Nobody Wants to Buy My House for Bitcoin

NAWRB

Desirée Patno is the CEO & President of Women in the Housing and Real Estate Ecosystem (NAWRB) and Desirée Patno Enterprises, Inc. (DPE). With almost three decades specializing in the Housing and Real Estate Ecosystem, she leads her executive team’s expertise of advancing women’s economic growth and independence.

Palm trees gently sway as the trade winds scatters the scent of flowers throughout the neighborhood. When I close my eyes this is how I see the little piece of paradise I own in the eponymous Waikiki Beach neighborhood in Hawaii. It bothers me to no end that nobody else wants to own my little piece of paradise that I am trying to sell for the paltry sum of 20 Bitcoin.

What is a Bitcoin you may ask? And what is it worth? The first question is challenging to answer because it is technical, but essentially Bitcoin is a digital currency that is secured by a cryptographic key. This is why Bitcoin and similar tokens are collectively known as cryptocurrencies.

The other half of the power of Bitcoin is that it is decentralized, meaning there is no single place the transactions are approved and recorded; instead, this information is spread across the world inside every Bitcoin. The second question is simpler because it is a number, but challenging because this amount changes frequently. The current exchange rate to the U.S. dollar is $6339 to one dollar, but tomorrow it could just as easily be $5,500 or $7,000.

Why did I think selling my house with Bitcoin would be easy? Because it was touted to be this way. Sell your house for Bitcoin, there are endless buyers from Asia lining up to purchase and send Bitcoin directly to your wallet. It just isn’t that simple, as the ecosystem to make these transactions barely exists.

Blockchain for Real Estate
Propy is the company I was trying to make this happen through. They are a real estate listing platform that gives a market to sell the property, and helps with the escrow functions of completing the paperwork as well. They even have an arm where they are applying blockchain technology to issue deeds.

The technology is not the problem. They have good technology. Certainly the world of the future has deeds hashed onto blockchain, as this move from the physical constraints of the local recorder’s office to cyberspace. Just like the old microfiche records, blockchain contains a time stamp showing the exact moment when it was recorded, and the documents are lined up end to end together. This makes for a strong audit trail, and in the long run this should bring down the cost of title insurance.

Trouble with using Propy, though, was it actually did not let me list my house for sale in Bitcoin. Or rather it let me put the amount in, but then it converted that to U.S. dollars and used that amount for my listing price. I wasn’t particularly impressed by that feature, but I was still hopeful I would receive offers and be able to sell my lovely slice of paradise.

Is the Bear Market the Cause?
So what then is the problem? Could it be market forces at play? Bitcoin is down from a high that crested over $20,000 this past winter. The trough of this wave plays into investor’s backronym-inspired motto “HODL” that carries the common definition of “hold on for dear life.” This has become an anthem among cryptocurrency investors, of which many pride themselves on never selling their tokens.

The bear market could certainly be an issue as when the markets are down nobody wants to sell. This makes sense, because then, of course, the market will go up once a purchase was made using Bitcoin, and the same nobody will regret having traded their cryptocurrency in on something so banal as a condo in Hawaii. This is collectively known as “FOMO” or the “fear of missing out.”

What About a Lack of Bitcoin Loans?
Perhaps the problem is the lack of loans for buyers. Maybe there aren’t that many crypto millionaires out there throwing hundred dollar bills around who would want to buy, and the more savvy real estate investors always prefer loans so as to maximize cash flow and minimize taxes. I am certainly that investor when I buy properties, and I’ve owned about 20 houses by this point, so I’m not a novice by any means.

However, there are now loan platforms using cryptocurrency, so that cannot be the problem either. The company SALT now issues loans in Bitcoin or other cryptocurrencies, as well as in U.S. dollars. So basically someone could use their Bitcoin as collateral and buy my house, then still have a loan, right? Not quite so fast. As the IRS considers cryptocurrencies to be property and not currency, that means loans repaid in cryptocurrency won’t necessarily be treated as interest paid on a loan. This would be the equivalent of sending out individual lots of property to your lender and calling it interest. That wouldn’t really fly.

The Real Problem
Looking back on this, and reviewing my ad for this article, the real problem is clear: I didn’t put the required effort in to get good traction with my listing. My photos just don’t give a good indication of the property or the lifestyle. I think when Propy’s system converted my asking price from Bitcoin to U.S. dollar I must have lost interest and said I would circle back around when I had more time. Now three months later I have even less time then when I said that, as is typical.

Well on the bright side, at this rate I may keep owning my tropical retreat long enough to actually have the time to visit it again.

By Crystal Stranger,
EA, author of The Small Business
Tax Guide, Founder of PeaCounts

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