So...How Do I Buy A House With Crypto?

For most people selling a house, they want a smooth transaction, cash deals with a fast escrow. If the buyer is financing, then a lender who can close quickly is almost as good. The speed of a transaction is almost always preferred by a seller, unless they're contingent on finding a replacement home before closing escrow. All things aside, I think most people can agree a cash deal is preferred, followed by a conventional loan with a large downpayment.

But what if the buyer has their downpayment, or the entire payment, in cold storage? According to a Forbes article on cryptocurrency, "31% of people ages 18 to 29 have used it, compared to 21% of people ages 30 to 49, 8% of people ages 50 to 64 and 3% of people age 65 or over.

How about the average first-time home buyer? According to Financial Samurai, that person is 33 years old, fitting in line with a good amount of crypto owners in this age range.

If we are also to assume this 33 year old is active in the crypto world, they might prefer Bitcoin as a store of value versus a traditional savings account, riding the volatility instead of having inflation eat away their fiat, while getting a minuscule interest payment from their bank.

Now let's look at the average age of a home seller. Zillow says that person is 45 years old, and that overall, "millennials make up nearly one-third of sellers (32%), with almost another third of sellers belonging to Generation X (31%). Baby Boomer households make up 28% of sellers, while only 9% are from the Silent Generation."

What we can see is that, at least transactionally, the average buyer and seller has a decent to good amount of knowledge of cryptocurrency than one might have guessed, and that leads me to believe that these types of transactions will continue to grow and slowly become a normal way to buy and sell.

So how do they work? Here in the United States, there are a few ways to do this:

Crypto to cash - this is the most common way to transact. For example, you have BTC or ETH, you then sell and convert it to cash for a real estate purchase that will be how you normally would transact with fiat. In this instance, should you be using crypto just for your downpayment, the title and escrow companies will not have any issues, as you're essentially using USD currency. It's good to convert your cryptocurrency a good two months in advance for the cash to settle in your checking account. Redfin estimates 12% of buyers sell crypto to convert to a USD for a downpayment.

Crypto to Crypto - the seller and buyer are both comfortable with a crypto transaction, and are willing to exchange it through crypto wallets, to complete the transaction. By now have all read about the Miami luxury condo selling for $22.5 million of crypto last May, closing in less than 10 days. The specific cryptocurrency used was withheld due to confidentiality agreements. You should have to have both a title and escrow company experienced in crypto transactions, as many at this point are not.

Crypto Mortgage: another service being offered by companies like Milo a direct lender, which will enable borrowers to keep their cryptocurrency, instead using their Bitcoin as collateral. The company will base their lending criteria not on traditional FICO scores, but on an individual's crypto wealth.  

So there you have it, a few ways to buy and sell real estate using cryptocurrency, and I'll be sure to breakdown some of these strategies in future blogs into greater detail. With a willingness of companies to disrupt traditional institutions, and the continued adoption of new crypto users, those unfamiliar with crypto will have a learning curve ahead. No one knows exactly what lies ahead for the world of crypto and real estate, but it will be a fresh, exciting and ever changing.

Disclaimer: Nothing in this article should be considered investment advice. Readers should do their own research (DYOR).

Joe Steele
In addition to investing in and selling real estate, Joe is also a crypto investor, running a blog and YouTube Channel, “Crypto and the House”, focusing on all things real estate and crypto.
United States