All the things you need to know about blockchain real estate practices.

Blockchain Real Estate: Selling Property Is Getting Easier

This article by Bennett Garner was originally published on CoinCentral.com

Blockchain Real Estate Is Coming Sooner Than You Think

Blockchain real estate transactions, records, and marketplaces could radically change the way we think about property. Current systems for tracking and trading real estate are disjointed and inefficient. There’s an enormous opportunity for blockchain to standardize and secure real estate data. Land records, property listings, leases and mortgages, and government property tax offices could all benefit from a blockchain real estate revolution.

The challenge, of course, is that real estate is an enormous industry with many players including lenders, brokers, local governments, and private citizens. Changing to a blockchain-based real estate system isn’t as simple as flipping a switch. That said, various parties are experimenting with blockchain all along the real estate value chain to find ways to integrate the new technology.

Land Records

Land records are the foundation of real estate. Titles and deeds make it clear who owns what property. They power everything else that happens in real estate. However, they’re highly fragmented. Each individual local jurisdiction has its own rules regarding property records. Sometimes, these records aren’t even available online.blockchain real estate

All that is changing. Chicago’s Cook County ran a pilot project for land records starting in 2016 that digitized all information and tested blockchain solutions. South Burlington, Vermont launched a similar pilot project in January 2018. Sweden recently implemented the second phase of its transition to blockchain land registry, using smart contracts on a private blockchain to facilitate transactions. That project will save Swedish taxpayers an estimated $100 million per year when it comes to full fruition.

Once we have property records listed and secured on the blockchain, it opens a lot of doors. Now, those records can easily change hands. We can use smart contracts to manage and trade those records as well.

Property Listings

Right now, if you want to sell a piece of property, your best bet is to list it with a local real estate agent. Sure, you could list the property for sale by owner, but you don’t have access to the multiple listing service (MLS) that real estate agents use to search for property when they have a new buyer.

The MLS is notoriously fragmented, walled off, and difficult to understand. Transferring property listings to the blockchain would mean opening up access to all available property for anyone to review. Along with the listing, you could include any terms or conditions that would need to be met for a successful sale. In the future, shopping for a home or an office space could be as simple as visiting an e-commerce website and adding the property to your shopping cart. Smart contracts behind the scenes could handle the rest of the transaction–transferring funds in exchange for the blockchain title to the property.

Smart Contract Property Management

One of the most exciting applications of blockchain real estate is smart contract management. Currently, any real estate transaction requires mountains of paperwork and hours of coordination between the bank, broker, seller, buyer, and local government. It’s possible to imagine a world where smart contracts handle most of that burden.

Not only that, but what if smart contracts handled rental agreements, commercial real estate tenancy, and other ongoing types of real estate transactions. Smart contracts could also help brokers automate due diligence on potential buyers/lessees. Blockchain real estate could create trust between parties on a level that doesn’t currently exist.

Crowd Ownership & Investing

Another exciting idea in blockchain real estate is crowd ownership of property. With blockchain governance models, a group of people could come together to purchase property and then vote on decisions about what to do with that property. Participants would essentially own a share of the property that they could then sell at any time.

Taken a step further, real estate investment trusts (REITs) and other real estate development investment vehicles could benefit from lower overhead as a result of blockchain.

What Happens to Realtors & Brokers?

The real estate industry is slow to change, and that won’t be any different with the blockchain transition. The truth is lenders, insurers, and other parties make a lot of money off the inefficiencies and challenges of navigating the current system. Blockchain poses a serious threat to these administrative and regulatory companies.

That said, there will always be a role for realtors and brokers in real estate. Even with blockchain real estate, people will want to see the homes or offices they’re considering purchasing. They’ll still need the help of an expert in the field to navigate such a large transaction and make sure the physical asset they’re purchasing is in good shape. Even if the transaction is much simpler and quicker, buyers will always need an expert guide.

Conclusion

Many trends in real estate are changing at the same time. Housing prices in cities are skyrocketing. Homeownership among young people is down. Brick and mortar retail is facing a threat from online shopping. Our neighborhoods are changing around us, and blockchain real estate is poised to become part of and accelerate that change.

