Many investors and individuals across the globe now use cryptocurrency to acquire real estate investments. Several real estate companies directly purchase, list and sell property using Bitcoin and other cryptocurrencies. The increasing growth of Bitcoin’s price and value has enabled people to sell and buy houses, with Bitcoin as the only medium of exchange.
More than 10,000 US retailers and corporate giants had integrated Bitcoin and other digital currencies as a payment method for various goods and services as of 2020.
The trend is swiftly gaining popularity and industry experts believe cryptocurrencies will revolutionize the future of real estate transactions. However, that should not be a surprise because Bitcoin has successfully developed in scale and value to become one of the most profitable investment instruments and payment methods. So, how can one use Bitcoin to buy real estate?
How Buying Real Estate in Bitcoin Works
The golden rule for completing a real estate purchase through Bitcoin is that both parties (buyer and seller) must agree to perform the money transaction in that currency. That is because cryptocurrencies are highly volatile and non-resistant to market movements. The parties usually assume a significant risk when signing the agreement due to cryptocurrencies’ instability.
Although property buyers can pay using Bitcoin, sellers have the option to accept the digital currency as is or convert them to USD. Many crypto exchange platforms, such as Bitcoin Code, now have automated software that tracks market statistics and price movements in real-time to help users determine the equivalent of Bitcoin in US dollars or other currencies. The seller can also use those platforms to convert their Bitcoin to fiat currency upon the sale.
Bitcoin and cash real estate transactions are similar in many ways. However, buying a house using Bitcoin means both the buyer and seller must have digital wallets. That will enable a homebuyer to transfer the agreed funds in Bitcoin directly to the seller’s digital wallet.
Real estate transactions involving the direct exchange of cryptocurrencies may also bear some potential pitfalls. One of them is that the seller may never deliver the title deed to the buyer, or the former may deliver the document but fail to receive payment. Besides, some vendors like the state, real estate brokers and banks may not accept payment in Bitcoin.
Completing the process would also impact additional costs and time on the involved parties. Thus, the buyer would still need some cash to cover expenses like transfer taxes, recording fees, lender payoffs, liens, real estate commissions, inspection fees, and government taxes. That’s because some entities have not integrated Bitcoin as a payment method.
Other Considerations for Buying Real Estate in Bitcoin
It would help if you talked to your financial advisor when deciding to use Bitcoin to purchase real estate. As with any other significant investment, professional consultation would enable you to understand the most effective way to manage its financial aspects. For instance, using a title company to handle the purchase can help quickly expedite all the legal and regulatory issues without waiting for weeks or months to exchange funds.
If you opt to buy a property via a title company, it would be best to consider an entity with experience in real estate cryptocurrency transactions. That would process and finalize the transaction as per the agreement seamlessly and quickly. Cryptocurrencies like Bitcoin also allow the integration of smart contracts, improving real estate transactions’ transparency, security, and efficiency. It enables buyers to provide secure funds within a shorter duration, ensuring greater convenience for both parties.
While buying real estate using Bitcoin seems simple, success mainly depends on the agreement between the buyer and seller. Other variables may come into play based on industry regulations and the crypto market statistics.