With the rising normalization of cryptocurrencies in our marketplaces, it’s no surprise crypto has found its way into real estate. In recent news, the first commercial property in New York has been put on the market exclusively for Bitcoin — $29 million dollars worth, to be exact. Although using crypto to pay for real estate isn’t a new concept (we’ve already been using it for international transactions), it’s starting to become a more mainstream concept when it comes to local property sales.
Bill Zielke, CMO of BitPay, has been handling crypto transactions in real estate for years where transactions are settled as soon as the next business day, involving no banks, and no traditional pay wires — and they’re completely secure.
With how quickly the crypto wave is catching on in general, this is a good time for real estate agents to study how crypto technology can potentially be used to benefit your real estate practice before it becomes a new norm — with or without you.
Cyprotuccrency utilizes blockchain technology that allows assets like real estate to be tokenized — representing a real-world asset, like a home, in the form of a digital token that can be transferred, purchased, and sold across different users. This tokenization allows for ease of online transactions via trading platforms and internet marketplaces, making real estate trades much more like handling stock exchanges, and home purchasing as simple as online shopping.
This also makes for easy liquidation of your assets since you can trade cryptocurrencies such as Bitcoin in exchange for fiat currencies online.
Major benefits of tokenizing real estate assets include:
- More liquidity
- Lowered barriers for investment
- Programmable security
Cutting Out Middlemen
There are usually too many cooks in the kitchen when you’ve got those who handle your listings, payment transactions, as well as your legal documentation with your clientele. Fortunately, blockchain technology is ushering in a new era of secure digital real estate trading which is capable of cutting out the likes of lawyers and bankers from your deal-making via platforms that essentially automate and protect all these processes for you.
For buyers and sellers, this means they’ll get more bang for their buck when they save on commissions and fees typically charged by brokers, lawyers, and banks. And the fewer who are involved in the process of their home buying or selling process, the quicker it will be.
That’s certainly a worthy enough selling point to set you leagues apart from plenty of your competitors.
Real Estate Smart Contracts
The security that blockchain offers to the real estate industry is a game-changer, offering a safe medium for digital contract automation and record-keeping for you and your clients. Since a user’s personal information is stored on the blockchain, this can streamline the process among mortgage lenders, bankers, agents, and buyers and sellers, making credit checks quicker and the transfer of ownership essentially automatic.
It’s also worth noting that blockchain also can minimize fraudulent claims and transactions since the history of the property’s sales and transfers will be more accessible than ever before, protecting you and property owners now and well into the future. And since all of a property’s information is stored in the blockchain, real estate agents and investors will have a much easier time analyzing a property’s title, deed, land registry, co-ownership details, and any other applicable information at any given time.
The Current State of Bitcoin
Bitcoin along with other cryptocurrencies are hitting record high prices even this year, with owners cashing in their coin for purchasing property, cars, entertainment, and fashion. Even luxury purchases with crypto are growing as BitPay logged “about 32% of [their] October processed volume was from purchases of luxury goods including jewelry, gold, yachts, and real estate.”
It’s also worth noting that Bitcoin made up 60% of the volume of luxury purchases made with crypto via BitPay.
How Buyers Can Use Bitcoin to Buy Real Estate
Although there are plenty of cryptocurrencies available, Bitcoin and Ethereum are the likely two that you’ll find title insurance and escrow companies willing to accept. Even then, many may not even back ventures funded by cryptocurrencies, so it’s important to do your research if you plan on using crypto yourself as a real estate agent.
The safest bet for success when utilizing crypto among parties who are either unfamiliar or skeptical is to “cash-out” your crypto into dollars that can be used during the transaction process instead of directly transferring Bitcoins.