Many of you have heard about the recent cryptocurrency sale of the luxury Arte Surfside Development’s penthouse for $22.5 million. But what do a college rental income property in Raleigh, North Carolina, a spacious family home in downtown Houston, and a cute starter home in the Chicago suburbs have in common with it? They were all listed for sale or recently purchased with Bitcoin.
The reality is that buying or selling a home with cryptocurrency is becoming more frequent than most people — and real estate agents — realize. And, as more millennials and Gen Zs enter the housing market, that number will most likely increase. It’s important for real estate professionals and brokers to get up to speed on how cryptocurrency purchases work — doing so makes you look smart and provides you with an opportunity to stand out from other agents in your area who aren’t as “forward thinking.”
If you do have a client who wants to buy or list a home with Bitcoin, here are a couple of things you need to know:
- Cryptocurrency easily can be converted into cash for final payment via an exchange for small amounts or an OTC Broker (Over-the-Counter Broker) for larger amounts. A 1-2% exchange fee is usually charged and sellers have to pay taxes on any profit made from the original purchase.
- Many crypto buyers prefer to borrow against their crypto assets to pay for a property, but these loans can be processed in days and usually have a shorter term than a traditional mortgage. This is the most popular option for cryptocurrency owners because they don’t have to actually sell their asset — just borrow against it. Normally they borrow against 5-10% of their total holdings, which is sufficient to make a down payment or buy an entire property. A company called Helio Lending has recently begun offering a mortgage secured against a borrower’s crypto assets.
- Property can also be sold as an NFT. Propy, a transaction and offer platform, recently sold the first ever physical property as an NFT and the process is relatively simple. The property, however, must be owned as an LLC. When the sale takes place, the ownership of the LLC changes so there is no need to update/change the recording and the deed. NFT purchases can close in a matter of minutes, so you’ll need to prepare your clients for a fast ownership transfer.
Cryptocurrency represents a trillion dollar market and it’s not going away. Cryptocurrency has never been hacked, and it’s truly decentralized and not dependent on a single country’s economy. In many parts of the world, it’s the safest and most secure form of currency.
