Right after the new year, a long-time client came to us and explained that she inherited a large sum of cryptocurrency. She found a home that she wanted to purchase and asked us what we thought about making an offer with a down payment in cryptocurrency with traditional financing. Bitcoin has recently gained mainstream notoriety as merchants like Microsoft and Subway have begun accepting the cryptocurrency. In order to use bitcoin to purchase real estate, it is not as simple as getting a buyer and seller to agree on the form of payment. Such a transaction is complicated when considering you need to actually find both a buyer and seller willing to exchange this new form of payment as well as how financing, escrow companies and title insurance are impacted.
For starters, most lenders will not accept bitcoin or cryptocurrency as a down payment for conventional financing. There may be lenders willing to provide such a product but none that we spoke to. Even if our client was able to combine bitcoin with traditional financing, or even pay fully in crypto we expressed our concerned that the seller pool willing to except crypto as payment is limited. Ironically this week the Contra Costa Times printed an article about a home in Oakland that is being offered in cryptocurrency. The article mentioned that the response from buyers was overwhelming.
While there are online brokers that claim to have handled real estate transactions involving cryptocurrency, traditional title companies have yet to embrace this new form of payment. This makes obtaining title insurance difficult. Also, given the recent pull-back in the value of bitcoin, which recently traded below $10,000 from a high of above $19,800, the hype around completing real estate transactions in cryptocurrency might fade as most people will not want to deal with the associated volatility and risk.
Please feel free to contact us with your real estate questions - Erin at 925.951.3817 or Darrick at 925-900-8218