Bitcoin cashes in on the real estate transaction.
INTERVIEWED BY DARREN ELMS
In the competitive real estate market, a seller is sure to be enticed by an all-cash offer. But what if your buyer wanted to pay in Bitcoin—the worldwide cryptocurrency and digital payment system called the first decentralized digital currency?
Justin Miller, a Realtor at BCB Premier Real Estate, recently presided over the largest Bitcoin transaction in California: a residential property at $1.9 million. He then followed it up with another residential and a commercial property, at $3.2 and $2.3 million respectively. We had plenty of questions. So we sat down with Justin to discuss the unusual yet progressive purchase.
How did the buyer approach you about using Bitcoin for the purchase?
The buyer works in the tech industry and had earned or invested in Bitcoin. He wanted to know if I could help him purchase property that way.
How did you react?
It motivated me to learn something different, because I had been hearing so much about Bitcoin and knew it was an interesting space that would eventually affect real estate markets. So I wanted to find out what the possibilities and opportunities were.
You say this was the largest real estate transaction of its kind in California at the time?
I believe so. At the time that I was researching this, I located only one previous purchase in California … so I think that’s correct. It was a property in Lake Tahoe that sold for $1.6 million. I used that sale as my main research point to learn all I could about how the transaction was handled.
What was the process like?
First, I researched the sale in Lake Tahoe and learned as much as possible about the new cryptocurrencies like Bitcoin, and then I found a title and escrow company that could do it using Bitcoin. The last step was explaining it all to the sellers so they could reach a comfort level with this new type of transaction.
Then we needed a third party who could take the Bitcoin and convert it to cash and send it to escrow. I eventually located BitPay, which handled the Lake Tahoe transaction and talked to them to work it all out. One of their reps came down and did a great job meeting with everybody involved to help educate them and build trust in the process.
Getting people on board was sort of tough at the beginning. I talked to a lot of title and escrow companies that didn’t want to work with Bitcoin, and I just decided to keep pushing until I found the right match. Once we had BitPay and the title and escrow on board, everything was very smooth. It’s very similar to a cash transaction.
After your experience, what do you view as the benefits … and challenges?
Well, there was one really interesting benefit for my client. During the escrow period, the value of the Bitcoin rose significantly. By the time escrow was completed, the buyer had seen a substantial net increase of over $1 million due to Bitcoin’s price fluctuation. Pretty cool. Now of course it could have worked in the reverse, but Bitcoin has generally been on the rise this year.
Regarding challenges, the first one was getting everyone comfortable and onboard, because Bitcoin is new and it’s had some growing pains. Luckily I was able to educate myself and find some key players who were willing to learn and become comfortable. In some ways it was easy, and in some areas it was a real hurdle figuring it all out.
The escrow was a bit difficult, but I have a good relationship with the escrow office and they were willing to hear me out, consider it and talk to Bitpay, which helped them understand it.
After that, you had another client wanting to use Bitcoin?
I have several clients who have been asking me about it and calling, and I get a lot of inquiries out of the blue. So there’s a lot of interest. Bitcoin has taken a big jump lately, so I assume there will be more people looking to use it for properties soon.
Any advice to future buyers or sellers who want to get in on this new currency trend?
I would say that when buyers and sellers are open to using creative or alternative financing, this opens doors and provides opportunities. Cryptocurrencies like Bitcoin are looking like they’re here to stay—becoming more and more mainstream. I’d urge everyone to learn more about what Bitcoin is and how it works. It’s really quite fascinating and ingenious on many levels.