Propy’s weekly webinar Episode #36 is with Sarah Richardson, CEO & founder of Tru Realty, Scott and Cherie Goldsmith, Owners of Homestead Realty, Melissa Richelle, Residential Assisted Living Specialist & SRES, and Piper Moretti, CEO of The Crypto Realty Group
Sarah Richardson, CEO & founder of Tru Realty, Scott and Cherie Goldsmith, Owners of Homestead Realty, Melissa Richelle, Residential Assisted Living Specialist & SRES, and Piper Moretti, CEO of The Crypto Realty Group join Propy’s CEO, Natalia Karayaneva, and William Dickey, Account Executive to discuss how to use Bitcoin in a real estate transaction, and lessons learned using this novel currency.
Also discussed is why the immutability of blockchain makes it so appropriate for real estate. The first half of the webinar will discuss Bitcoin and crypto payments, and the second half will cover blockchain.
The difference between crypto currency and blockchain
Natalia explains that it’s important for people new in the industry to differentiate Bitcoin as a crypto method of payment, while blockchain acts as a transparent, immutable database storing all the details of a transaction.
How you became interested in crypto currency and blockchain
With Bitcoin reaching $20,000 recently, this is the perfect time to ask each of our guests on this webinar what their interest is in this novel currency.
Scott and Cherie Goldsmith recently posted in a Facebook group about a potential buyer interesting in paying with Bitcoin. As broker/owners in the small town of Brevard, NC, this was not something they had ever dealt with before. They immediately started asking questions on Lab Coat Agents, and a lot of agents told them it was a scam and they shouldn’t explore this with their seller.
Melissa Richelle’s exposure to Bitcoin started working for a company that provided education for blockchain. She has a background in property management, sales, leasing, and is a residential assisted living specialist. If she hears about an interesting technology, she wants to learn about it.
Piper Moretti shares the story of how she had a buyer who wanted to purchase using Bitcoin at the end of 2016, and she had no experience with crypto currency. Initially, her lender and other agents didn’t think she should do this, but she was able to get everyone on board, and the deal closed in early 2017. She went on to do four more Bitcoin transactions after that.
Sarah Richardson is the founder and CEO of an independent based residential, primarily residential firm based in Arizona, and was an early adopter of using Propy. She did the first transaction in Arizona using blockchain, and is impressed with how blockchain can ease a lot of the friction in the transaction process.
How to tell if it’s a scam
Cherie said that the majority of the comments made on her social media post thought this was a scam. However, she said when she gets scam calls, she gets a feeling about those because something feels “off” to her, but this buyer felt legitimate to her.
Anytime someone wants to use crypto currency when selling a property, Piper explains, it’s no different than anytime you have a seller. You always go through a verification process to make sure there is a deed or other paperwork that proves the seller owns the property. With buyers, you have to find out what kind of crypto currency they are using. If they’re using Bitcoin, Ethereum, or XRP, then it’s most likely legitimate. If you’ve never heard of the coin, then your first action needs to be to look at CoinMarketCap to see if the coin is listed there. If the coin isn’t listed, then your conversation ends there.
Melissa interjects that high-net worth clients may prefer to use a privacy coin, like Monero rather than the three that Piper mentioned due to the ability to remain anonymous.
Motivation behind using Bitcoin
Scott and Cherie explain that their buyer wanted to use Bitcoin to save money. To convert his Bitcoin to cash would cost around $5,000, so he wants to transfer his Bitcoin directly to the seller. The seller’s attitude is
“get me the money I want for my property, and I don’t care how you do it, as long as I can count it out.”
Cherie continues saying,
“we’ve got a buyer, and we’ve got a seller. How can we bring them together?”
Piper explains that everyone wants to save those transfer fees, but it’s just a fact of using Bitcoin. She doesn’t know of any way to circumnavigate those fees.
Natalia states that in the future as Bitcoin becomes more common to use in real estate transactions, that there will be more opportunities for buyers to send their Bitcoin directly to the seller who wants to invest in cryptocurrency. Propy handled the first transaction where cryptocurrency was sent from the buyer to the seller directly, and using a smart contract played a role in the escrow.
Capital Gains and taxes
Melissa suggests that more education is needed to understand how taxes and capital gains will work using crypto currency. She feels it’s difficult enough to advise a client regarding these important financial concerns without adding this new component into the equation.
Piper explains that she’s been fortunate that her clients have been very savvy and they all have excellent accountants, so she hasn’t run into any issues regarding those issues. She stresses that it’s really important to find a CPA that understands crypto and the tax code.
Natalia says that if any agents need to learn more about the tax implications of using crypto currency, they can contact her for the contact information for her CPA. She can also recommend escrow companies that are crypto friendly.
A spike in crypto requests
Piper states that she’s been getting more requests to use crypto and is currently working with someone in Mexico. She’s had someone in Colorado contact her, as well as internationally.
Sarah says that her brokerage had gotten three inquiries from investors in Northern California who are looking to purchase in Arizona. She is glad that she tested the Propy platform almost three years ago so she understood how it worked, because now that she’s starting to get inquiries from investors, she knows she’ll be able to give them a good consumer experience.
