As digital currencies like cryptocurrencies become more prevalent in certain real estate markets, agents and professionals need to be aware of their unique challenges and risks. Here are a few things to keep in mind:
- Nature of Cryptocurrency: Cryptocurrency operates as a digital payment that bypasses traditional banks. Transactions with it are stored in a digital blockchain ledger.
- Risks Involved: The main risks associated with cryptocurrency in real estate transactions include its volatile nature and the potential depreciation between the signing of the contract and the settlement. Additionally, converting crypto to cash may introduce settlement delays.
- Protection for Sellers: Agents working with sellers can request buyers to provide proof of cash funds or a lender letter. This ensures that buyers have the ability to complete the purchase even without relying on their cryptocurrency. Additionally, agents can negotiate a larger earnest deposit to indicate the buyer’s commitment.
- Protection for Buyers: To alleviate sellers’ concerns about cryptocurrency value fluctuations, buyer’s agents can advise their clients to convert cryptocurrency to cash before making an offer or finalizing a contract. It’s also beneficial to connect buyers with financial and legal professionals knowledgeable about cryptocurrency’s role in real estate.
Matt Troiani from the National Association of REALTORS® highlights that despite volatility and challenges faced by crypto firms, the future of cryptocurrency seems promising. Over 420 million people globally own some form of cryptocurrency, and a 2022 NAR survey indicated that a significant portion of real estate professionals believe blockchain, crypto, and smart contracts will heavily influence the industry soon.