Authority Magazine Interview with Piper Moretti

“Seriously Educate Yourself About The Crypto Market” 13 Insider Tips With Piper Moretti, CEO Of The Crypto Realty Group

“Have the right people on your side. Going into business for the first time can be scary and expensive. I’ve had “partners” in the past who talked a great game but didn’t want to do the actual work involved to carry it through. Sometimes it’s better to lay the foundation the way you envision THEN invite the players in, that way you’re spending 100% of your energy on your dream rather than having to split that trying motivate the unmotivated.”

I had the pleasure of interviewing Piper Moretti, CEO, The Crypto Realty Group. Piper has completed 5 bitcoin real estate transactions to date, she is an advisor with CPROP.io and Block66.io, and speaks publicly about blockchain tech in real estate.

Thank you so much for doing this with us! What is your “backstory”?

Itstarted a little over a year and a half ago when some prospective buyers randomly found me online. I’d been a realtor for almost three years, and was still relatively new at it. So one weekend these buyers asked if I would take them to look at a house in Manhattan Beach. We really hit it off. As we looked at a few homes they said, ‘oh, and by the way, we’re going to buy in bitcoin.’ That certainly got my attention. Honestly, I had heard about bitcoin at that point. I remember hearing about it when it first came out and kind of looked into it a little bit. But because it had some negative connotations in addition to being highly volatile, I thought ‘oh, no. That’s not something I want to be in.’
I just let it go for a few years until these potential buyers found me. They had a lot of bitcoin, did business and even paid each other in it. Eventually they found a $3.2 million dollar house that they wanted to purchase in all cash and bitcoin and we just made it happen. As the story goes there had been only one other bitcoin transaction in California that I know of at the time and that was a few years ago in Lake Tahoe. So I’m working backwards and have no idea where to start. I’m just Googling like crazy. We found out that BitPay was involved in that transaction so got in touch with them. I just did searches like crazy on LinkedIn. I also discovered the International Blockchain Real Estate Association and reached out to see how they might be able to help. Just anything I could get my hands on. It didn’t help that the sellers direct agent was dead set against utilizing bitcoin from day one. So it was me calming his nerves almost every day telling him that this was for real and convincing him that we’re not out to scam anyone. Showing proof of funds was the first hurdle. The second hurdle was now that we had proof of funds, how was the transfer of these funds going to take place. In other words, how is BitPay who we selected as the processor going to make this happen.
Fortunately, the seller was young and hip enough to go, “oh yea, I can just open a BitPay account and everything will be fine.” So she did and that’s how we transferred the funds.

But seven days before we were supposed to close the escrow lawyers got a hold of it and said “ no, we’re out, we’re not going to touch this. We’re not going to close for you. We’re done.” So we had to scramble and find another escrow company that could do this in seven days.
There’s more. While we were trying to get all of our ducks in a row, bitcoin surged and my client decides to purchase a Lamborghini with some of the extra money he made in bitcoin. That’s when I thought, “OMG, send me the sales receipt” Since it was a lambo dealership down in Orange County that accepts bitcoin through BitPay. I thought, “please send me any documentation you can.”
Here’s the good news. When he bought the lambo he provided me with the documentation of that transaction. So I was able to prove that, yes, this is not crazy internet nerd money. This is the real deal because he just purchased a $250,000 car with it. Now we can buy this house. So that helped tremendously in terms of getting this deal through.
All of this eventually turned into the Crypto Realty Group. We went on to do three more transactions yet I wasn’t even thinking about starting a company doing these. It was kinda like just this novelty thing I was doing along with my other traditional real estate practice. Then a colleague of mine said: “look, you have a thing here. You should start a company and focus on this.” I’m like, really?
I started going to Blockchain events, meeting people in the space and their eyes got so big. When I told them that I had done four transactions already, they were like OMG, are you kidding me? So that’s how it started. I started a LLC and its kinda taken off from there. That was last summer.
Now there are a ton of agents who want more information because there’s not a lot out there in terms of these types of transactions. And I’m personally hearing from buyers and sellers all over the world. There’s often a lot of talk before something actually happens but I’m more than happy to consult, especially if there are a lot of traditional real estate agents that just don’t want to go with this. I’m happy to step in and do a consultation.

Can you tell me about the most interesting projects you are working on now?

Yes — www.cprop.io is about to launch their token. They’re working to create an end-to-end transaction process using blockchain technology with trusted vendors, smart contracts, title, escrow, and even payment gateways. www.block66.io is creating a loan process that will take as little as 48 hours to fund.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

Robin Milonakis — she is the regional VP of First Team Compass in Newport Beach and Manhattan Beach where I hang my license. She has always been a supporter and mentor in getting my company off the ground. She knows we’re onto something that will change the real estate industry for the better, and has set up meetings and put me in the same room with important people in the industry I may not have gotten the opportunity to meet.

What are the 5 things that most excite you about blockchain and crypto? Why?

- We as Realtors will be able to complete transactions in just days rather than 30–60 day escrows, which obviously cuts down on the time but also the sky-high costs that can be associated with closing.

-The human margin of error is so much more narrow. Because of smart contracts, there will be the necessary checks and balances implemented so nothing is overlooked.

- Crowdfunding. The dream of owning a home will be so much more accessible to buyers who previously may not have had the chance.

- Verification. We will be able to look up potential clients who have gone through the prequalification process with a hash associated with their information, saving everyone time.

-Transparency! ALL parties associated with the transaction will be able to log on and know where we are in the process at all times.

What are the 5 things worry you about blockchain and crypto? Why?

- Real estate agents claiming they know how to do a transaction when they’ve never done one — it’s one thing to say you know how to do it but it’s an entirely different ballgame when you’re in one (trust me on this!) creative problem solving is important and we do it everyday in regular transactions, but new problems surface with crypto transactions most agents aren’t equipped to deal with.

- The stigma. So Bitcoin got off to a rough start, big deal. Some agents who have been in the industry much longer than I have are afraid to associate with it, and some potential clients get wind that I’m in the space and it scares them. I lost a client once because of that.

- Human error. Even though blockchain tech will mitigate much of it, we don’t know what we don’t know.

- ICO bubble. I don’t think there is a bitcoin bubble, but there will be an ICO bubble if it’s not already in the works.

- Junky ICOs, especially in the real estate industry. Many are racing to be the first to do something without checking the legalities and regulations from state to state and country to country. All they care about is “cross border” implementation but they’re opening themselves up for a lot a lawsuits.

How have you used your success to bring goodness to the world? Can you share a story?

- I’m able to set my own schedule now, whereas when I was in entertainment I couldn’t do that as much. I now have no excuse for not being able to volunteer! I drive for Meals on Wheels when I can as well as volunteer with animals, and help the other causes that are dear to me like women’s’ rights. This year, I was able to schedule a flight out to see my mom for her 70th birthday and I know that meant the world to her.

What 3 things would you advise to someone who wanted to emulate your career? Can you share an example for each idea?

- Seriously educate yourself on the crypto market. Like I said earlier, I know several agents who brand themselves as “crypto agents” not knowing a thing about it. I know it may be a cool trend right now, but if you end up getting a serious client, you need to be able to have real conversations.

- Get your ducks in a row. Gather your team players who will help you complete your transactions, whether it’s payment processors, title, lenders, etc. Be ready to go.

-Have the right people on your side. Going into business for the first time can be scary and expensive. I’ve had “partners” in the past who talked a great game but didn’t want to do the actual work involved to carry it through. Sometimes it’s better to lay the foundation the way you envision THEN invite the players in, that way you’re spending 100% of your energy on your dream rather than having to split that trying motivate the unmotivated.

Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might just see this 🙂

Professionally, I’d like to meet Tom Ferry. He’s an amazing coach in the real estate industry who is always staying ahead of the tech curve and I’d love to sit down and share ideas.

Blockchain and Brokerages – Getting the Conversation Started

We’re still at the forefront of blockchain technology, what it is and how it’s going to disrupt a multitude of industries. There is no “if” in this scenario, only when. While my obvious focus is on real estate, I and my colleagues who are on board are still figuring out the how. No doubt the early adopters will have an advantage, but what I know for sure is that blockchain technology will fast become a necessity in the day-to-day innerworkings of real estate.

