Bitcoin and Real Estate: A Match for the Future?

April 17, 2024
bitcoin real estate

The traditional method of purchasing a house is a lengthy process, involving multiple parties and necessitating a series of steps to see to its completion.

Typically, buyers pay a 10-15% downpayment and take out a home loan that runs for about thirty years to pay off the remaining balance. This home loan is facilitated by financial institutions such as banks and credit unions. 

Throughout this period, the financial institution earns interest from the monthly repayments you’re paying off. This is marked at a percentage that you agreed upon before signing the contract, averaging at about 6.7% per year.

While the core process of inspecting and seeking the right house remains the same, the introduction of Bitcoin in the real estate space has revolutionised the way prospecting homeowners can finance their new home.

Whether you’re buying your first home or planning to build and flip houses for profit, there are a lot of benefits to be had when transacting through Bitcoin. Let’s clear the air and explore the evolving relationship between real estate and the most popular cryptocurrency in the world.

How to Buy Real Estate With Bitcoin

Buying real estate with Bitcoin is a viable way of acquiring your own commercial or residential real estate property. This is especially true for foreign investors looking to buy homes in another country.

First, you have to ensure that the region you’re in allows you to make this type of transaction, with both legal and tax considerations considered.

Secondly, ensure that the seller is agreeable with this payment method. If they accept direct transactions using crypto, then both of you can push through with the deal. 

However, if they prefer other modes of payment, you may have to convert your Bitcoin into another currency (like your country’s fiat currency) that they would accept. You can also consider using a crypto debit card that auto-converts crypto into fiat currency. 

You can also conduct cryptocurrency transactions using sites that utilise payment providers that accept these cryptos. Pacaso and are some of the notable sites, to name a few.

For instance, if you’re from Australia, you’ll need to convert your Bitcoin to AUD. Check the current Bitcoin price in AUD.

The number of sellers and real estate agencies accepting Bitcoin in Australia and around the world is rapidly evolving. Search around, vet your picks, and choose private sellers or real estate agents willing to accept the deal.

How Bitcoin Shapes The Future of Real Estate Financing

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Bitcoin is more than just a number in the blockchain. It’s a disruptive currency with monetary value—digital gold, you could say. 

Outlined below are five of the perks of making real estate deals with cryptocurrency, specifically Bitcoin.

1. Bitcoin Reduces Fraudulent Activity

The real estate industry is fraught with vulnerabilities and exploitative schemes. Many unscrupulous companies prey upon unsuspecting buyers and employ deceptive tactics classified under real estate fraud. 

This fraud typically arises due to the nature of the traditional transactional process, where the involvement of numerous parties heightens the risk of fraudulent activities.

Examples of such fraud include impersonation, false listings, title misdeclarations, manipulation of signatures and contracts, and other types of deceptive tactics.

However, in the future of real estate, such a problem can be solved. 

Bitcoin, with its cryptographic nature and highly resistant security process, improves upon the traditional financing process by allowing actors in the real estate market to verify and audit the property’s record and history. 

Furthermore, the decentralised nature of cryptocurrency also grants protection to buyers and sellers due to the enhanced transparency found in the ledger. Furthermore, it’s difficult for cyber hackers to compromise the blockchain system due to the improved security measures there.

2. Bitcoin Cuts Out The Middleman

Using Bitcoin and other types of cryptocurrency is a viable and better alternative to eliminating intermediaries. In a traditional home purchasing process, there are banks and real estate agents that attach a cost to certain processes. 

When you buy through Bitcoin, not only are you eliminating this added cost, but you’re also reducing the processing time of these processes. This makes buying and selling a real estate property more efficient and simple for the consumer and seller granted that you’re transacting in cryptocurrency all throughout. 

3. Bitcoin Expands New Opportunities

Many real estate agencies and agents are fairly receptive to the shift to cryptocurrency as a mode of payment. This is primarily because of the elimination of fees imposed by traditional banks—thereby putting more capital in their pockets.

If the seller is bullish on cryptocurrency, they may even provide discounted rates for their property if they receive crypto payment over traditional fiat currency. While such a case is still quite rare in 2024, having some Bitcoin on hand can help you prepare for such a situation when it arises.

4. Bitcoin Simplifies International Transactions

If you want to buy a house overseas the traditional way, there are often lengthy processing times, high fees, and other barriers that can complicate and lengthen the process. This is especially true if you’re dealing in different currencies.

By using Bitcoin, however, you’re waiving the need to use such methods. Bitcoin can be transferred directly between parties without intermediaries and in a near-instant. This can be done through the Internet. 

5. Bitcoin Offers Collateral Options

Bitcoin, being a globally accepted asset and currency, has been used as collateral to access home loans. If you have a large amount of this asset, you can use it to get into financial agreements that accept cryptocurrency as collateral. 

Generally speaking, loans secured with collateral offer more favourable interest rates compared to unsecured loans. This applies to loans secured with Bitcoin as well.

This enables better savings for you while still providing an acceptable guarantee for lenders who are giving you funding.

Risks of Buying Real Estate With Bitcoin

Buying real estate using Bitcoin comes with several benefits. But it’s not always the superior option; there are still some risks involved when making Bitcoin transactions, especially involving purchases as major as property.

Here are some of the risks associated with buying property using Bitcoin:

  • Volatility: Bitcoin’s price can fluctuate wildly, which can be a point of contention for buyers and sellers over price agreements.
  • Legal uncertainty: Many countries don’t automatically approve or legally recognise transactions made through Bitcoin. Furthermore, policies surrounding cryptocurrency are ever-evolving, making the future of this currency not as stable when compared to fiat currencies.
  • Seller restrictions: Some sellers simply won’t accept Bitcoin due to its volatile nature. Unless you’re paying using a crypto credit or debit card, it might be hard to convince sellers to accept this form of payment. This makes seeking the right seller harder.
  • Security concerns: Payments made through the Bitcoin blockchain can’t be reversed or rectified, which means that both parties need to have robust protocols to protect themselves and their money.

How Cryptocurrency Helps Real Estate Market

Bitcoin is a matured cryptocurrency that has established its place in the market. That said, there are many types of cryptocurrencies out there that offer use cases specific to the real estate market.

Here are some functionalities offered by a few heavyweights in the cryptocurrency world:

  • Smart contracts: Run by Ethereum and a few other cryptos, smart contracts automatically execute deals when conditions are met. This helps eliminate the need for paperwork and reduces the chances of fraud occurring.
  • Improved property management: Crypto streamlines property management by automating tasks like collecting rent and managing leases. This reduces the need for manual labour and enhances management efficiency.
  • Real estate tokens: Cryptocurrency allows real estate property to be “tokenised” into shareable digital tokens. This allows investors to buy shares of the real estate and owners to sell parts of it without even physically meeting up.

Cryptocurrency like Bitcoin is a large influence in the real estate world. In a few decades, it’s likely to become a more mainstream way of conducting business, especially for international property purchases.

Soho is your expert team in Australian real estate, offering an innovative platform for effortless property searches. With deep insights into buying, renting, and market trends, we guide you to make informed decisions, whether it's your first home or exploring new suburbs.
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Our AI match engine will match you with over 150,000+ properties and you can swipe away or shortlist easily. Making your home buying journey faster and easier.