The rising popularity of cryptocurrencies has intrigued everyone. And, now that major developed countries like the US and Canada accept digital currency as a mode of payment, people naturally start looking for the next step of this process. If you haven’t noticed yet, then know it now! It is possible to buy a property with cryptocurrencies!
Of course, it is not an easy process, as it requires several legal documents among other things. Most probably, you will be paying with Bitcoin or Ethereum, as other cryptos are not popular as these two. Keep in mind that the majority of people are still skeptical about digital currencies as they are volatile and not regulated by any central authority.
Here are a few tips that will help you in the process of buying a property with cryptocurrency.
1. Get Your Bases Covered
Although the concept of cryptocurrencies and the technologies related to them have existed for more than a decade, only in recent years have they become widespread and familiar. A lot of people are still wary of this concept as the technology behind digital currencies is a bit complex to comprehend. It doesn’t help that these currencies do not take any physical form, thus not giving the assurance of traditional money.
If you are a person who is new to the crypto world and is interested in the trades involved, you really need to research and understand all the basic details needed. Explore the types of digital currencies available and how they differ from each other. Find the right crypto exchange and wallet for you so that trading and storage of these currencies become easy for you.
Overall, before you jump into the field of real-estate =property and transactions in cryptos, ensure that you know your fundamentals.
2. Choose The Apt Seller
This is the first and most important step when it comes to purchasing a property with digital currencies. Finding a seller who is willing to accept payments in Bitcoin or any other cryptocurrencies might be rare to find. Only when both parties consent to the transaction, can the process be accomplished further. click here to know more about these transactions,
There is a high chance that you have found your dream property but what if the seller is not convinced about accepting cryptocurrencies as payment? A solution for this situation is exchanging your cryptos for cash. One can use services like Coinbase and convert their Bitcoins into USD and seal the agreement.
Ah, but there is a catch here too. Converting Bitcoins to Dollars is quite a risky business for the buyer. The seller will agree to a fixed dollar amount, but as everyone knows, the value of Bitcoin fluctuates dramatically every day.
3. Understand the Legal Work Involved
When both parties have settled upon the transaction, you will need to find a title insurance and escrow company that agrees to handle the said transaction. Tax complications are also to be taken into account. An interesting fact to know – every real estate list in the US is available to be purchased by using Bitcoin.
But, of course, it needs proper knowledge of all the technical procedures that take place, and also that of exchanges, banks, and custodians. The Crypto market is often filled with tricksters and frauds who engage in illicit activities like trafficking, money laundering, etc. A proper legal structuring and a defined tax statement make the process of buying and selling properties with the help of cryptocurrencies more authentic.
4. Acknowledge the Price Volatility
Anyone who knows cryptocurrencies will know about how their prices rise and fall enormously. This can be a bit of a deal-breaker when it comes to buying a property with these currencies. Obviously, even after the trade is done and dusted, the value of the crypto will change, thus causing unease for the seller. It is natural for them to think that they might not receive the actual payment they hoped for.
There are a few ways to solve this problem. First, one could try and close their trade as soon as the contract is signed. This way, you can avoid further fluctuation in the value of the digital currency, thus avoiding future complications. But, this method could be problematic if the property you are buying requires extensive approval periods.
The other way to go about this is by defining the contract price of the particular cryptocurrency in the document or tying it to the exchange rate, on whichever date the contract is signed. Also, when this option is chosen, one has to add a clause in the contract that clearly addresses the possible fluctuations in the value of the digital currency between the day that the contract is finalized and the closing day.
5. Stay Vigilant
There are numerous benefits when it comes to acquiring a property with cryptocurrencies. Some of them are:
● Conversion of a volatile property into a secure one
● Quick and safe method of purchase
● Private means of transaction
These same benefits could act as an opening for fraudsters to trick and partake in illicit activities. So, when you choose to buy a real estate property, make sure that every important detail is clearly stated in the document.
One of the reasons why sellers hesitate to accept digital currencies as a form of payment is that there is a high chance of fraud when it comes to the crypto market. Every transaction takes place virtually, so there is no solid proof, or at least for the people who seek traditional methods. This is why when you are involved in such a transaction, you should gain the trust of the seller. Laying out all the terms and conditions in a detailed manner can be advantageous to both parties.
The Bottom Line
The right seller and clear legal documentation are the keys to purchasing property with digital currencies. Selling your cryptocurrencies and changing them into fiat currency could be the easiest way to go about the business of buying a property with digital currencies. Finding a seller who is willing to accept virtual currency directly could be a trying task. If you do find a seller interested in digital trading, then they probably will only accept popular cryptos.
Choose the best options for you and proceed in the correct way!