Crypto real estate purchases in the U.S. are on the rise and Florida is leading the way. Many cryptocurrency real estate transactions have closed already. As recently as Feb 2022, Florida also saw the country’s first NFT real estate sale in Gulfport.
As we see an increasing number of properties listed and sold with Bitcoin, Ethereum and other cryptocurrencies, people are asking what’s possible with crypto real estate and how it can be done.
What Is Cryptocurrency?
- A cryptocurrency (or, ‘crypto’) is a digital or virtual currency or asset. They don’t exist in a physical form, like a dollar bill or bar of gold.
- There are over 2000 cryptocurrencies in use today (according to to CoinMarketCap.com), the most popular being Bitcoin and Ethereum.
- Users can convert cryptocurrency into USD and vice-versa.
- Cryptocurrencies are based on blockchain technology, sometimes referred to as Distributed Ledger Technology. Blockchain is, simply put, a decentralized virtual ledger validated by a network of different computers. When crypto is exchanged between parties, a block of information is recorded in a publicly viewable record of all transactions. The history of the transaction is unalterable and transparent.
- Crypto transfers are authenticated and encrypted by cryptographic systems, which enables secure online payments without the use of third party intermediaries. This process makes it near impossible to fake or double-spend payments.
- Most cryptocurrencies use smart contracts, which automate the execution of an agreement so that both purchaser and seller can be certain of the outcome, without the need of a financial institution.
Benefits of Crypto Transactions:
- High-speed transfers
- Transfer costs can be cheaper (dependent on gas fees), especially international transfers
- Near impossible to fake or double-spend payments
- No financial institution involvement
- Increased security and transparency
- Potential protection against inflation
- Diversify your investments
Disadvantages of Crypto Transactions:
- Value of cryptocurrencies may change significantly
- Tax implications may be complex
- The number of buyers and sellers currently using crypto is limited
- Lack of legal support and advice as the world catches up to its use
How to Buy and Sell Real Estate With Cryptocurrency in Florida
Cryptocurrencies, including Bitcoin and Ethereum, are used in real estate transactions across the globe, including here in Florida. Sellers are accepting digital currencies directly and then either holding onto them or converting the crypto back into USD.
Since we’re still in the early days of crypto, many title companies and lawyers have no idea what it is or experience handling it, so it’s important to hire a real estate lawyer that understands the process.
So how are people doing it?
Real Estate as an NFT
What Is an NFT?
An NFT is a ‘Non-fungible Token’ – which, in the simplest terms, is a unique ‘receipt’ that can’t be replaced with something else. Every NFT has its own unique ‘code’.
For example, a dollar bill is ‘fungible’ – you can trade one for another and have the same thing. But an NFT can’t be. If you swap it for another NFT, it’s completely different.
NFTs can represent or be attached to real-world items such as real estate and artwork.
Want a deeper explanation? Check out this guide.
Gulfport, Florida – The First NFT Real Estate Sale in the U.S.
Florida was the first state in the U.S. to see a home sold as an NFT, paid for in cryptocurrency in Gulfport, FL in Pinellas County. The home was sold for 210 Ether, the equivalent of $653,000, at the time of sale.
Sold by a Florida woman, the five-bedroom, three-and-a-half-bath house near Tampa was sold in an online auction.
A NFT was used to allow instantaneous transfer of ownership of the house. They did this intelligently, by transferring the house’s ownership from the seller to a limited liability company (LLC). Once the auction was completed, the winning bidder received an NFT that recorded ownership of the LLC on an online ledger. The LLC’s only asset? The house.
The seller received crypto in her digital wallet instantly – a huge premium, having paid just $250,000 for the property back in January 2021.
All the usual due diligence processes involved in a real estate sale were still completed, such as inspections, title reports and title searches. But the transfer process was rapid.
The property had a backup offer of $650,000 in cash. But on the day of the auction, the crypto bid came in and was accepted. Over 7,000 bidders expressed an interest, but only two had sufficient funds in their digital wallets.
Many more Florida crypto real estate sales are expected in the coming months.
