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Real Estate Meets Cryptocurrency: A Match Made in Digital Heaven?
The real estate market has traditionally been a stable and secure investment option, but it can also be a slow and expensive process. On the other hand, the cryptocurrency market is a relatively new and rapidly growing industry, but it can be highly volatile and uncertain. However, in recent years, the intersection between these two industries has begun to gain traction.
For over 13 years now, Bitcoin, the first and most well-known cryptocurrency, has been gaining attention in recent years not only as a form of digital currency but also as a potential hedge against monetary debasement. Monetary debasement refers to the decline in the value of a currency due to an increase in the supply of money, which can be caused by factors such as inflation or government printing of money via decree, thus inserting excess amounts of value backed by nothing.
One of the key features of Bitcoin is its limited supply, with a maximum of 21 million bitcoins that can ever be in circulation. This scarcity is built into the Bitcoin protocol and is designed to mimic the behavior of a commodity, such as gold. The limited supply of Bitcoin creates a natural barrier against monetary debasement, as there is no central authority that can manipulate the supply of bitcoins in circulation.
Furthermore, Bitcoin’s decentralized nature, meaning that any government or central bank does not control it, makes it resistant to traditional forms of monetary debasement such as inflationary monetary policies. This is because the supply of bitcoin is determined by the underlying algorithm and cannot be increased arbitrarily.
Additionally, Bitcoin’s decentralized nature provides an alternative store of value, providing an escape from the traditional monetary system subject to inflationary policies. This can be particularly useful in countries with hyperinflation or political instability where conventional forms of savings may lose value rapidly.
In order to properly explain how Real Estate can benefit from Crypto, especially Bitcoin, we need to delve into the what, how, and why. What is currently being done, how it can be done better, and even why we should. Many will allude to the old adage “If it ain’t broke don’t fix it”, so we will argue why the system is indeed broken and in desperate need of fixing.
How traditional Real Estate transactions work
Before even going into how Real Estate transactions work, let’s be super explicit here and state that there’s a very finite amount of people/companies entitled to financially benefit from a Real Estate transaction. According to the Florida Association of Realtors (FAR) and the National Association of Realtors (NAR), there are several legal parties involved in a real estate transaction. These include the buyer, the seller, and their respective real estate agents or brokers. Additionally, there may be a title company or attorney involved to handle the transfer of ownership and ensure that the title is clear of any liens or encumbrances. In some cases, a mortgage company may also be involved if the buyer is obtaining financing for the purchase. Depending on the specifics of the transaction, other legal parties may be involved, such as a home inspector, surveyor, or escrow agent. Each legal party plays a specific role in the process of taking transactions to close, but only the seller, the buyer, Real Estate agents, and Brokers can benefit financially from the transaction.
- Finding the house of your dreams: It’s important to understand that buyers have to obligation to enter into a contract with a Real Estate agent in Florida. This makes the search for a property a more pleasant process. The Internet is full of Real Estate portals such as Zillow, Realto.com, Trulia, etc. These portals provide buyers a window into the MLS, (Multiple Listing Service) the platform that only licensed real estate professionals can use. Before the existence of these portals, a call or an in-person visit to a local Real Estate brokerage was required to obtain a list of properties on the market.
- Making an offer: Once you have found a property that you are interested in, you will need to make an offer to the seller. This offer will typically include the price that you are willing to pay for the property, as well as any contingencies or conditions that must be met before the sale can be completed.
- Negotiating: If the seller accepts your offer, the next step will be to negotiate any contingencies or conditions that were included in the offer. This may include things like a home inspection, a survey, or a mortgage contingency.
- Closing: Once all contingencies and conditions have been met, the sale can be closed. This typically involves signing a contract, transferring the title to the property, and paying any closing costs or fees. Once the sale is complete, the new owner of the property will receive the keys to the property and the title to the property will be recorded with the local government.
How long do Real Estate transactions really take from start to finish?
The length of time it takes for a real estate transaction to close can vary depending on a number of factors, such as the complexity of the transaction, the availability of the parties involved, and any contingencies or conditions that need to be met. However, on average, it can take anywhere from 30 to 60 days for a transaction to close. If a real estate transaction is a cash purchase, the closing process may be quicker than a typical transaction because there is no need to secure financing. In a cash purchase, the buyer will be paying the full purchase price in cash or with a cashier’s check at closing. The escrow process will still need to be completed, which includes a title search to ensure that the title is clear of any liens or encumbrances, and any contingencies or conditions outlined in the contract will need to be met.When do agents and brokers get paid?
Real estate brokers and agents typically get paid when the transaction closes. The commission is typically paid out of the proceeds of the sale, and it is split between the buyer’s agent and the seller’s agent. In a cash purchase, compensation will still be paid at closing, but since there is no mortgage involved, the commission will be paid by the seller.