Cryptocurrency and Real Estate: Buying and Selling a Home in Crypto

Cryptocurrency is all the rage these days. It’s one of the most searched topics online. In this article, we’ll look at using cryptocurrency to buy and sell real estate.

Crypto

Selling Your Home for Cryptocurrency

If you do a quick Google search, you can find stories about people selling their homes for cryptocurrency. But is it a good idea and should you do it? Read on to find out.

Accepting cryptocurrency for your home can be a great marketing tool. It can attract interested homebuyers that otherwise wouldn’t have made an offer on your property. But it isn’t without its risks.

It’s important to make sure you know what you’re doing when accepting cryptocurrency for your home. Perhaps the biggest risk is the wild possibly fluctuation in the value of cryptocurrency. You could agree to sell your home for a certain amount of Bitcoin, only to have Bitcoin wildly swing in one direction or the other at the time of closing.

You can help mitigate this risk by working with a realtor and real estate lawyer who are both familiar with cryptocurrency. You can agree to sell your home for a set number of Canadian dollars at whatever the equivalent Bitcoin is on the closing date at the time the transaction takes place.

If you want to lower your risk as much as possible, you’ll want to convert the cryptocurrency you receive to Canadian dollars instantly. You’ll have a lot of money in cryptocurrency at one time, so the potential for losses is quite high. By converting the cryptocurrency to Canadian dollars right away, you can minimize your chance of losses.

Buying a Home with Cryptocurrency

If you’re in the market for a home, you might consider using cryptocurrency for some or all of your down payment. If you’re considering doing that, there’s something you need to be aware of.

Unfortunately, not all lenders are quite yet there when it comes to cryptocurrency. When it comes to prime lenders (mainly the big banks, credit unions and non-bank lenders available through mortgage brokers), the vast majority of them don’t accept cryptocurrency as a form of down payment when taking out a mortgage.

If you’re paying for the home entirely in cryptocurrency and not taking out a mortgage, it won’t be a problem as long as the seller accepts cryptocurrency, but very few people buy a home in just cryptocurrency. Even wealthy people who can afford to usually choose to take out a mortgage because it’s cheaper to borrow money than it is to cash out their investments earning a lot higher rate of return.

The issues comes down to the bank’s requirement to report to the regulators. Since cryptocurrency isn’t as heavily regulated as money at the banks, mortgage lenders shy away from accepting it towards down payment funds. It’s as simple as that.

Some lenders do accept cryptocurrencies, however, those would be alternative lenders with higher mortgage rates and lender fees. It may make sense to go with a so-called alternative lender, but if given the option most people choose a prime lender.

The Bottom Line

Are you looking for a lender who will accept cryptocurrency as down payment? Reach out to our mortgage experts today for some assistance in locating the right lender.

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