An offer on a Mississauga condo using Bitcoin as currency was accepted this week—a first in Canada—but as the cryptocurrency surges in popularity, will transactions of this kind catch on?
The seller, Derryn Shrosbree, an erstwhile derivative trader on Wallet Street, listed his two-bedroom condo for 35 Bitcoin and sold it for the equivalent of $445,000, and as he told the CBC, he believes the cryptocurrency is the future.
He might be right—the property was listed for four days before the offer was tendered and accepted. But the volatility of cryptocurrencies makes transacting real estate a risky proposition.
Shrosbree’s sales agent, Brett Starke, president of Starke Realty Team, says that every precaution was taken to mitigate risk in the transaction.
“What are we doing to limit volatility? We were changing the price of the listing on MLS every day to reflect how much Bitcoin was worth that day,” he told CREW. “We saw a fluctuation of approximately 3 Bitcoin throughout the four days before we received the offer. We also included a Schedule C on the listing at the request of Derryn’s lawyer, stating that all offers had to be reviewed by a lawyer at each party’s expense.”
Starke says that while only accepting Bitcoin as payment seemingly shrinks the pool of buyers, it in fact opens the door to more of them, including international buyers. He fielded calls for the Shrosbree’s condo from Monaco and New Zealand—but he added that, curiously, no Americans called.
“I think we’ll see a lot more,” he said. “The reason is the amount of shares we got from [the CBC] article, and of every real estate transaction I’ve ever done, this one has by far gotten the most attention. I think other people will see how much attention this property has gotten and go down the same route. People talk about limiting the buyer pool, but you’re not because you’re including everybody. If you need a mortgage, you take it from bank traditionally and flip it into Bitcoin. The cheque will be released from their bank to the lawyer who will flip it into Bitcoin. The idea we were limiting the buyer pool is absolutely incorrect. We got an offer within four days of having the property listed.”
On the other hand, Erica Mary Smith, broker of record and co-founder of Stomp Realty, isn’t convinced accepting cryptocurrency outweighs the risk of something—anything, in fact—going awry. Her primary concern is the currency’s value plummeting.
“I wouldn’t recommend it to clients,” she said. “I think proper deposits and proper money is the way to go. If this starts happening more and more, there will be more opportunity for fraudulent activity with that currency.”
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate