You have probably heard the term “cryptocurrency” on the news and in the media. And if you aren’t familiar with it, cryptocurrency is a digital form of currency whose value is confirmed and guaranteed through the internet. Each transaction is verified and then made as public record. This is known as blockchain.
There are different types of cryptocurrency, one of the most popular is Bitcoin. While it is still a newer process, when selling your house cryptocurrency can be accepted. But, since many are still on familiar with the process, here is what you need to know.
Cryptocurrencies are risky. You will want to work with a real estate attorney that has a good understanding of how they work in a real estate transaction. You also need to be familiar with cryptocurrency yourself, as well as the token that you are willing to accept.
When dealing with cryptocurrency it can also be a good idea to convert some of the tokens into US dollars once you receive them. This can help mitigate the risk.
The contract takes on a new meaning when cryptocurrency is used. It is important that both parties agree on not only the price, but also the type of cryptocurrency that will be accepted and the closing date.
It’s crucial that you have an attorney who is experienced with cryptocurrency deals draft the contract. Since the closing can last several weeks, it’s important that the contract includes a fluctuation limit.
While some areas do accept smart contracts and blockchain data for real estate transactions, not all do. It’s important that before you start the process you know what the rules are in your own area.
There are some startups in the works for recording deeds using blockchain. However, at this time, you will most likely need to have this recorded at a local office.
While your real estate contract may be written in cryptocurrency, you will still need US dollars or another form of payment for some parts of your transaction.
For example, most real estate agents, title insurance companies, and attorneys do not accept cryptocurrency at this time. You will need to pay these parties in the form of payment that they accept.
Buyers who like to use cryptocurrency usually like it because the transactions are anonymous and secure. However, there is an anti-money-laundering initiative that will require title insurance companies to report the identity of people in real estate transactions, including those that are behind LLC’s or shell companies.
When selling a house with cryptocurrency, most of the processes are the same as any real estate transaction. When it becomes possible for the deed to be recorded with Blockchain this could be different. But, at this time the main difference that you will see will be in the contract and the need for you to work with professionals who understand cryptocurrency.