Chad Roffers, Luxury Real Estate Agent, Talks Bitcoin Home Sales

Bitcoin and other cryptocurrencies are becoming a huge part of our society. Every day there is news about a new high, a new low, or a new company accepting digital money. One area Bitcoin has recently permeated is the real estate market. The first real estate sale conducted with Bitcoin happened late last year, and there is no sign of it being a single occurrence. Here are some of the ways Bitcoin’s usage could drastically affect the real estate market.

Volatility Means Legality

Legally-binding contracts are already an essential part of any real estate sale, but cryptocurrency usage will require an added clause: the transaction is either set for a certain amount of Bitcoin or its USD equivalent. Chances are, people paying in Bitcoin would choose the former option, while sellers would like the latter. However, it will ultimately come down to negotiation to determine which clause to include.

Insider Trading Has A New Meaning

Insider trading is illegally using knowledge of a stock to buy or sell to strategically profit. This could quickly affect home sales, as people with influence over a cryptocurrency could use a loophole where contracts are signed, but the deal is not finalized until cryptocurrency prices have shifted. This would benefit buyers who plan to purchase the home in crypto terms, not USD equivalent. Ultimately, this could lead to lawsuits over insider trading and could potentially void sales agreements, causing headaches for sellers.

Home Prices Will Be Hard To Track

Paying for a house in USD makes tracking the sales price over time easy. You can quickly plug the cost into an inflation calculator to determine how much the property was worth the last time it was sold. However, buying in Bitcoin means a few extra steps. First, you will have to convert Bitcoin to its USD equivalent at the time of sale. Then, you have to plug that number into the inflation calculator. That’s not all, though, as the contracts previously mentioned may skew the price of the home significantly. Consider this: a home sells for 10 Bitcoin, which should have equaled $100,000 when the contract was signed. By the time the process is completed, the 10 Bitcoin could only be worth $80,000. This means the intention was to pay more, but it came out to less, and the sellers may struggle to explain why the house price has risen so much over time. Resale is going to become incredibly difficult to negotiate with the introduction of Bitcoin.

I love the idea of Bitcoin being used to buy houses, especially in the luxury market. However, I think that it is a considerable risk for the buyer and the seller alike. The legalities of such a transaction may prevent Bitcoin from taking off in real estate unless someone can create a system that eliminates these problems. I believe it will be many years until the average person wants to deal with the headaches surrounding real estate acquisition via Bitcoin.