Two couples of sellers in Ballarat have put their 582m² block of land up for sale, accepting only Bitcoin payments. Why do people sell real estate for crypto, and how do the latter disrupt the real estate market?
The land in question
The block at 7 Magpie Street was bought by sellers Melissa Bower and Trudy Purcell in 2021 with plans to renovate and transform this place into “something magnificent”. Ballarat itself is a picturesque place that is not far from many attractions such as Sovereign Hill. However, the property itself needed some tweaking. At the time the couple bought this land, it was just an old miner’s cottage, a relic of a gold-era Ballarat. The metamorphosis of this place into a beautiful place proved to be a tougher task than the couple thought.
While Bower, Purcell and another couple of owners, Sasha Semjonov and Tessa Dunstan, obtained permission to build two houses on the vacant land, the economic outlook, including inflation and high interest rates, showed that these plans are not suitable. They realized that they should not spend their money on materials and labor, and instead, they were better sell the block
Why did they sell it for Bitcoin?
Purcell and Bower provided a simple explanation of why they wanted to sell the land for Bitcoin, not fiat money. The main reason is to reduce intermediary costs. Instead of wasting time and money on real estate agents and bank operations, they want a quick and secure transaction that won’t cost much, and Bitcoin is the way to go.
The block has been sold. According to the sellers, everything took an hour, without inspection or staging. Bower said that today, social media platforms play a huge role in the sale of goods and pointed to TikTok as an example.
Do people often pay for real estate in crypto?
The Ballarat land trade turned heads, but we can’t say that Australians were the only ones selling the domain for Bitcoin. Another notable case is the $22 million penthouse in Miami sold for cryptocurrency in 2021. At that time, he was considered the greatest real estate transaction made via cryptocurrency.
Although Bitcoin is not yet legal tender anywhere, but in El Salvador, more and more people around the world are using crypto to pay for real estate. If we do in people who pay in fiat money, but use blockchain to keep real estate records, we will discover even more cases. For example, the Republic of Georgia uses blockchain to maintain property records at the national level.
Many choose crypto to pay for property because it allows them to save money on intermediaries and raises the barriers associated with cross-border transactions.
Interestingly, some people buy real estate for fiat money, but accumulate the necessary amounts for investment in crypto. The Fairway study revealed that in the fourth quarter of 2021 nearly 12% of all first-time home buyers used the money they made to sell their homes. This change illustrates how vital cryptocurrency has become in the 2020s and how influential it is for the real estate market, even if the deals themselves are done off-chain for fiat money. The other report he says that crypto fuels the real estate boom of the 2020s in the United States. Not to mention, some people are selling their houses to invest in Bitcoin.
The crazy fact is that real estate becomes more and more cheap if we evaluate it in Bitcoin instead of fiat money, as the BTC price has grown faster than real estate prices in USD.
Blockchain and the real estate sector
Since the release of the Ethereum whitepaper, blockchain has become a tool that shapes the new reality. Any sector that involves data can benefit from blockchain. What is more important is that the blockchain does not make life easier for a single party involved. The best projects create a win-win balance. Probably, intermediaries are the only category that is cut.
The real estate market is one of the biggest markets in the world. We not only use real estate for living and working, but we also see real estate as an investment. That is why this sector could not go unnoticed by blockchain entrepreneurs. In addition, real estate is notorious for wild brokerage fees and cumbersome bureaucracy. Sounds like a job for a blockchain dApp!
Real estate deals with property rights. Blockchain gives owners an easy tool to exchange their assets without having to deal with traditional entities like banks, agents, etc. Trading is done through smart contracts embedded in the local legal space to ensure that ownership will be passed to a buyer as soon as payment is made. Since smart contracts are automatic, they do not charge agent fees.
Blockchain eliminates time-consuming paperwork, allowing counterparties to exchange ownership quickly as soon as they agree on terms. No bank or other entity can intervene and delay the process. The property is verified, and buyers can access all the necessary legal information about the domain they are going to buy. Through tokenization of real estate, owners can sell fractions of their property in the form of digital tokens. This trend democratizes real estate trading.
The bosses are not left behind either. There are apps that simplify the collection of rent and other issues via crypto payments.
In general, it is safe to say that real estate is gradually embracing crypto like other sectors. Although some consider the volatility of the crypto price to be an obstacle to the adoption of crypto as real estate money, others are looking for luck, hoping that the crypto they receive in exchange for a house will increase in value in the future
