Last week, we explored the basics of what cryptocurrency and blockchain is, and some introductory questions about its place in the real estate market. This week, we’re going to dive deeper into it, and really explore the crypto culture and how it could potentially change the real estate market.
Though cryptocurrency is a worldwide concept, it’s important to understand how things in Denver could be impacted too, as many experts think that cryptocurrency could revolutionize how society buys and sells things, including big ticket items like buying and selling real estate here in Colorado:
1. How does cryptocurrency impact real estate now?
Though it’s a fairly new concept, at least when it comes to real estate transactions and other large purchases, cryptocurrency is something that has the potential to completely change transactions as we know it. Already, early adopters are using cryptocurrency in their transactions, with a few sellers accepting only crypto as tender. Mortgage companies now evaluate crypto portfolios as part of a buyer’s assets. And some direct transactions focus solely on crypto as currency.
In the future, we should see changes throughout the entire transaction including title and lending.
2. Do real estate investors in Colorado use cryptocurrency?
In the past couple of years, cities like Boulder, Arvada, Denver, and Fort Collins have
seen real estate transactions completely done in crypto. Overall, as long as both the
buyer and seller are both in agreement to complete the transaction then it can be used.
Even if the transaction is agreed upon, crypto users will have issues finding title
insurance and escrow companies that are also in agreement of the transaction as many
of them, just like mortgage companies, are weary of crypto and its market fluctuations.
Though crypto users tout it as safe, easy and secure, one huge deterrent is that the IRS
considers crypto transactions as property and capital gains tax could be an issue.
3. Where does Colorado rank, for crypto currency transactions?
Possibly not surprising, considering how forward-thinking Colorado can be in other areas, Colorado ranks in the top 10 states for crypto use which means many residents invest, buy and sell using crypto. It would not be surprising at all to continually see more real estate transactions done in cryptocurrency.
4. Do any mortgage companies currently accept cryptocurrency?
Not yet. When buyers apply for a mortgage on a residential property, or a loan for a commercial property cryptocurrency is not currently used as direct payment, however it is evaluated as part of the overall asset portfolio. Similar to any other kind of investment. Banks and mortgage companies also do not directly accept crypto assets as payment, at least not yet, but again like any investment, cryptocurrency can be sold and exchanged for liquid cash which can be used for transactions. Cryptocurrency is subject to capital gains tax, so it is always recommended to consult with a financial advisor if you’ll be using cryptocurrency to buy your next home.
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]