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Info For Buyers

What are the New Changes to Real Estate in California?

The real estate landscape has recently undergone significant changes, especially regarding the way agent compensation is handled and how listings are presented in the MLS (Multiple Listing Service). These adjustments, which took effect on August 6th, 2024, aim to bring more transparency to the real estate process but have also introduced some complexities that both sellers and buyers need to be aware of. Here's a breakdown of what these changes mean for you:

FOR SELLERS

  1. Agent Compensation:
    • Traditionally, the seller's listing included an offer to compensate the buyer's agent, which was clearly stated in the MLS. With the new rules, this compensation cannot be listed in the MLS, at least for now. However, this does not mean you, as a seller, are no longer participating in the buyer’s agent compensation. You can still choose to offer compensation, but it won’t be explicitly mentioned in the MLS.
    • In many other areas of California, the MLS now has a box indicating whether the seller is participating in the buyer's agent compensation. This allows buyers to decide whether to view properties based on the seller's participation in agent fees. Our local MLS is being urged to adopt this practice, but changes are still pending.
  2. Advertising Restrictions:
    • Another change is the restriction on advertising your willingness to compensate the buyer's agent on websites linked to the MLS. However, you can still mention this in social media posts that are not directly connected to any MLS listing.
  3. Increased Paperwork:
    • With these changes, sellers will need to sign additional forms when listing their properties. The goal is to ensure transparency, but the process has become more complex and may cause some confusion.

FOR BUYERS

  1. New Mandatory Form – BRBC:
    • As a buyer, you will now need to sign a new form called the Buyer Representation and Broker Compensation (BRBC) before you can be shown any property. This replaces the older BRE form that outlined the duties between you and your agent.
    • The BRBC form includes a section where you agree on the amount of compensation you are willing to pay your buyer’s agent. In most cases, this may be a non-issue as sellers are still likely to offer compensation.
  2. Buyer’s Agent Compensation Reference:
    • When submitting an offer, your buyer’s agent will now include a form that references the fees they expect the seller to contribute towards their compensation. This is a new requirement that has been introduced with the changes.
  3. Consultations and Clarity:
    • Given the complexities of these changes, it’s more important than ever to have a thorough consultation with your buyer’s agent. Ensure that you understand all the forms, fees, and the overall process to avoid any confusion.

WORK IN PROGRESS

As these changes are just being implemented, expect some growing pains as the industry adjusts. It’s a significant shift from how real estate transactions have traditionally been conducted, and many people, including agents, are still getting up to speed.

Our team is committed to staying informed and up-to-date with the latest developments. We’re here to help you navigate these changes smoothly and answer any questions you may have. We appreciate your patience as we all adapt to this new way of conducting real estate transactions.

If you have any concerns or need further clarification, don’t hesitate to reach out. We’re here to ensure you’re well-informed and comfortable with every step of your real estate journey.

 

From Sheri Dettman
In Buying - Info For Buyers, Buying – Info For Canadian Buyers, Info For Buyers, Info For Sellers, Info For Sellers, Real Estate Market Updates, Selling - Info For Sellers, Sheri's Palm Springs Area Blog, Uncategorized

The American Dream Press Release

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FOR IMMEDIATE RELEASE 

INTRODUCING A NEW LIFESTYLE AND REAL ESTATE TV SHOW 

Featuring the most influential voices in real estate 

Sheri Dettman - Lifestyle Realtor/TV Host

Featuring

Palm Springs, La Quinta, Palm Desert, Rancho Mirage, Indian Wells, Indio, Cathedral City, and Thermal

The American Dream TV proudly announces the release of its newest show set to captivate audiences nationwide. The Emmy-nominated TV show, celebrated for its compelling blend of lifestyle and real estate narratives, airs on national platforms such as The Travel Channel and prominent streaming services including Amazon Prime, YouTube Movies & TV, Tubi, Amazon Fire, Apple TV, and Roku. With a substantial social media presence and commanding visibility on leading streaming platforms, The American Dream TV solidifies its expansive reach and profound influence.

The American Dream TV, together with its production team, has garnered acclaim including an Emmy nomination, Telly Awards, and Viddy Awards, along with national recognition for showcasing authentic stories of neighborhoods and featuring top real estate professionals. Each episode spotlights elite realtors and mortgage lenders chosen for their expertise, reputation, and recognition from both peers and clients.

Executive show producer Craig Sewing, Inman News Nominee for "Most Influential in Real Estate," carefully selects the best hosts to represent the voice of lifestyle and real estate in each market. The show can be watched on a variety of networks and boasts millions of views on social media, proudly embracing its identity as “positive media” specializing in real estate, lifestyle, and culture.

