Ever since it was formed, cryptocurrency has caused a frenzy all over the universe. In 2017. The crypto boom has both the crypto buyers and sellers frantically searching for new ways by which they can capitalize on the explosion.
Despite the critics’ warnings and the fluctuations of a crypto bubble would soon burst, cryptocurrency coins such as Bitcoin continues to pop up in new industries. And right now, the real estate market is getting involved in digital currencies. But actually, what do you need to you buy or sell a home with cryptocurrency?
The CEO of The Crypto Reality Group, Ms. Piper Moretti and a licensed realtor were involved in the first Bitcoin transaction which took place in Southern California (United States) and ever since, several transactions has been completed. Piper Moretti shares her knowledge and gives her best five tips for people who set out to purchase or sell real estate in the cryptocurrency space.
5 Tips Before You Buy Or Sell A Home With Cryptocurrency
Get Some Real Practice
While the cryptocurrency is trendy and springing up quickly, it is becoming a fad among high dollar investors but space isn’t for the uneducated. If you are considering using a cryptocurrency to buy or sell a home, you should do your homework. You should understand the market, the risks involved and how it all works.
Piper Moretti suggests that you get some practice and knowledge by getting verified exchanges like Binance, Bittrex or Coinbase, which enables investors to buy and sell cryptocurrencies such as Bitcoin and Ethereum. They behave so much like regular stock trading, and crypto users can easily become verified and link their bank accounts.
Starting out with very this type of exchange is important because it will allow users to educate themselves on the digital currencies before jumping into larger pools such as real estate.
Understand the Escrow
The situation gets complicated when the escrow is tough to understand. There are two basic options for you, which is:
1) Convert your cryptocurrency into cash
2) Ensure that you use a crypto-to-crypto transaction.
If you are simply planning on how to convert your crypto to cash, it is assumed to be a regular cash transaction in the eyes of the escrow and title company. Moretti suggests that having the escrow set up with a cryptocurrency payment processor, which will take your crypto money and convert it to a USD wire transfer.
If you are after a crypto-to-crypto transaction, it is almost perfect to work with a title company which is well versed in blockchain technology and how the taxes and title play out in the conveyance of the property.
Startups like the Ragnar Lifthrasir’s Velox have proven that the titled can be conveyed on the blockchain, but the real issue arises when the local government requires the purchase price in fiat currency for accounting purposes.
Knowing what to charge, transfer taxes and title insurance can be difficult. Piper Moretti warns that with the use of the crypto-to-crypto approach, you may face trouble getting the title insurance. Although, most buyers do not find title insurance necessary.
It may be easier for all parties involved to transfer the money outside of the escrow, and Moretti has had many deals work with this way. Either way, you choose, Piper Moretti cautions that the terms & the conditions should be explicitly sorted on how the money will be eventually get converted and transferred to protect both parties.
Find the Right People
Someday, the blockchain technology will be the standard through which we operate transactions across the board. Until then, those who are enthusiastic and interested in pursuing it must deal with the challenges that come along with it.
One of the biggest threats and challenges for using cryptocurrency for real estate transactions is that people get over the initial idea that it is “fake internet money.” So a lot of sellers still do not want to deal with it.
This stigma is evolving as cryptocurrency is rising in popularity. Anyone who is willing and ready to learn about the blockchain technology and how crypto behaves can actually start using it now, even in the real estate business.
However, even while crypto remains in an infancy stage, you have got to protect yourself by finding the right people to work with. Interview the real estate agents and ensure that they are familiar with the crypto transaction.
Find a seller or a buyer who is willing to create a BitPay account to receive the wire transfer or a financial institution such as a bank who is open to participating as a 3rd party transfer.
Set the Standard
Using cryptocurrency to buy or sell real estate has its own problems, hindrances, and challenges. Crypto is extremely volatile, and this burden is incurred on the buyer. If you are actually involved in a cryptocurrency real estate transfer, always ensure that the price of the house is in fiat to set the standard. The contract must have specific wording contract regarding exactly how the cryptocurrency will be settled at the end of escrow.
For instance, if the value of the home is priced at $1,000,000 and the price of a crypto coin is down at the close, the buyer must be able to make up the difference. If the price of crypto surges and the transfer has already been made, the surplus should be returned. Endeavor to protect yourself by ensuring that your contract has the details spelled out.
Verify, Verify, Verify
Just like the good old saying “if it seems too good to be true, it probably is”, this same saying certainly applies to cryptocurrency purchases and sales. Cryptocurrency systems are extremely vulnerable to hacking. “The cryptocurrency space is new and fertile ground for money laundering,” says Piper Moretti.
Dirty money concealed within Bitcoin and other cryptocurrencies are difficult to trace where it came from the owner who owns it. Educate yourself on anti-money laundering practices and get to know your customer. “I get constant from overseas ‘buyers’ who claim that they have big stakes in the next new token and cannot wait to buy up property in Southern California of the United States all of the time.” Be overly cautious.
This is why you should ensure that you verify, verify and verify again. So many regulators worldwide are making implementations on additional regulations and guidelines which will help to prevent ill-gotten wealth to be utilized.
Through this, it would be evident that there will be a drastic reduction in the ability to launder money through cryptocurrency. Until then, you are advised to verify all associated parties.
Are you interested in digital currency and blockchain? Stay glued to us to learn about cryptocurrency trading and mining tips.