Cryptocurrency | Can this Digital Currency Change the Real Estate Industry?
Most people have heard of bitcoin, a type of digital currency that is secured by encryption. Also known as cryptocurrency, these digital funds are more than just an investment—they can be used to make purchases like the physical money in your wallet.
A recent HousingWire article explains, “As the cryptocurrency craze shows no sign of slowing down, people remain curious about how they can leverage cryptocurrencies and related technologies in the housing and real estate industries.”
Real estate companies and professionals alike are beginning to incorporate the blockchain technology—the ledger tech cryptocurrencies use—into their transactions. The article sites Engelo Rumora’s recent experience closing a real estate transaction that used a cryptocurrency as a down payment.
Rumora, a successful property investor, home flipper and real estate entrepreneur, shared that a perspective buyer asked to use cryptocurrency to purchase one of his properties. Although there are no regulations regarding real estate deals and the use of cryptocurrency and that the entire transaction didn’t use crypto, Rumora explained he worked closely with the title company.
Rumora said, “I told [the title company] I was going to set up a wallet, and the buyer would send Ethereum tokens to my wallet equal to $10,000. The title company then said they would classify that as earnest money on the HUD and in the closing docs, which would be equivalent to $10,000, and they would include that deduction from the actual final closing docs when closing. That was pretty much it. I told the buyer two days before closing to send the $10,000 in cryptocurrency to my wallet. I know it sounds crazy, but that’s what happened.”
Although he knows there are still many unknowns when it comes to making real estate purchases with cryptocurrency, Rumora believes it could change the industry.
“There is actually very good technology behind the cryptocurrencies that makes a lot of sense,” said Rumora. “I didn’t want to jump on board early on, but I had no choice because I realized that it was too big to fail and there are too many people and companies that are adopting this. I honestly think that real estate is going to be changed in a big way.”