How I Sold My First Property Via Cryptocurrency

by | BiggerPockets.com

Unless you’ve been sleeping under a rock, you’ve probably seen this whole cryptocurrency frenzy that has gone on in the market. Granted, it has died down because the market has died down a bit. Nonetheless, a lot of people are still talking about it as the next big thing, as the next internet even (not necessarily the actual cryptocurrencies, but blockchain technology).

Cryptocurrencies: Poised to Change Real Estate?

As with anything, I believe you have to keep an open mind to not only the changes in the economy but the changes in the world on a daily basis. It’s crazy how if you don’t touch your phone for an hour you feel like you missed out on something big. I want to be a part of these changes. I think that the world is moving towards everything becoming tech-centered, digital, and online—and reality becoming virtual and augmented, with artificial intelligence and even robotics playing a role. These shifts will make big changes in various industries.

One industry that I don’t feel has been largely affected by the changes we see happening in technology is real estate. When you look at a real estate transaction, it still basically happens the same way it did for many, many years. I think that is about to change. I also think that blockchain is going to play a big part in the way real estate deals are transacted. Personally, I think title companies are going to become extinct very soon—I think they will be the first to go. I think real estate brokerages will become unneeded middlemen. Some tech company out there will jumps in bed with the NRA (National Realtors Association) and tell them brokers are not the ones to keep agents accountable. Instead, their technology will be able to do that on a nationwide scale. Therefore, it is my opinion that brokerages are going to become extinct soon.

Last but not least, in the next 20-30 years, I think even real estate agents won’t be needed anymore. That’s because there is a trend in the market right now where a lot of consumers just want to deal with a robot or app or tech product and not actually deal with human beings, which is mind-boggling to me. You’ve got a lot of iBuyers out there like Open Door, Offerpad, and Knock. Zillow has actually entered the iBuyer as well, buying properties and listing them through their own platform, which will ultimately probably not require a real estate agent. 

My First Crypto Transaction

Seeing where all of this is going, I want to be a part of that revolution. So something that we have decided to do is sell a property via crypto. How do we do that? We’ve had a lot of young investors who have made money during the crypto boom reaching out to us. One of them actually approached us and asked to use cryptocurrency to buy one of our properties. Now, I do have a bit of a background because we are building a tech platform right now that will kind of use blockchain. So I am not a total rookie in it. But we definitely wanted to make sure we were doing the right thing because there are still no regulations on how you can close on a real estate transaction via cryptocurrency.

So we didn’t close the entire transaction in crypto, but this is what we did do. We approached our title company and said we had someone who wanted to buy a property from us using crypto. We said we were happy to accept the first deposit on that property, around $10,000 in cryptocurrency, and then the rest could be processed through traditional means. We asked the title company how we could get the deposit in cryptocurrency—but understand, our title company is not educated on how to close via cryptocurrency.

So I told them I was going to set up a wallet, and the buyer would send Ethereum tokens to my wallet equal to $10,000. The title company then said they would classify that as earnest money on the HUD and in the closing docs, which would be equivalent to $10,000, and they would include that deduction from the actual final closing docs when closing. That was pretty much it. I told the buyer two days before closing to send the $10,000 in cryptocurrency to my wallet. I know it sounds crazy, but that’s what happened. They sent the Ethereum tokens, those tokens hit my wallet, I gave the green light to the title company that I received the tokens equal to $10,000 and to make sure it was recorded in the HUD and that we were good to close, and that was that. That is how we were able to close our first ever transaction (or at least a portion of it) in cryptocurrency.

Related: 4 Reasons Cryptocurrencies & Blockchain Technology Are Poised to Transform Real Estate

Now, here is a question for you guys: How would someone like me go about selling a property entirely in crypto? That’s a question for you guys because I still don’t know that. I need to do a little bit of research because if the buyer wanted to buy the property entirely in crypto, how would that work and how would the title company process the transaction? I guess we would have to deed the property to that investor because there wouldn’t be any dollar amount on the HUD (or would there)? And how would that work for tax purposes? There are still a lot of unknowns. It’s amazing how the world is changing and what is happening.

What I urge you to do is to be at the forefront of that change. Don’t write off cryptocurrency just because you see it as very volatile. There is actually very good technology behind the cryptocurrencies that makes a lot of sense. I didn’t want to jump on board early on, but I had no choice because I realized that it was too big to fail and there are too many people and companies that are adopting this. I honestly think that real estate is going to be changed in a big way, so stay tuned for what’s to come.

Any questions? How do you think real estate transactions will change in the coming years?

I’d love to hear from you.

About Author

Engelo Rumora

Engelo Rumora, the Real Estate Dingo and your favorite Australian, quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate all over the world and has bought, renovated, and sold over 500 properties. He is currently in the process of launching an ICO that will “Decentralize The Real Estate Industry.” He’s also known for giving houses away to people in need and his crazy videos on YouTube. His life’s mission is to be remembered as someone who gave it his all and gave it all away.

17 Comments

  1. Howard Greisman

    Hi Engelo, very cool receiving part of your payment in cryptocurrency. You might be the first to have it on a HUD. I totally agree with your article that changes are coming to how we transact real estate. First, perhaps another line on the HUD saying cryptocurrency??????

  2. Christopher Smith

    Still not sure what the real advantage of using a “crypto” currency will be vis a vie a soveriegn currency. On the other hand, I can definitely see a couple of potentially really really big disadvantages such as vastly increased scrutiny at many levels by governmental agencies.

    Presumably the raison detre of utilizing crypto currency was to keep the transaction under the radar screen from others hence the “crypto” label. Governments and the agencies they administer (and some private groups) are coming out one after another warning those who use crypto currency that they will be watching them very carefully to make sure they achieve none of these “cryoto” related objectives.

    In other words, the governmental authorities intend to ensure that these transactions executed via crypto currency will be subject to all of the full and comprehensive disclosure requirements as any other transaction. Any attempt to “hide the ball” using cryptos may be met with heavy crminal and civil penalties if done with the intent to avoid any applicable public disclosure laws, or to for instance facilitate tax evasion.

    Why invite the scrutiny? Crypto currency may ultimately gain some acceptance, but the idea that you are going to be able to utilize them the way many had envisaged (under total annonimity) is turning out to be woefully misplaced. So block chain technology benefits notwithstanding, one might want to at least consider thinking twice before jumping onto the Crypto currency band wagon.

    • Michael Thoma

      I will direct you to this article, posted 2 days ago, about comments from the CFTC regarding cryptocurrencies. They are now on record as believing they are here to stay. There are many, many different forms of a cryptoassets. And anonymous currency is just one of them. I would be happy to discuss further but I believe you can simply google every concern you’ve raised and find out that people much smarter than me are working to address them.
      https://www.ccn.com/cryptocurrency-a-modern-miracle-not-going-away-cftc-commissioner/

      • Engelo Rumora

        Thanks for sharing the article Michael.

        It has a reached a point where it’s just too big to fail in my opinion.

        Governments and companies worldwide are adopting blockchain and crypto.

        Folks in the real estate world should have an open mind and in the least, start educating themselves on what it actually is and what it actually does.

        Many still don’t even know that blockchain and crypto exist.

        Much success

    • Dillon Reilly

      Hey Christopher. I think you should really look into cryptocurrency a bit further to prevent spreading misinformation. I’ll give you a very, VERY brief breakdown so that you can hopefully see where you’ve been misguided. First and foremost, it’s called cryptocurrency not because it is an anonymous, shady bit of business as your raisin detray believes (is that Latin? Like cavity empire? Not important, new technology > dead language). Rather, it is coined this term because it uses cryptography to establish incredibly secure transactions between two people. In fact, you can pull up the data and see for yourself every single transaction that has ever happened, because it is all kept on a huge digital ledger called the blockchain.

      The reason governments are hesitant is because governments are really bad at change. Especially large governments. That’s why we have jokes about bureaucracy. No one is entirely sure how it should be regulated because nobody knew we could have a different way of handling transactions.

      My advice to you: Never stop learning. Otherwise you may end up thinking you know what’s going on because you use dead-language catch phrases in your writing, instead of actually knowing what’s going on.

