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For blockchain technology to gain widespread adoption in an industry as large as real estate, much needs to be played out first.
Blockchain assets prices are falling, processes remain complex, and the US government is looking at new regulations from – and even its own alternatives to – the existing slate of private cryptocurrencies.
But some real estate professionals believe that the fall of a variety of private tokens will only speed up the process of finding the winning products that can revolutionize the home transaction.
Teresa Grobecker of Grobecker Holland International and Kevin Cottrell of eXp Realty will join a panel at Inman Connect Las Vegas in August to discuss their independent firm Real Estate Consortia and its work to standardize the role of the blockchain in home transactions.
These two and her colleague Sheila Fejeran of eXp – all real estate practitioners and executives at Consortia – joined Inman on a video call ahead of the conference. Their answers below have been modified for length and clarity.
But first, since this is a confusing and rapidly evolving space, let’s cover a few terms.
Now, on to Inman’s conversation with Consortia.
Inman: In January at Inman Connect New York, Teresa said that replacing intermediaries – such as real estate agencies – is one of the explicit goals of many blockchain enthusiasts. What role could Consortia play in keeping the agent at the center of a blockchain-assisted transaction?
Grobecker: This was my promise to the industry in 2018, and the national stage jumped. I had no idea what I was getting myself into. I did not even know Inman and all of these things exist. I knew the publication, but events – I knew nothing about this space. At the [Real Estate Standards Organization] stage in 2018, I said that the promise would be to keep the Realtor at the center of this. So if we are minting a property of non-fungible tokens, there must be a practitioner who is the steward for who enters the system to connect this property to the right person. The reason is, it’s a relationship built conversation.
Cottrell: If you look at the story, we first went through the Internet where people thought that what Expedia did to travel agents would happen to real estate agents. And it does not, because what people are realizing, customers want representation. So just the introduction of blockchain and it does not eliminate the need for relationships, as Teresa just described. In the Web3 world, or decentralized world, they like to just wipe it clean, and that just is not practical. The expectation is that blockchain efficiency will be able to benefit from what Consortia offers. And if anything, we can drive costs out of the transaction, and make it much more efficient, but it does not break that connection [between parties]. We can offer the private blockchain to all parties, and still have the publicly targeted portions that are needed, and do so in a way that you will see great adoption in the real estate ecosystem.
One use of the blockchain you mentioned is to host a public database of home lists and transactions. Are you describing a competitor of MLSs? And how far are we to see it happen?
Grobecker: There is no intention to disrupt the MLS world. I mean even when we first launched, there was a lot of fear. I have been asking this question for the last four years since I joined organized real estate. People see a platform where data is shared and the most similar thing we can analyze is MLS. MLS, I say, is the backbone of the financial markets, and worldwide. The reason why American real estate is so stable is because of the way the data is collected and stored in the MLS. Consortia has no interest in replicating this system. People came to me from the MLS world and they said, “Teresa, consult us on how to build this on blockchain.” It’s inefficient, at best. The other side of it is the MLS sales and service page. We have no intention of going there, as said, Consortia complements the kind of data available on the housing market, and it puts it in one place.
Fejeran: As she described, the consortia is not meant to take over the MLS, or take over the Realtors, or take over any part of the industry. Consortia aims to help keep data stored in a more efficient, effective, consistent way for accurate information so that all parties involved in the information know that it is accurate, verified, appropriate, privately kept appropriate is, publicly confronting what is appropriate.
How much of the consortia business is as a storehouse of data vs.
Grobecker: Blockchain as a technology allows for so many doors to open, and all of a sudden we as practitioners are now dealing with things that have never been on our radar before. So we now need to understand the convergence of SEC laws. We need to know the U.S. Treasury Department’s financial crimes, their department. This is subject to anti-money laundering laws, and know-your-client rules. Now we have to say, here is the crypto-wallet of one. Oh, by the way, where does this money come from? Does it come from the dark web, in the Silk Road? Or is this legitimate funds from someone’s legitimate wallet? We need to know, are we now selling real estate, or are we selling an SEC-regulated security? For me as a practitioner, especially as a broker, it is to understand the convergence of all these laws. I just want to make sure all my friends stay out of orange jumpsuits. It’s really important that they are all like, “OK, these are the laws – here’s how I stay in my track and I do not get into trouble.”
In recent months, the prices of most cryptocurrencies, including NFTs, have experienced a sharp decline. Do you think this will affect the timeline for the further adoption of blockchain technology in real estate? Do you think it sets it back?
Grobecker: Forward, actually, and fast clip. And the idea here is that crypto is just a testing ground for a Fedcoin that will be rolled out. And when this project started, it was all conspiracy theory ash. But the government has since announced it is working on Fedcoin. In addition, in recent months, the SEC has said it regulates stablecoins. They would investigate, right? And right after that, stablecoins start to crash. From there, it all starts, as far as the validity of crypto. And this is actually a beautiful thing. The SEC and the federal government really crack is good for the consumer. Rinsing them is good for the consumer. It’s also hard to see what Fedcoin will be, and what will be the one or two winners in the actual Stablecoin space. So I think everything just moves faster from here in a legitimate, legal way.
Cottrell: I think there’s a lot of confusion where people want to equate blockchain with crypto. And it becomes clear that blockchain is the infrastructure. It’s the ledger, if you will; it is immutable. That will be the infrastructure that moves forward. We could lose 90 percent of the crypto projects. It should remind you of the year 1999. Over 1999 and 2001, so much has gone on [in the Internet infrastructure]. I expect the same thing will happen with crypto.
