When you’re in the market for a new home, you probably have a lot of things on your mind: square footage, school districts, mortgages rates.
One thing you’re probably not spending much time thinking about: Bitcoin.
But perhaps cryptocurrency and blockchain technology will soon be a major consideration for property purchasers and sellers.
At least that’s what some Boulder County real estate professionals are gearing up for.
“Blockchain and cryptocurrency really has the ability to change every aspect of real estate, from titles, to lending, to the brokerage itself,” said Jim Merrion, a Boulder real estate agent with Coldwell Banker.
Merrion, along with Anthony Meisner with Boulder’s Land Title Guarantee Company, are preaching the gospel of the blockchain and encouraging real estate industry professionals and clients to embrace the technology.
“This (technology) is finally mainstream enough in the real estate community that people are really talking about it and considering the implications and benefits,” Meisner said.
Simply put, cryptocurrency — the most famous and valuable example is bitcoin — is a form of verifiable and transferrable digital money that exists independent of centralized banks.
The blockchain is technology that uses large computer networks to create a decentralized ledger or database that tracks activities such as the transfer of bitcoin.
Merrion said he first dipped his toe into the crytocurrency pool in about 2012 when he bought a couple of bitcoins.
“I bought it as a lark and sold it way too early,” he said. “I just thought it was an interesting idea.”
The cryptocurrency market has been on a wild ride since Merrion bought those first tokens, with the value of coins in a seemingly endless cycle of skyrockets and crashes punctuated by temporary periods of stabilization.
Despite the peaks and valleys, some see this technology as the future not only of currency, but also of a host of business applications.
“A lot of smart business people are using this technology to tackle really important things like real estate,” said Alan Curtis, a former Innosphere employee who last year founded Radar Relay in Fort Collins. Radar Relay is a wallet-to-wallet cryptocurrency exchange technology firm.
The use of cryptocurrency also opens up local markets — such as real estate in Boulder County — to a global pool of customers and investors.
“At the end of the day, there are people all over the world that you want to do business with, people all over the world that you want to interact with,” Charles Hoskinson said at a cryptocurrency conference in Boulder earlier this month.
Hoskinson leads the blockchain platform Cardano, which hosts the Ada cryptocurrency, and has been involved with the founding of a host of other well-known cryptocurrency technologies, including Ethereum.
“We’ve gone from siloed, isolated economies that were paper-based and basically designed in the 19th century or before to economies that are highly globalized,” he told DISCON conference attendees.
Alan said, “The idea of global access is critical.”
Blockchain technology could help make the process of buying or selling a home more efficient by streamlining the titling process and eliminating the need to shuttle documents to and from the county clerk’s office, experts say.
The transparency afforded by the blockchain can also help reduce the potential for fraud “and really move the needle to help people realize we can have a more secure environment,” Merrion said.
A Front Range first
Merrion listed a two-bedroom townhouse in Arvada earlier this summer. With mentions of easy access to highways, recently replaced windows and quartz countertops, the listing is much like any other.
But there’s a phrase that sets the listing apart: “Traditional financing, Bitcoin & other Cryptocurrency accepted!”
“As far as any of us can tell and from all the research we’ve done, this is the first” property along the Front Range to be marketed on a major multiple listing service as accepting cryptocurrency, Meisner said.
Merrion quickly found a buyer for the Arvada home who opted for the traditional financing model, but he plans to continue marketing homes to cryptocurrency holders.
“It is part and parcel of my discussion with clients,” he said. “The industry is headed this way and I certainly don’t want to be left behind.”
Once Merrion brings together a buyer and seller, Meisner and Land Title can step in to help facilitate the transaction.
“We serve as neutral third-party,” Meisner said. “So if there are questions that arise, we can refer people to attorneys, refer people to cryptocurrency experts.”
Even if Merrion were to find a buyer interested in using cryptocurrency to buy a home, bank regulations require those coins to be liquidated before a purchase. However, if a seller owns the home outright without a mortgage or lien, a peer-to-peer purchase can be made without turning the coins into cash first.
“Some parties don’t want to have to liquidate their coins” and would prefer a peer-to-peer transaction to minimize frictional costs such as fees and slippage, Meisner said.
The first peer-to-peer bitcoin real estate transaction occurred late last year in Miami, according to multiple media reports from December.
Meisner and Merrion say it is only a matter of time until that kind of deal is made in Colorado.
“I would say it’s possible” there will be a peer-to-peer transaction in Colorado this year and “it’s probably very likely next year,” Meisner said.
He added: “We would really like to be the first.”
credits to Lucas High