Can you buy a house with Bitcoin or another cryptocurrency? It’s a question an increasing number of people are asking. While using cryptocurrency to buy a house may have seemed outlandish just a handful of years ago, that isn’t the case today.
Since an increasing number of people are getting into the crypto market – and some want to leverage what they’ve gathered to make real-world purchases – seeing how blockchain and real estate can go hand in hand is a must. If you’re curious about what it takes to buy a house with cryptocurrency, here’s what you need to know.
What Is Cryptocurrency?
Before digging into the nuances of buying real estate with cryptocurrency, it’s important to understand what cryptocurrency is and how it functions from a financial perspective.
In the simplest sense, cryptocurrency is a form of decentralized digital currency. Cryptocurrency is tracked virtually, typically using a technology known as blockchain. With blockchain, there’s a digital distributed ledger that records transactions, effectively logging the movement of the cryptocurrency.
Currently, there are thousands of cryptocurrencies. However, they don’t all have the same function in financial markets. While some of the more popular ones – like Bitcoin, Ethereum, and Dogecoin – may be “spendable,” allowing you to use them to acquire goods and services directly, others are mainly investment vehicles at this point.
One of the main reasons cryptocurrency isn’t used broadly for transactions is that the sheer number of coins is overwhelming. Additionally, regulations surrounding cryptocurrency are very limited and still developing. Due to that, buying real estate with cryptocurrency can be an incredibly attractive option, largely because it takes a risky asset and transition it into something more secure.
If you’re wondering, “What does it mean to mine cryptocurrency?” the concept behind the answer is surprisingly simple. Typically, when a person wants to mine a cryptocurrency, they have to solve complex cryptographic equations (math problems) using a high-powered specialized computer to verify blockchain transactions. When done successfully, the miner adds a block to the blockchain and receives some of the cryptocurrency as a reward.
Why Interest in Buying a House with Crypto Is Growing
Currently, cryptocurrency is a popular investment vehicle, particularly among younger adults looking to get ahead. It’s a pathway to financial gains, potentially far beyond what you can get through savings accounts or traditional investing.
For young cryptonaires, buying real estate with cryptocurrency might be especially attractive. Investing in real estate provides numerous advantages in comparison to holding certain cryptocurrencies. Whether you purchase a home or invest in digital shares through SolidBlock, it lets you move away from a volatile investment into concrete, real property, giving you additional security. Plus, it could make homeownership more plausible, making it possible to get ahead of their peers.
Buying a Home with Cryptocurrency
If you want to buy real estate with crypto, it’s important to understand the nuances of using the approach. Buying a home with cryptocurrency is possible, particularly with some of the new blockchain real estate tools and new lending options that allow people to leverage crypto assets. Here is an overview of the process.
Get the Right Real Estate Agent
If your goal is buying a house with crypto, find a real estate agent that’s familiar with these kinds of transactions. Since buying property with cryptocurrency is a bit more complex, having someone by your side who is familiar with this approach works in your favor.
Vanessa Saunders – the owner and CEO of Global Property Systems – is a Crypto Currency Certified Real Estate Broker. Along with knowing the ins and out of cryptocurrency home purchases, she can assist sellers with crypto offers, giving everyone a new avenue for securing a great price and ensuring a streamlined sale.
Understand Your Options
Buying a home using cryptocurrency doesn’t necessarily mean transitioning crypto from your digital wallet to the sellers. You could also sell your cryptocurrency for cash, which may be a better option if you want to connect with sellers that find cryptocurrency unattractive. There are also new approaches that could be a solid fit.
Today, there are two platforms that make financing a down payment on a home with crypto assets a breeze. Both Abra and Helio are changing the game, offering lending options that let you leverage your cryptocurrency into a down payment for a home.
Be Ready for the Taxes
There are tax implications of using crypto to buy real estate. The IRS views cryptocurrencies as property for tax purposes. Since that’s the case, you might be subject to capital gains if you use crypto to buy real estate, either directly or indirectly.
Since the tax implications are significant, it’s best to prepare for that expense. Speak with a tax professional in advance to estimate your liability. That way, ensuring you don’t end up experiencing an unanticipated financial hardship come tax season.
Speak with the Seller
Not all sellers are comfortable with letting you buy a property with crypto. Still, you won’t know if it’s an option until you have a conversation.
Depending on how the seller lists the property, you may be able to talk directly. However, you may also have to speak through your real estate agents. In either case, let them know not only that you’re interested in buying the house using cryptocurrency but which coin you’d like to use.
If you’re spending more widely known coins, you may have an easier time. As a result, you may want to present familiar coins from your wallet – or even transition altcoins into Bitcoin – to make the idea more enticing.
However, if the seller declines to accept crypto, you’ll need to make a decision. You could go with a more traditional approach or set your sights on a different home. Alternatively, you could look at the new lending options that allow you to leverage your crypto assets directly, making it easier to buy property with crypto.
Prepare for Price Fluctuations
One benefit of using cryptocurrency to buy real estate is that the transaction can move forward quickly. However, the value of any given cryptocurrency can fluctuate significantly in a short period. The pricing can change while you’re completing steps like a home inspection or appraisal or even during a few days’ worth of negotiating.
Price fluctuations may lead to headaches. If the seller was initially hesitant to accept crypto, the movement might cause them to back out. Your initial offer will no longer make sense if the value changes dramatically.
By knowing this can occur, you can prepare more effectively. For example, you could put contingencies in your offer that address what happens if the coin’s value shifts significantly before the transaction completes. That way, you can ensure the outcome is fair.
Also, you could explore crypto lending options that eliminate the need to walk down this road with the seller. While the exact terms vary, you can have a lending decision in mere minutes and funds in hand far faster than with some alternative approaches, allowing you to leverage your crypto with greater ease, even if prices shift.
Get Ready for Title Insurance and Escrow Company Hurdles
While it may seem like buying real estate with Bitcoin or other cryptocurrencies shouldn’t be too unlike using cash, that isn’t the case. Most escrow companies aren’t prepared to handle this kind of digital asset, leading to potential hurdles when it gets close to closing time.
If you want to buy real estate with Bitcoin or another crypto, you may want to find a title and escrow company to handle cryptocurrencies specifically. While it isn’t widespread, an increasing number of companies are making it an option. By finding one that’s already gone down this road, you’ll have an easier time finalizing the purchase.
Otherwise, look into platforms that allow you to leverage your crypto without having to actually make the purchase with cryptocurrency. That eliminates a major hurdle, enabling you to close quickly.
Should You Buy a Home Using Cryptocurrency?
Buying a house using cryptocurrency is a relatively new concept. As a result, the process is complex, mainly because there aren’t widespread mechanisms for facilitating these transactions. Additionally, since not all sellers are open to the idea, you may have fewer property options.
However, that doesn’t mean buying a home using crypto is a bad idea. If you’re aware of the potential complications and can find a willing seller, it could be the right move for you. Additionally, thanks to new platforms, you can simplify the process without having to cash out your cryptocurrency.
Global Property Systems Joins the World of Blockchain
Whether you’re looking to purchase a house using crypto assets or want to stick with classic fiat currency, GPS is making the process easier and more transparent. Using Propy, transactions of all types are captured using blockchain technology. That ensures that all information is safe in an immutable digital ledger, keeping all of the details and associated documentation in a secure place. Plus, the records aren’t alterable, ensuring no finagling by any party.
Finally, Propy makes it possible to turn crypto into fiat currency, keeping the process simple and centralized. If you’re ready for a new kind of real estate transaction, GPS is here. Come experience the difference today.