Proof of funds
As a broker and as agents, we want to make sure that the buyer can provide proof of funds that can cover any type of variability in the market, states Sarah. She continues,
“Right now, we’re in a bull market, but what happens if that goes down in the next 24 hours? We have to know that even at its’ lowest point, the buyer can still purchase that asset. We have to be the fiduciary for our client, and not put them at risk because a buyer might not be able to perform. It’s critical that we have proof of funds and that the funds are viable.”
Utilizing a block explorer, which is a blockchain search engine, Melissa explains that you can look up the block hash to verify that funds are in that wallet. She added one warning for people just getting started with crypto currency who don’t really understand how the technology works. It’s important to keep the currency in a wallet where you control the keys. This makes your crypto less susceptible to being hacked.
Another way to verify proof of funds, is to get the address of their wallet, and send them one cent of Bitcoin, explains Natalia, and then from any explorer, you can check to see if those funds went to their address.
Getting PR with Crypto currency
Natalia explains that some agents are advising customers to sell a property in Bitcoin as a way to get more PR and a better price on the property.
Her brokerage received a lot of media attention when they first started to talk about using crypto currency in transactions, Sarah states. She said it positioned them as a forward-thinking brokerage, just in terms of how they leveraged traditional technology and emerging tech like blockchain. Her ad agency capitalized on this, and news channels covered the story.
Piper shares that with her first crypto deal, there was a write-up in the local paper, but the reporter really didn’t understand the technology. After she completed four more transactions in 2017, she spoke at the International Blockchain Real Estate Association conference, and she thought more people were doing this. She was very surprised by the amount of attention she received there. She started to speak and be interviewed on the topic of crypto.
Piper continues, saying that her client in Mexico was very savvy and he saw the value add in selling this really unique property in Bitcoin. He was a successful investor, so she doesn’t think he had any interest in getting PR. With the uptick in crypto, he thought this was a good time to position his property for that. She said during the downturn when the price dropped to $3,000, she had some people who wanted to use crypto for the exposure on their property. But she told them that she didn’t think people were going to buy now. Overall, Piper thinks most of the people she’s worked with using crypto did it because they liked crypto, not for the PR they would receive.
Melissa shares that she considered the PR factor when selling a property in the Chicago market. She felt that accepting crypto would definitely create a buzz, but ended up going under contract quickly, so didn’t need to pursue this. She is only aware of one property in her market that has successfully closed using crypto.
Blockchain makes real estate transactions more efficient
Piper stressed that with Propy’s platform, everything is organized for you on the blockchain, making it effortless when you need to locate a particular document. You don’t have to search for files anymore because everything involved with that transaction is uploaded and timestamped on the blockchain. This technology saves time, and it’s transparent.
Speaking from the perspective of a user of the smart contracts on Propy’s platform, Sarah explains that it was extremely secure and very easy to use. She said signing documents was a simple process, and she was impressed with how efficient the platform was.
Natalia explains that during the transaction process, every step is recorded on a smart contract. For example, when a signature is received via DocuSign, it is added to the blockchain as an immutable record. No one can ever delete that from the blockchain. When the title report is received showing proof of ownership, a hash is created and added to the blockchain. When the deed is recorded, another hash of the PDF is made, along with the stamp that it’s recorded, and added to the blockchain. In a few years, if there is ever a question on a transaction, the hash of each document can be checked to verify accuracy.
Many states have laws in place that define blockchain, smart contracts, and cryptocurrency. Many of these laws state that the blockchain record can be used as evidence in court because of its immutability.
Learning about blockchain
Piper realized early on that she needed to learn more about this new technology, and went to BlockGeeks.com and took a basic blockchain course that was designed for non-technical people.
Sarah said that she came across a podcast she highly recommends called The Pomp Podcast with Anthony Pompliano, who is a thought leader in the blockchain community. She subscribed to his newsletter and listens weekly.
Melissa recommends 99Bitcoins for beginners, as they have short videos that explain the basics. She also worked at the Blockchain Institute in Chicago, and said this is an excellent resource if you’re in Chicago. You can go there in person and their staff will walk you through your questions.
For people who are interested in learning more about blockchain and crypto-currency, Natalia shares that Propy has a Crypto Certification Training Program available. This program will educate agents about blockchain, and what crypto-currency is, and how it can be traded.
Cherie said that her biggest take-away is they need more education to be able to use crypto currency in transactions. Even though they are in a smaller community and are a mom and pop business, they are curious about the new technologies and want to be forward-thinking for their clients.
Piper stresses that agents don’t have to know it all to use blockchain and crypto. There are resources available, and people that can help you. Assemble a team of people who can answer your questions and work with you.
Melissa hasn’t done a closing yet using blockchain, but she’s had a lot of closings that she knows would have gone more smoothly had they been done using blockchain. She sees so many applications where blockchain will really benefit the industry.
You don’t need to know all the details to use the technology, Sarah explains, and you’re never going to know everything about it. For example, when the internet first came out, no one understood it, but we used it. Blockchain is the same way, because platforms like Propy will make it easy to use.