Bitcoin Is Becoming a Bigger Part of the Housing Market
Buying with Bitcoin has never been easier — or trendier. But can your clients use the digital currency to buy a house? Some sellers are warming up to the idea. Similarly, buyers might come across a listing that begins with a message to cryptocurrency fans: “Accepting Bitcoin!” But what is Bitcoin, and what do real estate agents need to know about this new form of currency?
The Bitcoin Brief
Bitcoin is a type of cryptocurrency — a digital currency that operates on a blockchain, independent of a central bank. It uses encryption techniques to regulate the generation of units of currency and verify the transfer of funds.
When Bitcoin was created in 2009, it was the world’s first cryptocurrency. More than a decade later, thousands exist, each with varying levels of popularity.
Blockchain technology is what makes cryptocurrency possible. A blockchain is an open, distributed ledger that records transactions in code. A collection of computers around the world run Bitcoin's code and store its blockchain.
“Imagine a book where you write down everything you spend money on each day,” said Buchi Okoro, CEO and co-founder of African cryptocurrency exchange Quidax, in an interview with Forbes. “Each page is similar to a block, and the entire book, a group of pages, is a blockchain.”
The use of Bitcoin isn’t widespread yet, but in the years since it launched, it’s proven to be more than just a fad. Although the value of the digital currency is extremely volatile, an increasing number of retailers accept it as payment. In 2014, Overstock became one of the first major retailers to accept direct Bitcoin payments. But Bitcoin still doesn’t make up a very large portion of the company’s revenue, its chief executive, Jonathan Johnson, said recently.
“Our demographic skews hard towards women, and Bitcoin purchasers tend to be men,” Johnson said. “It’s a different customer segment.”
During the first three quarters of 2020, the site had revenue of almost $2 billion, the New York Times reported. An average of $30,000 to $50,000 a week came from cryptocurrency.
The gradual acceptance of cryptocurrency took on new speeds when billionaire entrepreneur Elon Musk announced that Tesla would begin accepting Bitcoin as payment this past March. There’s even a page on the electric vehicle company’s website explaining exactly how to use Bitcoin to buy a Tesla.
You can now buy a Tesla with Bitcoin— Elon Musk (@elonmusk) March 24, 2021
“I think [Bitcoin] is on the verge of getting broad acceptance by conventional finance people," Musk said recently.
Cryptocurrency in Real Estate
As Bitcoin increases in popularity, some agents and firms have even begun to specialize in cryptocurrency. Piper Moretti, founder and CEO of The Crypto Realty Group in Los Angeles, started working with her first Bitcoin buyer in 2016.
“I knew what [Bitcoin] was, but I didn’t hold any, I wasn’t an investor or anything like that at the time,” Moretti said in an interview with The CE Shop. “He said, ‘Yeah, I’m going to buy this house in Bitcoin,’ and I’m like, ‘Okay, we’ll figure that out.’”
The transaction closed in early 2017. It was the second Bitcoin home sale in California.
In the years since, cryptocurrency has become “way more recognizable” in the real estate industry, she said. She has closed five real estate transactions using cryptocurrency, and she’s helped other agents navigate countless others.
“People are taking it way more seriously now than they did in 2017,” Moretti said. “They were like, ‘Oh, maybe it’s just a fad, it’ll go away.’ But it’s not going anywhere.”
What Should Real Estate Agents Know About Cryptocurrency?
First of all, “it’s legal,” Moretti said. “It’s not some nefarious internet money that only criminals use. We know that now because the major banks have pretty much adopted it — a lot of them have, anyway. And there is a way to help your clients purchase with Bitcoin or other cryptocurrency.”
The seller doesn’t necessarily have to accept cryptocurrency, Moretti said. “We can convert it to cash — in fact, that’s how many of them are done right now.” But it does help to have an escrow or title company that’s on board with cryptocurrency to help the transaction go smoothly.
She said she has fun “putting the puzzle pieces together” to facilitate a cryptocurrency deal. “We’re all problem-solvers, as agents, and it’s kind of a problem to solve — each transaction, even if it’s just traditional, [is] different, and we all have to figure out how things [like the title] are going to work.”
All of the cryptocurrency real estate transactions that Moretti has been involved in have been Bitcoin-to-cash conversations, so she is usually paid in U.S. dollars through the escrow company. But on a recent deal for which she was a consultant, the buyer paid her a consulting fee in Bitcoin.
Bitcoin and Beyond: What’s Next for Cryptocurrency?
Moretti has high hopes for the future of cryptocurrency in real estate.
“I think it will eventually become a lot easier to buy and sell real estate with cryptocurrencies,” she said. “More agents definitely see the value of it, and they’re like, ‘Oh my god, this is a whole other audience that we can be marketing to.’”
The problem is that “the process right now is still really clunky,” she said. And the real estate industry can be slow to adopt new technology.
“What I see — I’m hoping five, ten years down the line — is that it’s going to be so mainstream, you’re just going to be able to click a button and say, ‘Yeah, I’m going to buy this with Bitcoin,’ and that’s that, we’ll have everything figured out on the back end,” Moretti said. “You can do it now with U.S. dollars with all of these iBuyer programs, why can’t you do that with crypto?”
That future, however, could still be a while away. For now, if you visit a real estate listings website and search by the keyword “Bitcoin,” you’re likely to find a few dozen properties across the country advertised as being cryptocurrency-friendly.
“Bitcoin, Ethereum, all other actively traded crypto are accepted,” says the listing for a 5,500-square-foot house priced at $2,195,000 just outside of Sacramento, Calif.
Earlier this month, Billionaire Rick Caruso’s real estate company announced that it would begin accepting Bitcoin as rent payment at its residential and retail properties. The firm also said it had invested in Bitcoin.
“We believe that cryptocurrency is here to stay,” Caruso said on CNBC’s “Power Lunch.” “We believe that Bitcoin is a right investment for us.”
Caruso said his company is making a long-term bet.
“It’s not about the next year or five years,” he said. “We’re looking forward to the next decade.”
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