Buy and Sell Real Estate with Cryptocurrency
In this article:
- Buying a house with crypto
- Selling a house with crypto
- Considerations for handling cryptocurrency in real estate
Cryptocurrency is a form of digital currency that has grown in popularity by leaps and bounds over the last few years. When it comes to investing, more people are moving away from stocks and bonds in favor of cryptocurrencies as a viable means to buy goods and make money. Cryptos like Bitcoin have fluctuated wildly in price; just one Bitcoin reached a value of approximately $45,000 in 2021. The future of real estate is changing, and cryptocurrency is sure to become a crucial part of the revolution. A Miami Beach penthouse was purchased for $22.5 million in cryptocurrency in June of 2021 — and you can buy a home with cryptocurrency too.
Buying a house with crypto
Yes, you can buy a house with cryptocurrency, but take a closer look at the pros and cons before you decide this is the right move for you.
Pros of buying a house with crypto
Here are some of the benefits of buying a house using cryptocurrency.
A way to use your Bitcoin – If you have quite a bit of Bitcoin in your digital wallet, you may wonder exactly how to invest it wisely. Real estate investing is almost always wise (depending on the market). That’s why buying a home with crypto is a good way to use the Bitcoin (or another form of cryptocurrency) you already have. This option is especially beneficial if your Bitcoin has gained value over time. You’ll already have a great return on your investment if you choose to purchase actual real estate with it.
Diversify investments – Purchasing a home with cryptocurrency is also a smart way to diversify your investments. You’ll have something tangible that you own, which you can resell later for a profit. It’s never wise to have only one form of investment in your portfolio, so purchasing a home is a great way to diversify things.
Cons of buying a house with crypto
There are a few downsides to buying a home with crypto. Remember, you should always follow the traditional protocol when purchasing a home to get a professional home inspection before making an offer.
Lack of sellers (with crypto) – Not every seller will take crypto as a form of payment. That means your opportunities to find a property you like could be limited. Talk to a seasoned real estate agent in your area or a financial advisor who may have some leads on sellers willing to accept cryptocurrency in place of cash.
High volatility – The cryptocurrency market is highly volatile, so prices can fluctuate wildly over a short period. For example, if you make an offer on a home that closes in 30 days, the value of your crypto could be much less by the closing date. Pay close attention to the market and the value of your crypto before you commit to buying a home with it.
How to purchase real estate with cryptocurrency
There are several ways to use your cryptocurrency to buy real estate.
Direct transaction to the seller with crypto
Some sellers are willing to take cryptocurrency directly. In this case, you’d simply transfer your crypto from your wallet to theirs. This process is done over a secure network and can be performed remotely online, via a smartphone app, or through an email where the seller will receive your payment and then transfer the amount to their wallet.
Pay a down payment with crypto
You may not want to purchase the entire home using cryptocurrency, but maybe you’re willing to use it for the down payment. If the seller accepts it as a legitimate payment, you can pay the down payment with crypto and the rest in cash.
Use cryptocurrency to get a loan
You may use cryptocurrency to obtain a secured loan. This loan uses your crypto holdings as collateral by a lender in exchange for liquidity. Once you repay the loan, you’ll get the crypto back at the end of the term. This arrangement means the loan amount you receive is a percentage of the crypto you pledge to a lender to use as collateral. However, if the value of your holdings drops over the life of the loan, you may need to provide additional collateral to cover the difference.
Selling a house with crypto
Selling a house and accepting crypto as payment is becoming more popular among today’s savvy homeowners. After you’ve prepared your house for sale, consider the pros and cons of using this method.
Pros of selling a house with crypto
There are a few great benefits of selling your home with crypto.
Quick sale – Think of selling a house with crypto as selling it with cash. In many cases, once the buyer makes an offer and a legally binding contract is in place, a simple transfer between the two crypto wallets is all you need to complete the transaction. Traditional real estate sales can take 30-45 days to complete. If you want to sell your home fast, accepting cryptocurrency is a smart way to get it sold more quickly.
Appreciation of owning Bitcoins – In the world of FinTech, cryptocurrencies like Bitcoin have seen extremely high growth. Even though certain cryptocurrencies can be volatile, future Bitcoin gains should provide property sellers with an opportunity to make even more money on their profits after the home is sold.
Cons of selling a house with crypto
While you could make a great return when selling your home with crypto, there are a few cons.
Lack of buyers (with crypto) – Just like there could be a lack of sellers who accept cryptocurrencies as a form of payment, there could also be a lack of buyers, too. Much of this depends on your market and how you sell that home to buyers. For example, use reliable, popular online platforms to sell your home and make it clear that you’re taking cryptocurrency as a form of payment.
Tax complexity – Using cryptocurrency to complete a real estate transaction can have serious tax implications. Consulting with an experienced accountant or financial advisor is recommended — particularly one who is well-versed in cryptocurrency and tax law.
How to sell real estate with cryptocurrency
Here are some quick tips to help you sell real estate with cryptocurrency.
Have a trustworthy agent that handles crypto
Since buying and selling real estate using cryptocurrency is relatively new, it’s vital to find a responsible real estate agent who understands how the process works. Look for an agent near you that knows about the crypto market so that you have a strong advocate who can help you navigate the process.
Offer your home on platforms where you can find buyers with crypto
If you want to reach the right market, you’ll need to list your home on platforms where buyers willing to pay in crypto will be looking for a home. Websites like Bithome and Propy are two examples of online marketplaces where buyers and sellers who use crypto can go to find or list real estate.
Considerations for handling cryptocurrency in real estate
Whether you’re buying or selling a home using cryptocurrency, use reliable methods to protect both yourself and the other party.
Find a real estate agency that handles transactions with cryptocurrency
Before you buy or sell a home, it’s crucial to choose a real estate agent with knowledge of cryptocurrency transactions. These experienced agencies will know how to handle the transaction between yourself and the buyer or the seller in a safe, responsible way.
Get informed about cryptocurrency
Do your research and understand that cryptocurrency is volatile and can change in value at any time. Look into the ease of handling transactions using cryptocurrency in your country, as each nation has different rules and laws governing this digital currency. The more you know in advance, the easier the process will be when you’re ready to make a move.
In the United States, the IRS considers crypto a type of property rather than a type of currency. Therefore, you may have to pay income taxes on the current value if you receive crypto after selling your home. If you sell any cryptos for profit, the difference between the purchase price and any proceeds you get from the sale will be taxed.
Cryptocurrency can be a brilliant investment, whether you keep it in your portfolio or use it to purchase a home. Remember to research and look for reputable, trustworthy agencies near you that deal with cryptocurrency in real estate transactions. With the proper marketing and some know-how, you can easily buy or sell a house with cryptocurrency for easy purchase or sale.