About The American Dream TV: 

American Dream Media and Tech is a dynamic media company delivering premium content and innovative technology solutions. The American Dream TV, an Emmy-nominated national TV show centered around real estate and lifestyle, inspires and enriches communities across the country through positive media. Featuring over 1,000 top-producing real estate professionals as the authentic voice of their markets, the show airs on major networks and streaming platforms, amassing millions of views.

Connect with us: americandreamnetwork.tv

On social: @theamericandreamtv

As Seen On

From Sheri Dettman
In Info For Buyers, Info For Sellers, Lifestyles & Things To Do, Sheri's Palm Springs Area Blog

Proposition 13 & 19 – Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire & Natural Disasters Initiative

California Proposition 13, passed by California voters in 1978, was a groundbreaking law that helped to keep property taxes under control for homeowners. The property tax caps offered by Proposition 13 affect everyone who owns real estate in California. Proposition 19 marked a significant change to Proposition 13, changing tax benefits for families, seniors, severely disabled persons, and victims of natural disasters in California.

Proposition 19 amends the California Constitution by expanding qualifications for the transfer of a property's taxable value. These changes may affect your next escrow and title transaction if eligibility requirements are met. Additional documents may be required by escrow if you plan to transfer the current taxable value of the property.

How does Proposition 19 affect property tax base transfers:

Starting April 1, 2020, Proposition 19 allows an owner of a primary residence who is over 55 years of age, severely disabled, or a victim of a wildfire or natural disaster to transfer the taxable value of the primary residence to a replacement primary residence:

  • anywhere in California;
  • purchased or newly constructed within 2 years;
  • of any value with an upward adjustment for a more expensive replacement; and
  • the property tax base can be transferred up to three times for persons over 55 years old or with severe disabilities and once for wildfire or disaster victims.

How does Proposition 19 affect inherited properties?

Starting February 16, 2021, Proposition 19 narrows the rules for parent-to-child or grandparent-to-grandchild exemption for inherited properties. The child or grandchild can transfer the taxable value of the inherited property if:

  • the property is the principal residence of the child or grandchild or is the family farm;
  • the homeowner's or disabled veteran's exemption is claimed within one year of the transfer to the child or grandchild; the property is used as the principal residence and has a market value above $1 million, in this case an upward adjustment in assessed value would occur.
Source: https://www.boe.ca.gov/prop19/ and https://assessor.lacounty.gov/about-prop-19/

Contact Sheri Dettman & Associates for more information on Proposition 19

From Sheri Dettman
In Info For Buyers, Info For Sellers, Info For Sellers, Real Estate Market Updates, Sheri's Palm Springs Area Blog

Navigating the Housing Market: Answers to Your Top 3 Questions

Clarity is crucial in the ever-evolving landscape of the housing market, especially when conflicting information abounds. Addressing the top three questions on everyone's mind, we turn to expert insights for a comprehensive understanding of the current scenario.

  1. What's Next for Mortgage Rates?
    • Mortgage rates have recently surged, prompting concerns for potential homebuyers. Historically, there's a correlation between mortgage rates and inflation. With inflation easing, the Federal Reserve has paused rate hikes, leading experts to anticipate a gradual decline in mortgage rates in 2024.
    • Aziz Sunderji, a Strategist at Home Economics, suggests, "Interest rates are likely to be lower—perhaps even lower than many optimists think—in the weeks and months to come."
  2. Where Are Home Prices Headed?
    • Contrary to fears of a market crash, data indicates a steady rise in home prices across the nation, albeit at a more sustainable pace. The Home Price Expectation Survey from Pulsenomics, involving over 100 experts, underscores confidence in continued appreciation in the coming years.
    • The consensus among experts is that home prices will keep climbing, presenting a positive outlook for the housing market.
  3. Is a Recession Around the Corner?
    • Recession concerns have been prevalent, but recent indicators provide a more optimistic perspective. The Wall Street Journal's regular polls of experts reveal a shift in sentiment, with a decreasing likelihood of a recession.
    • Over 52% of experts now believe we are not headed for another recession, marking a significant departure from earlier projections.

Conclusion:

  • The housing market, despite its dynamic nature, appears resilient. The convergence of factors such as easing inflation, sustained home price appreciation, and diminishing recession concerns paints a hopeful picture.
  • It's essential to stay informed and connected. Contact us to discuss any housing market questions or concerns and gain a clearer perspective on your real estate decisions.
From Sheri Dettman
In Info For Buyers, Info For Sellers, Info For Sellers, Real Estate Market Updates, Sheri's Palm Springs Area Blog
Rebate Offer from Coachella Valley Water District!

Rebate Offer from Coachella Valley Water District!

