time, brokerages are still learning a lot about the role of Bitcoin in real estate transactions. The real estate brokerages dealing in cryptocurrency today are pioneers in the market and are paving the way for the future use of digital currency. The real estate industry has been heavily influenced by the use of technology over the past decade, and cryptocurrency will be no exception. Brokerages who leverage information on technology trends like Bitcoin will help determine its impact going forward.
Educating the public has been part of the job for Michel Triana, founder and CEO of Intelerit, a Fort Lauderdale-based predictive real estate analytics platform for U.S. investors. The vast majority of sellers still want payment in dollars, he said. For some portions of a deal, that may not change soon, Triana acknowledged.
That includes the title and escrow process, said Marlen Rodriguez, president of the HomePartners Title Services, an affiliate of the Keyes Company real estate firm. Major insurance underwriters only accept dollars, she said.
As long as buyers convert their Bitcoin or Ethereum to cash for the title and escrow process, there would be no problem.
Once the seller converts the digital currency to dollars to pay the title company, “there’s nothing unique about that transaction moving forward,” said Andrew Hinkes, a partner at the law firm Berger Singerman.
Pay The Necessary Parties In Dollars
Some attorneys, real estate agents, title and escrow agents will require you pay them in dollars. For that, you would need to convert your Bitcoin to dollars. Services like Bitpay or Changelly can convert the digital currency to cash.
What About Title?
The seller may have liens on the property or an unpaid mortgage. If a seller has $500,000 left on his or her mortgage, they would convert that portion of cryptocurrency into dollars and pay the mortgage. “The title work is exactly the same,” Kakon said. But, he added, “you need somebody who really understands cryptocurrency.” Because most title and escrow companies aren’t set up to accept Bitcoin, “They just might not be sure,” added Lifthrasir.
Recording The Deed
In the future, cryptocurrency supporters hope that recording deeds will be done with blockchain. The startup Propy recently launched a pilot program in Vermont to use blockchain technology to record real estate deals. Velox.RE created a similar program in Chicago’s Cook County.
Propy CEO Natalia Karayaneva said the technology could be replicated in South Florida. For now, deeds are recorded with each county’s property appraiser.
Fascinated By Cryptocurrency And Real Estate? Here Are A Few Resources You Can Leverage:
- Bitcoin Magazine offers a collection of articles from some of the top minds in the cryptocurrency space. We recommend starting with their article on how the blockchain will transform the real estate market. Subscribe to their email alerts to stay on top of the latest Bitcoin news.
- Inman’s technology section stays current on the latest Bitcoin trends in the real estate market. We recommend the article: 2018 real estate: Bitcoin bets, mega brokerages and VR.
Your Questions And Comments Are Greatly Appreciated.
Monty H. & Carolyn A.Go back