{"id":3206,"date":"2023-08-22T07:26:46","date_gmt":"2023-08-22T11:26:46","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=3206"},"modified":"2024-04-25T23:17:34","modified_gmt":"2024-04-26T03:17:34","slug":"volatility-seasoning-nars-advice-on-working-with-bitcoin-buyers","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/volatility-seasoning-nars-advice-on-working-with-bitcoin-buyers\/","title":{"rendered":"Volatility? Seasoning? NAR\u2019s Advice on Working With Bitcoin Buyers"},"content":{"rendered":"\n
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Bitcoin is volatile<\/em>. It can change in value from one month (or day) to the next.<\/p>\n\n\n\n

To a mortgage<\/a> lender, bitcoin is a non-cash asset. It must be sold before the deal can go through. In other words, holding digital currency is like holding a Patek Philippe gold watch. Or a retirement fund. The holder must turn the value into cash before turning it into a home.<\/p>\n\n\n\n

After conversion, a large deposit shows up in the holder\u2019s bank account. Lenders scrutinize unusual deposits. So a mortgage applicant should season<\/em> those converted funds ahead of the time they\u2019ll be needed \u2014 at least two months in advance, most lenders say.<\/p>\n\n\n\n\n\n\n\n

NAR\u2019s Advice to Agents Working With Digital Currencies<\/h2>\n\n\n\n

The National Association of Realtors\u00ae says agents rarely meet buyers who want to use digital currency to buy homes (outside of say, Miami<\/a>). Yet the buyers \u201ccould become more widespread in the future.\u201d<\/p>\n\n\n\n

And so, given potential risks to home buyers and sellers alike, NAR urges agents to get up to speed on digital currencies. Here\u2019s what NAR urges agents to consider.<\/p>\n\n\n\n

First, know the basics. Bitcoin and cryptocurrencies enable people to pay each other without a bank in the middle. Transfer validations are indelibly recorded on a ledger known as blockchain<\/em>. According to Coinbase<\/a>, 20% of the U.S. population holds digital currencies as of 2023. Coinbase says the number of people holding digital currencies has remained stable, year-over-year, despite all the recent turbulence involving digital assets<\/a>.<\/p>\n\n\n\n

NAR agrees. Matt Troiani, NAR\u2019s director of legal affairs, has noted the \u201crecent volatility in the value of cryptocurrencies, the public failure of many crypto firms, and the decade-old predictions of imminent collapse\u201d but nevertheless concludes that \u201ccryptocurrencies appear to be here to stay.\u201d<\/em><\/p>\n\n\n\n

Of course, blockchain isn\u2019t the only potential game-changer. In recent months, we\u2019ve seen a convergence, with artificial intelligence (AI) and blockchain both impacting the \u201cfuture of real estate\u201d conversation.<\/p>\n\n\n\n

\u261b See more at <\/strong><\/em>AI and Blockchain: Their Blended Impact in Real Estate<\/em><\/a>.<\/em><\/strong><\/p>\n\n\n\n

When Digital Purchases Mean Special Contracts<\/h2>\n\n\n\n

Are boilerplate sales contracts appropriate for cryptocurrency holders\u2019 purchases? Seasoning converted funds long enough should make the question unnecessary. But what if the buyer still holds the funds as cryptocurrency when making a formal offer?<\/p>\n\n\n\n

Crypto values generally fluctutate more than official currency. So what seems like a good deal to a seller when the contract is signed could look different if the digital assets plunge in value by closing day.<\/p>\n\n\n\n

What should an agent recommend, according to NAR? The agent could prepare the contract in a way that:<\/p>\n\n\n\n