Since my involvement in the crypto space, I’ve had the pleasure of meeting several brilliant blockchain experts, most have which opened my eyes to the possibilities of blockchain technology. I’ve blogged about several proptech ICOs in the past, and not to do another shameless plug (who am I kidding, it’s my blog, isn’t it??) for CPROP, but they’re one of the frontrunners in the race for wide-spread adoption in the industry. Powered by blockchain, the concept is to have a ‘one-stop-shop’ for everything needed in a real estate transaction, from selecting an agent, to the purchase agreement, removing contingencies, finding vendors, financing and closing the deal. In theory, Escrow times can be slashed to just days instead of the typical 30-45-60-day escrow.

I also met Oliver Tickner, CEO of StreetWire. Agents will be soon able to update their property statuses on his platform and receive tokens (in a nutshell). Why is this useful? Because blockchain technology can track everything tied to a particular property, saving time and energy while mitigating risk and fraud. He also turned me on to a spectacular idea, and that was being able to verify buyers with a hash number – any potential buyer could be prequalified through their bank, and the coveted prequal information would be sitting on the blockchain for verification through their unique hash number. To any buyer’s agent, this in itself is worth its weight in gold. 

I bet you’re thinking, “Well this is all just great but how in the hell do we implement this in our own office?” Several ways. Once these startups are up and running, there will be portals in place, just like an online database. You wouldn’t need a special IT department with expert blockchain coders or a pool of miners. Other alternatives for smart contracts are AI-based platforms such as Matrix. An agent would be able to enter the rules of the contract in simple language, and the technology codes it on the blockchain.

There are some hurdles, the main one being getting your broker on board. With enough education and real-world applications, I feel like it would be a no-brainer. I’ve taken mine to a couple of blockchain Meetups in our area, just to get the conversation started and for her to meet the people who are using the technology right now.

To delve deeper into the subject, I highly recommend reading The Business Blockchain, by William Mouaygar, or taking the non-technical blockchain course on blockgeeks. And if your company or brokerage is already running its day-to-day applications on the blockchain, I’d certainly love to hear about your experiences!

Crypto, Real Estate, and Capital Gains

Capital Gains: Taxes on profits from the sale of certain types of investments by a company or individual.

Another frequent question we are asked about is the question of capital gains, and the answer is YES. If you are a savvy investor, whether it’s property or other investments, you can always expect that the IRS will have their hands in your pockets (or at least die trying…wait, who am I kidding? The IRS will be the only thing left besides Keith Richards after the apocalypse).

A great article in thebalance.com goes into detail as to how Uncle Sam views crypto and BTC. Essentially, the IRS views cryptocurrency as property, and taxes it based on the capital gains formulas. Long-term holds (more than one year) aren’t taxed if you fall into the 10-15% tax bracket, but taxpayers in the 25, 28, 33 & 35% tax brackets are subject to 15% CGT. Short-term capital gains rates are taxed at the same rate as ordinary income (20%) and a 3.8% tax on net investment income for single taxpayers with an average income greater than $200K (more on taxpolicycenter.com). I don’t know about you, but it makes my head hurt already.

Now, what if you’re using crypto to buy real estate? It all depends on what you plan to do with it. Hopefully you’ve held onto your Bitcoin long enough to avoid the aforementioned happy fun times and now you’re ready to convert some of your investments into tangible assets (insert shameless plug here). So, if you DO fall within the long-term and lower tax bracket guidelines, you’re good on the BTC capital gains and according to bankrate.com, you’re also able to avoid CGT if you follow these guidelines:

  • You must be selling your principle residence.
  • You must have lived in it for at least two of the five years before you sell.

Of course, there are separate rules for married couples (those guys always get the breaks) and special rules for military personnel. Technically, you could repeat this cycle every two years. This, of course, doesn’t apply to second homes or investment properties.

Other ways to avoid are of course the old 1031 Exchanges, charitable donations, tax shelters, but my advice would be to find one of those rare CPAs who specialize in crypto anyway (and if you find one, let us know and we’ll add them to our preferred vendors!).