This is great news for Tampa – it’s not London or Paris, yet it’s getting ahead of the game!
Real Estate Listings With Crypto
Digital currencies like Bitcoin, Binance and Ethereum have been used in real estate home listings across the globe. Doing so creates a big buzz around the sale, perfect for high-end house listings where buyers may want to use crypto. Many sellers have enjoyed big wins through cryptocurrency and are desperate to convert their digital currencies into real-world assets.
There is also the option to accept only crypto, such as Bitcoin or Ethereum, or ask for a split between a form of cryptocurrency and US dollars.
Buying a House With Crypto
Buying a house with crypto can be achieved by sending the cryptocurrency directly to the seller – avoiding the need for a check or cash transfer between financial institutions.
Doing so should still be completed with the support of a Real Estate attorney.
Taking Out Mortgages With Crypto
The group who organized the Gulfport NFT real estate sale, ‘Propy’, have also said they plan to allow buyers to soon take out mortgages via a stablecoin, whose price is pegged to the U.S. dollar.
The crypto mortgage companies which exist today often require the borrower to provide an equivalent value of crypto to the amount to be borrowed. If the value of the crypto used goes up, then borrowers may be able to take some crypto back. However, if the value of the crypto goes down, they may be asked to provide more crypto as collateral. The goal of this is to have an equivalent amount of crypto to the amount borrowed available as collateral.
Renting Homes With Cryptocurrencies
Travel booking sites, such as Expedia.com, are also accepting Bitcoin payments. This can be great for those looking to rent out their property for vacations by drawing in wealthy, young travelers.
You’ll Still Need Cash
It’s important to note that every real estate crypto transaction is likely to still need cash. Government entities and many vendors don’t accept cryptocurrencies. For example, USD may be required for the costs of:
- Appraisal Fees
- County Taxes
- Inspection Fees
- Judgment Payoffs
- Lender Payoffs
- Lien Payoffs
- Municipal Lien Searches
- Real Estate Commissions
- Recording Fees
- Title Insurance
- Title Searches
- Transfer Taxes
Is Crypto in Real Estate Safe?
If completed with the support of a professional and reputable real estate attorney, then you will ensure safety and protection from liability. However, possible risks may include:
- Additional liability concerns for both parties
- Vulnerabilities to cyberattacks
- Vendors not accepting cryptocurrencies
- Buyers may struggle to obtain title insurance – causing them to assume liens or title defects against the property
- Additional costs
Why Use Cryptocurrency in Real Estate?
The following examples are considered compelling reasons to use cryptocurrency for real estate sales in Florida:
- Rapid transfer of ownership
- Privacy when buying property
- Easy international transactions
- Liquidity in real estate investing
- Reduced real estate transaction costs
- Tax benefits on transferring property rights
- Create a buzz in local media
- Attract wealthy investors and young-buyers
- Balance the flexibility of bitcoin with tangible real estate
- NFT sales reached $4 billion in December 2021.
- Real-world assets will soon represent a significant portion of the market.
Why You Need a Real Estate Attorney With Crypto Real Estate in Florida
As the real estate industry learns and adapts to cryptocurrency, there is a lot of misinformation and risks that you should be wary of. You still need to meet any legal obligations when making a real estate sale or purchase with cryptos – such as taxes, inspections, contracts and fees.
It’s highly advised that any cryptocurrency sale or purchase be made with the help of a Florida real estate attorney to ensure a smooth and stress-free process that meets the legal requirements of a real estate transaction.
They will ensure that you don’t miss any steps that, if not completed, could leave you liable.
Our attorneys are quickly developing authority in crypto real estate and would be happy to take your call to assist you with your transaction or answer your concerns.
Most Popular Cryptocurrencies:
At the time of writing, CoinMarketCap.com lists the following as the top forms of cryptocurrency in the world:
- Bitcoin (BTC)
- Ethereum (ETH)
- Tether (USDT)
- BNB (BNB)
- USD Coin (USDC)
- XRP (XRP)
- Terra (LUNA)
- Solana (SOL)
- Cardano (ADA)
- Avalanche (AVAX)