Can You Actually Buy a House with Bitcoin?

If you're buying a home to expand your family, a vacation home, or an income-producing investment, you can use Bitcoin to seal the deal. The future of real estate is changing to accommodate cryptocurrency, as it offers increased transaction speeds and lower costs and can attract more investors. If you've dabbled into buying virtual property in the metaverse with your crypto funds, you should better translate your wealth into your physical life. You can transact Bitcoin directly with the seller, qualify for a mortgage, or convert your crypto holdings into cash. 

The Rise of Cryptocurrency in Real Estate 

During the COVID-19 pandemic, people attempted to diversify their investment portfolio toward digital assets like cryptocurrencies to experience short-term gains. To be more precise, many rushed to buy Bitcoin with credit card as prices soared in the belief that they would make quick gains. Building wealth is possible through cryptocurrency, so it shouldn't come as a surprise that many have made enormous amounts of money. Investors who've struck gold ended up with the funds to buy property for the first time. In June 2021, a Miami Beach Penthouse was purchased for $22 million in cryptocurrency, one of the most expensive deals finalized using digital assets. 

The use of cryptocurrencies, particularly Bitcoin, has been surging over the past years in the real estate industry. Wire transfers are not only costly, but they also take weeks and even months to complete. The simplicity with which cryptocurrency can be transferred using a digital wallet streamlines the buying (and selling process). Fraud can be prevented in real estate transactions via the usage of cryptocurrency; blockchain technology, on which Bitcoin is built, is an immutable database, so it's impossible to manipulate the data. In other words, a transaction that has been added can't be changed or removed. 

Reasons Why You Might Want to Buy Real Estate with Bitcoin 

You can buy a house with Bitcoin or other digital assets, such as Ethereum and Litecoin, as numerous real estate companies offer their listings in cryptocurrency. The current system is opaque, requires many documents, and it's not secure, to say nothing of the fact that it's stressful. Buying a house with Bitcoin has many advantages, as follows: 

Smart Contracts Eliminate Mountains of Paperwork

When buying property, you receive two things: the home itself and the paperwork. As you might already know, it takes a staggering amount of paperwork to buy a house, from income verification to copies of tax forms. Smart contracts can replace conventional contracts in real estate – some companies are even using them to automate the transfer of ownership. Information is stored on the blockchain network for a transparent record and in escrow services until the agreed-upon terms are met. 

There Are Fewer Intermediaries

Intermediaries play an important role in the formation of the real estate market's microstructure, connecting sellers and buyers. Owing to blockchain technology, the dream of disintermediation could finally become true. Bitcoin excludes intermediaries within the ecosystem, so savings will be generated that will make the seller charge less. Needless to say, the complete removal of third parties isn't possible at present, so don't expect to avoid realtors or lawyers even in a Bitcoin transaction. 

You Might Get the Lowest Available Price

When a home is on the market, it's easier for the seller than for the buyer. The buyer makes a promise to purchase the property using Bitcoin, and if that offer is accepted by the seller, the transfer is completed in about 15 minutes or less. If the seller believes the cryptocurrency market will experience an upward price movement, they might offer a discount on the home. Purchase activity has declined due to the current economic outlook, high inflation, and affordability challenges, so you could enjoy seller concessions. 

It's up to you to decide if buying a house with Bitcoin is the best approach for you. Home buying can still be done the old-fashioned way. 

How To Buy a House with Bitcoin 

It's not the best time to sell your Bitcoin, as the market is stabilizing, but it's time to consider how you might benefit from your crypto holdings. Once the sale has been negotiated, you can select the technique that best suits your needs. If you plan to invest in real estate using Bitcoin or another cryptocurrency, you have several options, as follows: 

• Transact Bitcoin Directly with The Seller. Provide payment to the home seller in Bitcoin. Buying a home with cryptocurrency through a private seller varies from person to person. While some accept 100% crypto transactions, others prefer a split between Bitcoin and cash. Have a conversation about the terms of the exchange so that issues don't arise in the future. 
• Use Your Bitcoin as Collateral for A Mortgage. You can get a mortgage by putting up Bitcoin as collateral. Since this practice is relatively new, lenders' guidelines are constantly updated. The lender decides the terms, i.e., how much you can borrow and at what annual interest rate. You pay back in monthly installments. 
• Convert Your Bitcoin to Cash. For now, there are still very few people and businesses that are comfortable with payments in Bitcoin, so you may have no other choice but to convert your cryptocurrency to cash. Prior to selling your Bitcoin, document the process from beginning to end for tax purposes. Crypto holdings are similar to property, so they're subject to capital gains and losses tax. 

Every real estate transaction works differently, which can change preferences among buyers and sellers alike. 

Wrapping It Up 

It will be interesting to observe how cryptocurrency will affect the real estate industry in the long run. The process of buying a house with Bitcoin is straightforward, but it might get simpler as blockchain technology scales up; there are difficulties and restrictions to take into account, such as the regulatory framework and the volatility of cryptocurrency. Last but certainly not least, you can use NFTs to assume ownership of a piece of real estate, even if it adds an extra step to the process. The Bitcoin blockchain doesn't support NFTs, but they can be minted on Layer 2's.