Bitcoin Forum

There needs to be a way to use some of the wealth that bitcoins represent. If someone could purchase real estate with bitcoins... it would be huge. A good thing for everyone. But how can it work? Most people can't afford to buy a house outright so they take loans to pay it over time.

I can think of a couple of ways... but I don't know a lot about real estate so please jump in..........

1.  The bitcoin real estate company or bank.... acts as a long term escrow holder of the deed to the house. The seller........ gives the deed to the company. The company monitors and tracks the payments of the buyer to the seller. If anything goes wrong with the buyer.... then the company works it out in slight favor of the seller (to not encourage foreclosure for instance) . This means that the seller of a house doesn't get the full value of their house at once... but slowly over time. as if they were the bank.

2. second way....... the bitcoin company actually buys the deed with bitcoins... and accepts bitcoins as payment. I'll finish this and edit it later I have to go at the moment.

Actually what bitcoin needs (in the USA) is a title company that takes or facilitates transactions involving bitcoin.  That bad news is that there are less title companies then real estate agents but once you had a title company that could do this you could buy from any real estate agent.  If the seller did not want bitcoin the title company would take care of it.  If both parties wanted to use bitcoin then the title company would (as they normally do) act as an escrow agent and change the title after the bitcoins had changed hands properly. 

There are many taxes and rules with real estate and many title companies only act within one single state. 

I have no idea about the US real Estate market but private mortgages between the existing owner and buyer are quite popular here they are legal contracts and pretty much like your option 1 suggestion.

The other way could be a land bank style company

One of the main problems is going to be trying to keep any sales within the community so it is bitcoin only

Google the quote to see who said it.


In bold, I have a solution. Coming soon!

"Suddenly" is not going to work here for a number of reasons, the main one being the chances of matching up someone prepared to source and sink such large sums in Bitcoin and who happens to want to exchange a house are small, "Gradually" could work though, in a number of different ways.

1) Gradual purchase or combined rent/buy.  I have never done this but I think it has a huge capability to offere advantages to both buyer and seller even without bitcoins.
    It does need to be drafted fairly, and so seller and buyer need to have enough sense to recognise when this is not the case.
    In this scheme the purchaser effectively gives the purchaser a mortgage on the house and agrees to rent it to them for a period of time, say 15 years. There is also a deed of sale to sell the house in 15 years time for a nominal sum, provided that rent has never fallen significantly in arrears. The rental agreement allows the seller to evict the purchaser if "rent" is not paid, under certain conditions.
    Advantages of the scheme: The buyer does not need to come up suddenly with large amounts of Bitcoin which is tricky if you have not already got them. There is no 3rd party mortgage company involved. Steady bitcoin income for the seller (probably denominated in fiat.)

2) Part of the price is paid in bitcoin. Advantageous to the seller because the registered sale price is reduced, so capital gains and capital transfer tax is reduced. (Assuming tax is NOT paid on the Bitcoin part of the transaction. ) Advantage to buyer: capital transfer tax reduced, capital gains tax liability is transferred.

1) & 2) can be combined of course.

Or via an entirely different process altogether, with the net result being an individual owns outright a home paid entirely with bitcoins to a Real Estate agent in one of the 50 US states, where said agent has a Bitcoin payment option on their respective website.

I'd rather the American real estate industry be reformed first, before bothering with payments in Bitcoin.  My mortgage keeps going up and I'm gonna punch someone in the face, because they know I'll eventually be unable to afford it.  Then I'll foreclose, they'll sell it to another sucker, and the money keeps on flowing.

With that aside, a title company seems the best way to go.  At least until Bitcoin is as widely known as the dollar.

I did not mean to suggest that my suggestion was the only one, of course there are other possibilities. Its just one of the problems is that even for a modest house, its quite a lot of bitcoins!!

As a child, I always used to dream of walking into one of these smug looking estate agents offices, you know the one where they try to look too important and busy to even serve you. It would be even more fun to do this as as a child of course. I'd walk in with a suitcase, and without viewing or anything say, Yeah, I want that one there, and then proceed to pay the asking price in cash to the man at the desk. I need to move in tonight though, I'd say. I dont know if they would do it I suppose in fact they would bite your arm off because cash buyers are so very few and far between.

Knowing what I know now about real estate, I can say that simple deals are few and far between, and cash buyers rare. Many deals barely creak through, and I live in London (Uk) where the market is pretty buoyant.  Adding Bitcoin into the mix as I see it can only make it harder. 

I think it would be a great thing to set up, but I think if you are realistic about it it would be tricky to do. Not a reason not to try of course.

