Just a few years ago, Carol Cassis and Stephan Burke of Brown Harris Stevens were like any other high-end Miami realtors, facilitating million-dollar transactions of high net worth investors, athletes, celebrities and rich foreign buyers looking to park their wealth in southern Florida’s booming luxury real estate market.
Then in late 2015, the duo met a buyer who had a rather odd request — he was looking to purchase a home only through bitcoin and needed a seller who would play along. The buyer ended up having to convert bitcoin to cash to buy a property, but Cassis and Burke were intrigued. Bitcoin, at that point, was not nearly at the valuations they are at today, but the mania was building.
“We started studying it and paid close attention to bitcoin’s value. We wanted to understand what it would take to use cryptocurrency to buy or sell property… how it would work from the legal side,” Stephan Burke told VICE Money over the phone from Miami.
In late 2017, Burke and Cassis clinched a deal. Bitcoin investor Michael Komaransky sold his sprawling seven bedroom Miami mansion for $6 million, or 455 Bitcoin, marking the biggest bitcoin-to-bitcoin real estate transaction to date. The deal was formalized on January 8 and the buyer, according to Burke, made Bitcoin payments in increments.
“We wanted to show those people that it’s possible to do [a high-end sale],” Cassis told real estate newsletter The Real Deal at the time. “It’s possible to do it in a legal frame, in a perfect way, when you have the right team doing it.”
Skeptics of cryptocurrency would balk at mere thought of involving bitcoin in a long-term asset as steady as real estate. The most obvious risk is bitcoin’s sharp volatility — what if your 455 bitcoin was worth $6 million on the day you signed papers to purchase that mansion, and just $2 million a few hours later? From the seller’s perspective, how can you really trust that the buyer will really have enough bitcoin to complete the transaction?
The intersection of cryptocurrency and real estate is indeed virgin terrain, but there is little doubt that interest is growing. Rapidly, at that.
At the sixth annual North American Bitcoin Conference held in Miami this year, realtors were out in full force, according to Cassis, eager to learn as much as they could about cryptocurrency in light of growing interest from real estate investors. An upcoming “Real Estate, Bitcoin & Wealth” conference in Toronto this April boasts the likes of Sylvester Stallone, former baseball star Alex Rodriguez, and Shark Tank’s Daymond John. On the agenda — bitcoin investing, bitcoin mining, and flipping properties.
There’s even an International Blockchain Real Estate Association, which was in fact founded back in 2013 with the intent of providing educational resources directed at “implementing blockchain in real estate”. That’s arguably more complex from simply using cryptocurrency to buy or sell property — blockchain experts say that the technology could play a pivotal role in the real estate market because of its ability to streamline processes.
“Our first year at the bitcoin-real estate conference, there were no more than 300 people. Last year there were 3000 people,” Cassis told VICE Money. “This is not a game. There are very serious people behind it who see that this is big business.”
But in another luxury real estate market — Victoria, B.C. — Jason Binab has had less luck. The realtor was all set to close on a deal that involved a $2.5 million mansion in exchange for bitcoin, but it fell through when the media got wind of the transaction.
Binab, who represented the seller, Hugo Donais, claims the buyer got cold feet when he saw how negative media coverage of the future sale was. “It scared him. After all that publicity, the buyer’s accountant contacted him and said you’re crazy, why are you doing this,” Binab told VICE Money.
“I don’t know if it’s going to become more of a thing here. Victoria is a different market because wealthy people aren’t flashy, and that whole bitcoin thing got people talking. No one else has called saying they’d like to buy the property.”
That might not matter, in fact.
In early January, the Real Estate Council of British Columbia, the regulatory body for licensed realtors in B.C., banned the use of cryptocurrency for real estate transactions. The ban, more specifically, prevents brokerages and lawyers from receiving a bitcoin deposit and holding it in a trust account. You could, conceivably, process a same-day bitcoin transaction in exchange for real estate without having to hold bitcoin in a trust account, but in B.C., deposits on homes must be held in trust, unless otherwise stated in a sales contract.
Ontario’s regulatory equivalent, the Real Estate Council of Ontario (RECO), has also hinted that it intends to follow B.C.’s lead, but it’s worth noting that transactions solely between a buyer and seller, without the involvement of a brokerage, are not bound by any provincial real estate regulations.
Such regulatory controls don’t yet exist south of the border.
According to the real estate firm Redfin, cryptocurrency was listed as a way to pay for some 75 properties in California and Florida. Moreover, bitcoin is especially useful for foreign investors who want to invest in the U.S. and cannot otherwise do so because of their home country’s capital control rules, according to economist and bitcoin expert Charles Evans of Barry University.
“This seems to be driven by international investors who are circumventing inefficient banking and currency controls at home and by U.S. cryptocurrency enthusiasts,” Evans told the AFP wire service back in January.
But Cassis and Burke both believe that the bitcoin real estate boom is actually being driven by the younger generation — it’s also why they are convinced this isn’t just a fad, but the beginning of a new style of real estate investing, volatility be damned.
“Our demographic is 20 to 40 year olds. So just think about it… if one percent of this age group in U.S. and Canada want to use bitcoin for real estate, that’s quite a few transactions,” Burke says. “It’s like any other investment that fluctuates. We don’t really think about volatility because we’re not involved in the financial part of all this.”
That’s all well and good, but any time there’s going to be a high value purchase involving cryptocurrency, there are bound to be serious risks, says Andrew Ittleman, a partner at the Miami law firm of Fuerst, Ittleman, David & Joseph.
“The fluctuation is a real issue. Most transactions take at least a week or two, and you could have serious fluctuations in the time period. Somebody could make a whole lot of money or lose a whole lot of money by engaging in transactions like this,” Ittleman told VICE Money.
Ittleman is convinced that the only thing that anyone gets out of a real estate-bitcoin transaction is hype. “Attention. That’s what all these people are getting out of it. At this stage of the game, I don’t really see there being much independent value to buying and selling real estate using bitcoin.”
But Cassis and Burke are banking on bitcoin. They continue to claim to be the only real estate duo on Miami with the expertise to be able to facilitate a legally sound bitcoin transaction. “I think in a few years you’ll see 15 to 20 percent of real estate transactions using bitcoin, so we got into the game early,” Cassis says.
And it’s not risky, she emphasizes. “You can be on a jet from London to Dubai and call Carol and Stephan and we’ll take care of it.”