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Author Topic: Bitcoin desperately needs a real estate company  (Read 4767 times)
notig
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February 11, 2013, 06:00:13 PM
 #1

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.
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February 11, 2013, 06:08:26 PM
 #2

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. 

robertprosper
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February 11, 2013, 06:54:13 PM
 #3

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
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February 11, 2013, 06:57:36 PM
 #4

Quote
"If you say you're going to do something and you start to do it, and people enjoy it or respect it or are entertained by it, people will step up and help you."

Google the quote to see who said it.

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

In bold, I have a solution. Coming soon!

mintymark
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February 11, 2013, 07:07:26 PM
 #5

"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.


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February 11, 2013, 07:32:22 PM
 #6

"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.

Mike Christ
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February 11, 2013, 07:37:16 PM
 #7

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.

mintymark
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February 11, 2013, 07:43:25 PM
 #8

"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 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.

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February 13, 2013, 06:11:37 AM
 #9

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.
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February 15, 2013, 05:48:16 AM
 #10

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. 

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February 15, 2013, 07:54:23 AM
 #11

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.
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February 15, 2013, 08:10:25 AM
 #12

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. 
There's a housing bubble?  I thought the 50% reduction in value over the last 4 years was the bubble popping already...
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February 15, 2013, 08:17:20 AM
 #13

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.

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whitenight639
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February 15, 2013, 08:21:22 AM
 #14


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

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.

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February 16, 2013, 06:29:06 AM
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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.
notig
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February 16, 2013, 06:56:24 AM
Last edit: February 16, 2013, 07:08:28 AM by notig
 #16

off subject... how come when I reply to a PM it doesn't appear in my outbox? :T
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February 16, 2013, 07:12:29 AM
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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.

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February 16, 2013, 09:20:48 AM
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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.

+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.


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February 16, 2013, 10:30:05 PM
 #19

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.

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February 18, 2013, 06:55:52 PM
 #20

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.


David Fishwick http://en.wikipedia.org/wiki/Burnley_Savings_and_Loans


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