If you believe that the US government will keep inflating the dollar, wouldn't it be better to take out a 3% loan in USD? The asset value of your property will inflate substantially versus the principal on your loan over time. Another problem is that people receive their income in dollars (or the currency of whichever country you live in). If you're willing to assume Keynsian economics don't hold with regard to inflation (shouldn't be a hard argument to make in this community and there's a lot of data to support this, especially in the short term), it would probably be hard to keep up with your bitcoin loan payments because it would take increasingly more dollars to pay off your monthly mortgage while your income doesn't compensate for it. I also believe that bitcoin loans will have a pretty high interest rate for the foreseeable future.

As a general rule, you want your debt to be denominated in the same currency as your income. In the long run, I agree that this is probably a needed industry as the bitcoin economy grows.

As they are printing in most MEDCs the inflation will increase so eventually the housing bubble will burst, not only that with high inflation other houshold costs increase and mortgages can no longer be afforded by many, it won't take long for there to be massive foreclosures like we saw in 2008 possibly even bigger and effecting the middle classes, so there will be increased supply, here in the UK the housing bubble is all this country has left along with government Treasury bills / gilts When either of these collapse we will then see the money from the over inflated financial industries start to rain down into the real ecconomy and we will see massive inflation in my oppinion, Interest rates may have to rise but then may be the time to buy and hopefully people will start waking up to the reality of the economic and banking situation and realise bitcoin as viable alternative.

I think before housing though we need to see food and other commodities being bought with bitcoin before regular people will consider it as a 'real' currency for large purchases like housing. 

That's actually a pretty good point. I think what will actually happen is a little more complex and harder to pin down though than just saying an inflation-led housing bubble will cause all housing prices to collapse. I could see that happening for a certain time period (which would be painful and could potentially last years), but in the long run I believe housing prices will increase nominally to reflect their intrinsic asset value. So a super-inflated currency like the US could have in the future would still be a net benefit for people who took out cheap loans and bought decently-priced assets with them (which I believe homes in most areas still are). Many people wouldn't be able to pay off their mortgages in that situation either, so it additionally would only benefit those who can actually hold onto their assets during the downturn.

I did like your point, though, about the future when interest rates rise. If that happens, bitcoin loans could actually become pretty attractive.

There's a housing bubble?  I thought the 50% reduction in value over the last 4 years was the bubble popping already...

Real estate is a hard one to predict because of the double side to it- in that there is the rental market to consider so when purchase prices are high or mortgages are expensive people seek renting, so the more demand for rental properties the more insentive there is for people to sell up and rent out a property if they can, my friend had it as a supply / demand related question in his economics course it's a mind bender. You are right in that my predictions are a little simplistic.


It is different here in the UK though as we have limited space and it used to be the case that planning permission was quite often hard to get for a lot of developments.

House prices in the UK haven’t fallen very far, It might be different in the US it also probably depends on which end of the market.

In the long term I think there is a tiny chance that this will happen. Currently I think it's hard though. Why would I lend money to someone buying a home? BTC is increasing hundreds of percent per year, there's no way the person can earn enough to service the debt...

I think equity is a better way to deal with real estate. It's been 50-75 years since people had any equity. If it wasn't for all this Fiat currency, we'd have equity, not debt, attached to real estate.

off subject... how come when I reply to a PM it doesn't appear in my outbox? :T

You must tick the box that states that you want to save you outgoing messages. I had to learn that the very first couple times too.

My Indian friend told me the other day that home prices have skyrocketed in India during the past handful of years.

+1


If it wasn't for all this Fiat, inflation, excessive taxes and parasitic central bankers, we would all be (probably quite substantially) better off, My grandparents and parents generation didnt have a problem buying a house or building one and that was during a time of big population growth due to the baby boom, My generation can only dream of home ownership and a pension as the middle class jobs have decreased very substantially. People need to realise that wealth is never destroyed mearly transferred, so when families are working the same jobs and more hours than 20 years ago but can't afford to eat they need to know they've been defrauded and enslaved.

What you need is a bank that is willing to take bitcoin for mortgage payments...they could put in minimal effort and just bitpay, but some one needs to bring the idea to a bank.

http://www.burnleysavingsandloans.co.uk/

This one would be the easiest to accept bitcoins as payment. I suggest somebody from The Bitcoin Foundation give this guy a call and sent up a meeting. I'm sure that at the end of meeting, he'll be accepting bitcoins as payment.

http://www.weblinxseo.com/blog/wp-content/uploads/2012/07/david-fishwick-post-image1.png
David Fishwick http://en.wikipedia.org/wiki/Burnley_Savings_and_Loans

http://www.burnleysavingsandloans.co.uk/wp-content/uploads/about-us-banner.png

I think that someone should talk to them

I've sold real estate as owner financed, before.  I'd gladly take BTC as monthly payments.

In Portugal there are some Real Estate Funds that work based on Home Lease Buy Back (paying 14% to 24% year - monthly payments).
Minimum investment is 30k Euros (something like 1500 BTC).
If anyone wants to set up a pool of investors we can try to do some investments.

