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Real Estate and Crypto Currency: Buying, Selling and Assets (Part 1)

In Buyers by Doug Phelps

The financial world has been rocked the last few years with an ever-growing presence known as cryptocurrency.  Every day there is a new story or update about how people are buying and selling it.  Often, there is a new emergence of an original cryptocurrency that we have not heard of before and it takes off.  It was only a matter of time before crypto merged into real estate and now buyers, sellers and investors are wondering how they can use it to buy real estate.  Overall, the future of cryptocurrency as it pertains to real estate is a vastly untouched ocean of possibility and risk. Let’s dissect some of the hottest questions about it right now:

1. What is Cryptocurrency?

Don’t feel ashamed if you’re still not sure what cryptocurrency is. The idea of it is pretty complex and futuristic and it’s not uncommon to not know exactly what it is even if it is talked about all the time.  Basically, crypto currency is a digital currency available online to be used as any other currency would. People exchange their own money to buy crypto, not unlike how one would buy stocks.  Cryptocurrency is created by digitally mining it from blockchain with algorithms.

2. What is blockchain?

A logical follow up question, blockchain is basically a large online transaction ledger.  It was originally created to mine bitcoin.  It is decentralized which means crypto and the overall idea of blockchain does not have just one origin and it’s not necessarily a thing, so much as a concept.  This is why crypto can be so volatile in value changes.

3. Can I use Cryptocurrency to buy a house?

Yes, and no.  This is yet another complex answer.  If both buyer and seller agree to use crypto currency in a direct sell then yes that would be allowed.  After all, crypto is a regulated currency and it is recognized as such.  However, as of the end of 2021, most mortgage companies do not allow crypto as a valid form of down payment.  As crypto becomes a more widely used form of currency, this could change in the not so distant future.

4. Do mortgage companies consider crypto currency an asset?

As a buyer, if you take out a mortgage to purchase a home, your crypto accounts can be seen as assets during the processing stage of buying a home, even though it is not seen on the same level as liquid cash.  Loan processors are now using crypto as an evaluation criteria when looking at an overall client’s financial well-being to determine how much they can qualify for. 

As a seasoned agent, here are my closing thoughts about crypto and real estate….

There are really so many points to consider. Overall, I think it is a part of the future and requires both sellers and buyers to be on board with having a crypto wallet and other things before doing a deal in this new way.  There is movement in the direction to use crypto, just like cash, to buy real estate.  For example, there are currently real estate auction sites that allow crypto as a valid form of payment.  I think it will need to be more regulated and steady before it is recognized by mortgage companies in the form of a down payment.  Some cryptos are very volatile and anything that changes value so dramatically day to day will likely not be recognized as a payment system until it steadies.  There is also the question of which cryptos will be potentially recognized by mortgage companies: all of them, only established ones, some of them sometimes? 

There are still a lot of questions to answer, so look for Part 2 soon!

Do you have any lingering questions about crypto’s presence in real estate?  Are you in the market to buy or sell your home?  Call and text me at (720) 323-4176 or email me at [email protected]

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