Buy a house in bitcoin?
Virtual currency for a physical house?
The seller of a Southampton, N.Y., home is asking $799,000 for his ranch-style four-bedroom home — or its equivalent value in bitcoin. It’s one of the first homes on the market testing the digital currency, which was introduced in 2009 and is not backed by a central bank or government. The virtual currency is created by a computing process known as “mining” and can be traded online through unregulated Internet exchanges.
“There’s room for more than one currency,” says Philipp Preuss, the home’s seller, who says he would also accept a combination of bitcoin and cash. The bitcoin price, he says, will likely be determined by the currency’s average exchange rate on the day of closing.
The currency has fluctuated wildly over the past 12 months ranging from $13 in January to topping $1,200 in late November. Tuesday’s value on the CoinDesk exchange was around $715 for one bitcoin.
Earlier this month, the Chinese central bank said financial institutions shouldn’t take deposits from businesses tied to bitcoin. The European Banking Authority issued a warning last week that virtual currencies such as bitcoin were highly vulnerable to uses for criminal activity and money laundering.
Still, a small but growing number of businesses have announced they will accept bitcoin as payment. Last month, Richard Branson said that his space-tourism company, Virgin Galactic, would accept bitcoins as payment for space travel. (Virgin Galactic Space flights cost $250,000.) The online dating website OKCupid.com accepts bitcoins, as does content aggregator Reddit.com.
“There might be international buyers, or a younger computer whiz who came into a little bit of coin overnight,” says Preuss, who is 42 and originally from Germany. “I’m expanding my buyer base.”
Preuss, who works in international equity sales, has a small investment in the currency, having purchased about $100 worth of bitcoin in June, an investment that has appreciated significantly since then.
Preuss’ home hit the market in October because he says he and his family have relocated from New York City to Stamford, Conn., and it’s too far of a drive to use frequently. He decided to add the bitcoin purchase option last week.
The home, less than four miles Southampton’s Main Street and about five miles from the beach, is located on a large freshwater pond. It also includes a dock that is about 300 to 400 feet from the property.
Preuss says he had to initially explain what the currency was to his real-estate broker, Amadeus Ehrhardt of Brown Harris Stevens in Sag Harbor, N.Y. “Aside from what I hear on the news about it here and there, I didn’t know that much about bitcoin,” Ehrhardt says. “But people are always interested to see what’s new, and people like options.”
Because a bank is not involved, fees for bitcoin transactions can have fewer fees than traditional bank transactions, which Preuss says he also found appealing. With no underlying mortgage on the home, Preuss says he’d most likely hold onto the bitcoin if someone were to use the virtual currency to purchase his home. “I believe in the longevity of bitcoins,” he says.
It remains to be seen whether bitcoin sales will take off in real estate.
“I think at this point it’s nothing more than a marketing technique of getting eyeballs to a website, which can help sell a property,” says Jonathan Miller, president of appraisal firm Miller Samuel. “I don’t take this very seriously, but it certainly catches your attention.”
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