The guys who set up Burnley Savings and Loans are fantastic,  I could actually drive to where they are no problem and talk to them about Bitcoin but honestly I think when it comes to businesses like this you have to take into account all the legal problems that would come with accepting Bitcoins the central banks have had an almost absolute monopoly over money for almost a century, I think Bitcoin needs to gain more 'official' support before we introduce it to the more normal people out there.

The guy on the left in the photo is supposed to be there legal person and I can guarantee you what he'll most likely say is "It sounds like a great idea but the government hasn't even said whether it's legal yet so we probably shouldn't accept them for now".

I agree that would likely be their response, but you could point out paymium as an example of how bitcoin is legal in some places.

http://blog.bitinstant.com/blog/2012/12/10/the-controversy-of-bankhood.html

Also, they may become interested in bitcoin, and, if nothing else, the community would gain two new members who have resources and education at their disposal.

People might also want landlords who accept btc.

I think that people should see if their landlords are willing to accept btc. If they seem interested but aren't very tech capable, offer to help them set up their payment system.

You're exactly right about the title company.  I represent a title company and we are days away from publically announcing our ability to accept BTC for payment. 

There have been a few RE Brokers that say they now accept bitcoin as well as sellers, but that's very misleading.  Buyers usually buy real estate in the US through a title company for certain protections against fraud and many other perils involved in buying real property.  Mostly so a buyer truely receives what he/she believes he/she is buying.  It's more complex than a transaction with a portable product or service. 

Real estate brokers and sellers do not receive money from a buyer, they receive money from the title company.  Brokers have no ability to allow a buyer to pay with BTC. 

Vista Abstract is the first title company in the US to accept bitcoin as payment for real estate.  This is truely enabling a BTC transaction.  A buyer can pay us using bitcoin and the seller, broker and all other parties will get paid and we will complete the transaction.  Simple as that. 

www.vistaabstract.com

Well this greatly interests me.  Can I use your company to buy real estate anywhere in the US, or are there restrictions on location?

http://www.coindesk.com/lamborghini-mclaren-bitcoin/

You could always invest in supercars :)

Not my style.

On another note, how did you get out of newbie jail with only 1 post?

There IS a Real Estate BUYING company..
We buy, rehab, flip w/ bitcoins..
Others are coming..
Www.BitREO.com

Ie: example...
http://pensacola.craigslist.org/reo/4323251740.html

I think in most countries, buying a property with BTC would be illegal. The price of the transaction is used for tax purposes, and it must be in the country's official currency. An American can buy a house in Europe or Japan, but the transaction will have to be in euros or yens, not $.

We (Rentalstarter) could facilitate this pretty easily.

We've either bought or are under contract for a total of 5 free-standing properties so far all purchased with bitcoin. It's quite easy to do, so I'm shocked that more people aren't doing it.

Sounds like you need to talk to a professional about your mortgage. The price should never be going up unless you have some weird ARM, and even then, everyone I know with a ARM is seeing their payments go lower and lower.


There is certainly a equity issue in the US but it has almost nothing to do with fiat and EVERYTHING to do with the prevalence of the 30 year mortgage.

The average homeowner in the US sells their property every 7 years. By this point utilizing a 30yr mortgage (At 5%) the homeowner has paid down a total of 14% of the original balance of the property. If the home has appreciated by 5%/yr (Which is median for the US as a whole) the homeowner then has about 49% equity in the property. Just 30 years ago, the 20 year mortgage was what everyone had. In the same scenario the homeowner by year 7 has paid down nearly double of the principal as a 30yr mortgage. So, with annualized 5% appreciation, the homeowner now has 65% equity in his home.

When/if the market tanks, the difference between a 30yr and a 20yr is even more striking - The guy with a 30yr mortgage has no option but short sale/foreclosure. The guy with the 20yr mortgage can sell his property at the depreciated rate in nearly every case and still put a few thousand in his pocket. This is EXACTLY what we've seen in the US from 2004 onward with the lead up, and post-crash society. If 20yr mortgages or 15yr mortgages were the norm there would have never been a foreclosure-led crash from homeowners underwater, prices can expand/contract with much less harm to people.


You could do it with coinbase already, you just need to link your traditional bank up with your CB account and set it up on a monthly liquidation/autosell. You're still exposed to fiat risk but you get the opportunity to pay with BTC should you so desire.

We (Rentalstarter) are going to be offering private money mortgages to homeowners via bitcoin/fiat on all our properties. It's a long play but it will be worth it.


The big hurdle with landlords in many cases is that the median age in the US is getting higher and higher. In my area the median landlord age is 60+ which means very low acceptance of new technology. Granted it represents a phenomenal opportunity for young and tech-oriented people.