Whether you’re familiar with cryptocurrency or not, there is likely to come a time in the not-so-distant future where crypto becomes a more common form of payment for real estate transactions. Think that’s decades away and won’t be coming to a neighborhood near you anytime soon? Well, let’s just say I remember having a conversation with an agent I was mentoring in the early 1990s who said, “I don’t use email and I never will.” Here’s what to know about cryptocurrency, real estate, and the opportunities ahead.
Buying a home with Cryptocurrency
In 2021, a Miami penthouse sold anonymously for $28 million, a price tag paid entirely in cryptocurrency. To date, it’s the country’s priciest known residential crypto real estate transaction, and to be honest, one of the few. Even though I cut my teeth in tech-heavy San Francisco, where a majority of my clients worked in or with large tech companies you all have heard of, neither myself or any of my many esteemed colleagues have done a real estate crypto transaction to date. That doesn’t mean we won’t, it just hasn’t happened yet.
Crypto — i.e. Bitcoin, Ethereum, or any of the other 1,300 versions of digital currency, most of which will not be remembered in the years to come — is simply that, a digital currency created and managed primarily with blockchain technology. Creative agents and willing sellers, looking for an easy publicity hook, have begun to include crypto in marketing materials for the headlines it still catches. It has its lure to be sure, but at this stage, buying a home with digital assets poses more challenges than it potentially addresses. To quote Rich Hopen, who writes a weekly Crypto Blog for Real Estate agents, “it’s anything but frictionless.”
For one, unless you are planning on paying for your home outright, there are few lenders that accept cryptocurrencies as collateral. At one stage, Citibank was open and actively courting crypto holders but that window opens and closes as the fears of regulation, outright bans, and wild price fluctuations continue. As of the date of this post, at least two other companies, Milo and Lend, have offered to finance up to 100% of a home’s purchase with crypto as an asset. This will allow a buyer to hold onto their digital assets and avoid having to sell it for the down payment. Buyers receive a 30-year mortgage, which is repaid in monthly installments.
It’s important to note that neither myself nor any of my clients have tried either of these companies, so their track record for closing and performing as they promise is an unknown.
These are early stages, and the world of crypto real estate is still taking shape. But there’s a strong possibility that soon, the advantages may outweigh the drawbacks. As usual, I’ll be keeping an eye on this space as it evolves because most experts agree that cryptocurrency is here to stay. In what form remains to be seen.
