No doubt there has been a worldwide 'craze' about cryptocurrency most especially in the last few years.
Indeed, while most crypto critics are predicting a burst of cryptocurrencies especially bitcoin, it continues to penetrate through various markets including the real estate market.
Thus, players (buyers, sellers, and agents) in the real estate market are also looking for opportunities to take advantage of the situation.
In this short guide, you will discover 5 tips to have in mind before you use cryptocurrency to buy or sell a home.
Let's get started…
1. Understand the market
Including the risks and the know-how. Hence, you will need to educate yourself. You can kick-start your education by buying and selling cryptocurrencies such as bitcoin and there on verified exchanges such as Coinbase or Binance.
Trading on any of these platforms is similar to trading on stocks, also, you are allowed to link your bank accounts and become verified.
Thus, you can and should be educated on the intricacies involved in digital money before you become involved in real estate.
2. Protect yourself
Though there are still some challenges to overcome, it is becoming clearer by the day that in the near future, the Blockchain technology will be the basis of all transactions.
One major challenge that needs to be overcome is the mindset of people that cryptocurrency is 'fake internet money'.
Although as the cryptocurrency becomes more popular, this notion is gradually changing.
However, you still need to protect yourself because cryptocurrency remains in the infancy stage.
One simple way to protect yourself is to work with those in your industry who are knowledgeable about the way cryptocurrency works.
Before working with agents, make sure you interview them to know their level of experience with crypto-transactions.
For example, are they willing to create a Bitpay account so that they can receive a wire transfer?
3. Have a basis
Due to its volatility, the buying or selling of real estate using cryptocurrency has its challenges.
This will be a concern for the buyer. Your best option to avoid this volatility is to use the price of the house as the basis for buying or selling the house using cryptocurrency.
A word of caution: make sure the contract specifies in details the way crypto will be used to make the payment once the escrow has ended.
For example, assuming the price of the home is $2,000,000, but the at the end of escrow, the price of crypto is down, the buyer will be responsible for the difference.
But if the reverse is the case, then, the surplus must be returned.
Don't forget to specify these details in the contract.
4. Be very cautious
When it comes to using cryptocurrency to buy or sell, abide by the old saying, “if it seems too good to be true, then, it probably is”.
Since the cryptocurrency space is relatively new and it is difficult to trace where the cryptocurrency is coming from or trace the owner of the crypto, it provides a fertile ground for money laundering.
The best alternative is to learn more about anti-money laundering practices.
Though regulators all over the world are trying to enforce rules that will prevent money laundering through cryptocurrency until then, make sure you verify all those involved in any transaction you may be involved.
It is now obvious that cryptocurrency provides a new and better way to buy or sell in various markets - real estate market inclusive.
5. Have adequate knowledge of how escrow works
There are two major ways of using escrow in real estate transactions using cryptocurrency;
Whichever option you choose, make sure each party involved in the transaction fully understands the terms and conditions.
Though the use of digital currency in the real estate market has its own benefits, it also comes with its own challenges.
Hence, it is important for buyers, sellers, and even agents to be adequately knowledgeable in order to protect themselves.
Since the use of cryptocurrency in the real estate market is relatively new, it is important that as a buyer, seller, or agent, you understand the intricacies of using cryptocurrency in buying or selling real estate.