Bitcoin becomes option for homebuying
BAXTER—Imagine buying a house using bitcoins.
Longtime real estate agent Chad Schwendeman is making that an option in the lakes area.
"I believe in bitcoin so I feel that longterm it's going to be a solid investment," Schwendeman said. "I mean it is volatile, but if you look at the growth it's pretty fascinating."
To start the year, a single bitcoin was valued at $973. As of Friday, a bitcoin was worth $14,670. Schwendeman finds himself studying the cryptocurrency nonstop. With a few strokes of his computer keyboard in his office in Baxter, he quickly pulled up a variety of reliable sources talking about bitcoin, its volatility and its potential. His cufflinks were of bitcoin's image.
Schwendeman is building spec houses and decided to accept bitcoin as form of payment. He put that option into action earlier this month.
"I have heard of bitcoin being accepted in real estate transactions in New York and California, but I believe this is a first in the state of Minnesota," Schwendeman reported earlier this month. Schwendeman is owner/CEO and associate broker at Exit Lakes Realty Premier.
In the days leading up to Christmas, he provided more details after the option was in place.
So if someone wanted to purchase a home, bitcoin would be the tender used instead of U.S. dollars on the purchase agreement. The difference in this case is just how many bitcoins that would take would be decided at closing, depending on bitcoins value that day. The $299,900 home may need 17 bitcoins or 30 of them.
Schwendeman said a friend brought the idea of bitcoin to him about 2013 when it was $13 a coin and suggested he buy some. Schwendeman said he hadn't researched the option enough at that time and asked what the coin looked like. The friend told him it wasn't a physical coin but was on the internet. That was enough to make Schwendeman think twice. But if he would have put in $5,000 at that time with its value the week before Christmas, it would have equated to $6.5 million.
"People say that bitcoin is a bubble but what I think is fascinating is the United States is less than 30 percent of all the trading activity of bitcoin," Schwendeman said. "So over 70 percent of all the bitcoin trading activity is coming from outside the United States. Japan, Korea, India so there are some countries that have really gravitated toward bitcoin as a currency."
Bitcoin isn't backed by the government or a bank.
"It's really decentralized money," Schwendeman said. "People will say it's not backed by anything but really what is our U.S. dollar backed by—nothing."
Schwendeman said it is becoming more and more mainstream and he believes more stores will accept it as currency. It's one more option.
Bitcoin has been the a hot topic recently. Schwendeman also thinks it will serve to bring more attention to the homes for sale because of the bitcoin option. Bitcoin, called digital gold or digital money, digital wealth or cryptocurrency, has people on both ends who believe it will go longer and higher with one bitcoin worth $500,000 to $1 million, while others warn of that possible bubble. Others note a fear with bitcoin would come from a major hack or a change on the mindset of regulators.