Inman Connect Las Vegas starts here in a little over a month. Can you give our readers a sneak peak of what you plan to discuss on stage?
Grobecker: As a follow-up to the previous question, probably something important to say is the second is that Fedcoin or stablecoin, the winners will be revealed, 100 percent, all of our transactions are on blockchain. So it does not matter if you like blockchain, if you hate it – that’s really irrelevant. It’s a question of, are you ready for it? We as practitioners must be ready. We have to adapt. We need to educate ourselves, and then be there to serve our customers.
Cottrell: There is a lack of understanding of the regulatory framework, particularly around real estate. There are a lot of frothy conversations about factionalization, NFT home sales, and all that. So we’ll also touch on that so that people understand where we expect the market to go.
Fejeran: The interesting thing is that [a number of influential agents I work with] are hungry. They do not understand it, but they are hungry for it. And they are hungry for a new application that the consortia will make – to crack the metaverse, as you mentioned – just something we will integrate. We are not talking about it yet. But just keep your ears shut. That will come in the future.
Can blockchain replace Realtors?
Blockchain technology has impacted the real estate industry in several ways, including providing a new means for buyers and sellers to connect with each other. Blockchain could be used to cut intermediaries out of the real estate transaction process, thereby reducing costs.
Which jobs will be replaced by blockchain? Here are some of them. To see also : Red Rock Real Estate joins an innovative, technology-powered Real Broker; why they made the move.
- Banks and Finance. Banking and finance are the most obvious areas that blockchain is changing. …
- Health care. Blockchain has a myriad of applications in the healthcare sector. …
- Cyber security. …
- Elections and Politics. …
- Supply chain. …
- Insurance. …
- Real estate. …
- Education.
Why is blockchain important in real estate?
Blockchain facilitates secure data exchange, streamlines rental collections and payments to property owners, and also offers premium due diligence throughout the portfolio. This increases operational efficiency and allows time and cost savings.
Can you sell a house on the blockchain?
The idea behind Propy: it allows anyone to buy or sell real estate, anywhere, completely online. Propy’s blockchain records every step of the transaction, from expressing interest in a property to signing agreements to title transfers. To see also : Welcome to Real Estate Friday!. This makes the process safer than selling through traditional methods.
Do I pay taxes on crypto if I lost money?
The Internal Revenue Service allows taxpayers to use losses in stocks and other investments, including crypto, to offset profits. See the article : Sandra Bullock, Justin Bieber and Other Stars Lost Money on Real Estate in a Booming Market. If your losses exceed your total profit for the year, you can deduct up to $ 3,000 against your taxable income.
How much can you write off for crypto losses? Under the strategy, investors can use their losses to offset any gains in a given year. If they have no profit to compensate, they can deduct up to $ 3,000 in losses from normal income. Any excess capital losses above that amount can be used to reduce tax bills in subsequent years.
Do you have to pay taxes on bitcoin if you don’t cash out?
Yes, your Bitcoin, Ethereum and other cryptocurrencies are taxable. The IRS considers cryptocurrency holdings to be “property” for tax purposes, which means that your virtual currency is taxed in the same way as any other assets you own, such as stocks or gold.
Do I have to report crypto if I lost money?
Yes, you must report crypto losses to the IRS. The IRS classifies cryptocurrency as a capital asset. Any taxable event – including your crypto losses – must be reported on Form 8949.
Can you use crypto for mortgage?
In a nutshell. Yes, you can use cryptocurrencies to pay off your mortgage deposit, but you need to convert it into pounds first. You also need to prove that there is no evidence of money laundering, which can be a bit complicated! Have you made money from cryptocurrencies like Bitcoin, Ethereum or Dogecoin?
Is crypto an asset for mortgages? Depending on the lender, interest rates can vary anywhere from 3.9 percent to 7 percent or more. Overall, the process differs from a traditional mortgage because crypto is a volatile asset. But homebuyers who want to use crypto to get a mortgage can do so, even if there are risks to consider.
Can you use crypto to buy real estate?
The use of crypto currency to buy real estate is actually legal tender, as long as the seller is willing to accept the currency as payment. The downside to using crypto is that the buyer has a taxable transaction.
Can you get a mortgage loan with cryptocurrency?
Homebuyers will soon be able to buy homes using cryptocurrencies as collateral. Buying a home with Bitcoin BTCUSD â € “3.71% as a guarantee may soon be possible as crypto startups try to crack the $ 2.6 trillion mortgage market. A start-up called Milo started offering 30-year mortgages in March, backed by cryptocurrencies.
Can you use crypto as a down payment?
Crypto mortgages are the latest example of the deepening role of digital currencies in the US real estate market, with real estate buyers and lenders embracing volatile currencies to support dealers for hard assets. Last year, Fannie Mae began allowing lenders to use crypto for their down payments.
Do you have to report bitcoin to the IRS?
Yes, your Bitcoin, Ethereum and other cryptocurrencies are taxable. The IRS considers cryptocurrency holdings to be “property” for tax purposes, which means that your virtual currency is taxed in the same way as any other assets you own, such as stocks or gold.
Does the IRS know if you have Bitcoin? Yes. A variety of major crypto exchanges have already confirmed that they are reporting to the IRS.
What happens if I don’t report Bitcoin on taxes?
Failure to Report If you do not report taxable cryptocurrency activity and are facing an IRS audit, you could file interest, penalties, or even criminal charges. It can be seen as tax evasion or fraud, said David Canedo, a Milwaukee-based CPA and tax specialist product manager in accounting, crypto tracking and tax reporting.
