Real estate professionals in several resort locations have already closed transactions with buyers using bitcoin or other cryptocurrencies. Here’s what you need to know.
Paul Benson, co-owner and licensed partner of Engel & Völkers in Park City, Utah, closed two successful bitcoin trans-actions, both over $2 million, in less than 45 days. “Most importantly, these transactions happened before bitcoin’s huge upswing,” says Benson, who notes that bitcoin is extremely volatile. Both investors came from Europe. “Because it’s not on the United State’s monitored currency systems, it doesn’t go through the same channels, so a savvy investor who gets appropriate legal and tax advice can see tax benefits.”
Both transactions went “smoother than we thought,” says Benson. “We thought it would take four days to convert the bitcoin to U.S. currency, but we got the title company and attorney on board. The title company was able to initiate the request, convert to U.S. dollars and put the money in the seller’s bank account in only 18 hours.”
Because Benson works with many investors, he’s seen a lot of interest in buyers using bitcoin and other cryptocurrencies. “Many investors are coming from Europe, the Mideast and China. Bitcoin is truly an international currency. We forget how many countries are feeling bad about their economies, so it appeals to that group. “This is one of the currency’s biggest draws for investors who want to avoid the volatility of euros, dollars, and yen, especially in today’s tense global climate. For this reason, real estate professionals can expect to see increased interest in bitcoin among their international clientele.”
According to Bitcoin.com, the heaviest user demographic of bitcoin is European males between the ages of 25-34. “Bitcoin is still very much in its infancy, and not every buyer is ready to do business in the cryptocurrency. The U.S. market especially has been slower to adopt bitcoin for real estate, so brokers and agents must take that learning curve into account,” notes Benson.
Benson says he’s learned two valuable lessons through the transactions. The first is that bitcoin values are volatile. The value of bitcoin fluctuates by the second so there is a gap between when the title company can get on the computer to sell it and have it converted to U.S. dollars. “You have to get buyers and sellers to agree on that window of fluctuation,” he says. “We have it written into the contract that there will be a three-day window and during that time, if the value of bitcoin falls outside of the parameters outlined by both parties, they can walk away with no penalty,” he says.
Second, he says you should have flexible partners who truly understand how a bitcoin transaction works. From real estate agent to title company, sellers must find fluid partners who are comfortable working with bitcoin. Because the currency is so new and its value changes every day, there are payment service providers who will convert bitcoins into dollars to mitigate the risk for wary buyers.
Right now, we’re figuring out how to market it. We’re also exploring the legalities and how we can protect our brokerage from any untoward transactions. Always work with an attorney and tax professional to ensure your brokerage is doing it correctly. Notes Benson, “The buyer of the future is open to creative ideas. I think it’s important to get onboard even if it’s not that comfortable.”