      Disclaimer: this comes from a place of care and is riddled with sarcasm

  3. Nathan G.

    I really wish BP would stop allowing these misleading titles. You did not sell your house for crypto. All you did is exchange something that was of value to you and the Buyer as a downpayment. If the buyer had offered 10,000 Hooters napkins or 72 bedazzled conch shells, the Title company will document the exchange. That doesn’t mean Hooters napkins are acceptable forms of currency and it doesn’t mean you “sold your house” for crypto.

    Crypto is a crap shoot, at best. As we’re already seeing, it’s not as secure as promised, it’s not easy to turn into cash, and it’s far too volatile. Maybe in 10 years but certainly not this year.

  4. Angel Gutierrez

    The first time I heard of bitcoin it was at $14. I didn’t buy any and I would have but no one could explain it to me.

    When bitcoin was at $400 and I sort of understood what it was, I didn’t buy it because everyone was telling me it was a fraud. Still I got no plausible explanation as to what it was.

    I accepted my first bitcoin for real estate trade two months ago and the escrow people were only able to help me with title. They were interested in the concept and understand that it is here to stay like it or not, I made the trade directly with the buyer. I told the buyer I didn’t care what he paid for the bitcoin, I was more than happy to trade him for my house.

    The lawyer for the title company had me sign three disclosures that put together said that I wouldn’t hold them responsible for trading my house with crypto currency. Whatever.

    I remember when they used to say that you could buy anything off the Internet using a credit card and if you did it was dangerously full of dragons and demons etc. etc.

    What I don’t like about the comments on articles like this one is that we have too many armchair quarterbacks itching to chime in and let everyone know how they feel about whatever the subject line is.

    There are risks in everything we do every day and as long as you mitigate your risk and not involve yourself in risky behavior you’ll be OK and come out ahead nine times out of 10.

    For those of you out there that don’t like crypto currency’s and don’t like buying apartments I don’t like buying houses to stay away and leave those of us alone to do as we wish. Stay in your little safe cubicle and please by all means keep your comments to yourself. Like my mother used to tell me,” if you can’t say something nice don’t say anything at all. ”

    Remember, this website is about information exchange, not conjecture.

    Angel

  5. Dhanush Kondoth

    Hey Engelo, cool to see this happen. There was a transaction in Texas where the buyer bought a house with bitcoins. Also I was wondering if the buyer was relying on a good faith that you would be honest after receiving the tokens in your wallet because since it’s not traceable, there is now way the buyer can prove that he had sent it to you? Did you guys figure out a way to get around that?

    • Engelo Rumora

      Thanks Dhanush,

      Great question.

      The buyer was happy to trust my word that I will let the title company know that I received the coins

      As you can imagine, the entire process is still very new and it will take some before everything is more streamlined

      There is no doubt in my mind that we will soon start seeing “intermediaries” for such crypto transactions.

      There are already so many Blockchain companies launching tech to replace title companies

      Here are a few interesting ones:

      https://cprop.io/

      https://propy.com/

      Much success

  6. Angel Gutierrez

    A bitcoin transaction takes about 15-20 minutes to fully propagate through the network .
    My suggestion to anyone remotely interested in cryptocurrencies is to first read Mastering Bitcoin by
    Andreas M. Antonopoulos. It’s not an easy read at all, but just tough it out and read the whole thing. It will answer all your questions about bitcoin and how it works.
    Truth be told, Etherium is actually faster to use, you can use either one or any cryptocurrency listed on the more popular exchanges . As long as the sender has your wallet address correct(you give it to them) your trade will show up right away!
    For all you naysayers… just stay out of it.
    Personally , I have traded houses for: boats , cars, motorcycles, Visa, MasterCard , American Express, PayPal , gold, silver, bitcoin, etherium, Ripple, dollars, pesos and yuan and of course other houses. I don’t accept marijuana just yet(I have been asked) because I have no use for it(it never agreed with me).
    In the house business, If you guys out are looking to get paid in only one type of currency or only in one manner… you will fail(bankruptcy). Buyers are buyers and that’s what I need to keep my business going and you should too!

    Hope this helps… if not … oh well… just disregard. 🙂

    Angel

  7. Amelia Bloomfield

    Great post!

    Crypto HodLer here. Our very first investment journey was in crypto, and we’re in for the long haul. I believe in peer to peer and what blockchain can do and is doing, making “wealth” more accessible to the less fortunate.

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