Rebate Offer from Coachella Valley Water District!

Protect your property, take control of your water use, and save money on your next water bill.

Get Flume For Just $65 (plus tax and shipping) after Rebate!

Only 90 Remaining

GET OFFER

 

70% of New Flume Customers Found a Leak

Flume is changing the way we consume water

Flume can help you manage, monitor, and conserve the world’s most precious resource.

 

Up And Running In Minutes

Works so fast you won’t believe it. Set up and install Flume in the time it takes you to brew your Sunday pot of coffee. No pipe cutting. No wiring. No appointments. No plumbers.

 

Catch Water Leaks And Protect Your Home

Surprises are fun, but not when it comes to leaks. Since using Flume, about 70%* of people found leaks. Flume alerts you of abnormal (or accidental) water usage to give you peace of mind whether you’re at home or away.

 

Dig Up The Details Your Standard Water Bill Doesn’t

Take control of your water usage and bring quirky facts to the backyard barbeque. Here’s one: our customers reported reducing consumption at least 10% year-over-year. Flume gives you down-to-the-minute, easy-to-read, water use reports and insights to help you use less water.

 

Overflowing with Savings

A device that pays for itself. Flume automatically suggests a budget so you can cap your consumption and creates leak notifications to catch costly drips. Not to mention, 66%* of Flume customers reported a change in their water use behavior.

 

Up And Running In Minutes

Works so fast you won’t believe it. Set up and install Flume in the time it takes you to brew your Sunday pot of coffee. No pipe cutting. No wiring. No appointments. No plumbers.

 

Catch Water Leaks And Protect Your Home

Surprises are fun, but not when it comes to leaks. Since using Flume, about 70%* of people found leaks. Flume alerts you of abnormal (or accidental) water usage to give you peace of mind whether you’re at home or away.

 

Simple Self-Installation. No Plumbing Necessary.

Just download the Flume app, connect to wifi, and fasten the sensor. No real dirty work required, but it comes with gloves just in case.

1

Download the Flume App

Your phone or tablet is the only tool you will need.

2

Connect the Flume Bridge to Wifi

The Bridge captures data from up to 1,000 feet away. Rest assured, it will work for your property.

3

Place the Sensor on Your Water Meter

Once it’s securely fastened, activate it by running a stream of water. Straps included.

Showered with Compliments

Amazing!

My Flume device far exceeded my expectations! I can certainly see much research and development was invested into this product. It’s simple to order. Arrived quickly. No moving parts to hassle with. ‘Made easy’ installation. Easy to configure alarm settings. And just works great! Thank you for making this product available! (and a rebate to boot! Bonus!)

Don

This device immediately helped me lower my water bill

This device was recommended by our city water provider and they gave a rebate for the cost of the unit. It is very easy to install and I immediately started receiving detailed data on my water usage. The Flume also alerts me if a faucet is dripping anywhere, inside or outside. It is one of the most useful home automation devices I have used and I highly recommend it.

Richard M

Great data collection which helps me to conserve

Just like budgeting my finances, Flume allows me to set daily, weekly and monthly budgets to control my usage. The Leak alerts tell me specifically how long my water is running, either from the inside or outside, especially when I am hand watering my lawn or performing other watering tasks outside. Flume is now a daily watchdog to help us conserve our water usage! Great tool! Thank you!

TC S.

4,118

4,118

4.3 star rating

CERTIFIED REVIEWS
Powered by YOTPO

Here's How to Claim Your Rebate

1

Purchase your Flume System for $90 (plus tax and shipping)

Regularly $249

2

Install your Flume System

See mobile app for instructions

3

Automatically get $25 refunded back to your credit card

We’ve Helped Customers Save an Average of 10-20% Per Month on Their Water Bill

Based on 2019 study of 500 homes

 

This offer is only valid for Coachella Valley Water District customers only.

From Sheri Dettman
In Info For Buyers, Sheri's Palm Springs Area Blog

Why Home Buyers Should Use A Local Realtor

Why Home Buyers Should Use A Local Realtor

This to us seems like a no-brainer, yet time and time again, we see out-of-the-area agents attempting to represent clients in an area that they are not familiar with, and it’s a great disservice to the client. If a person is selling their home, they will not use someone who is not local and an expert in their area, so why would they do it when purchasing?

Where my team is located, in the Palm Springs area, this problem came to a head during the past couple of years. The proximity to Los Angeles, Orange County, and San Diego makes it appealing to agents who want a weekend in the desert combined with showing a few homes. And now that the market is so slow, there are a lot of hungry agents out there looking for any way to generate some income.

As a Realtor, you have a fiduciary duty to your clients; this practice certainly does not support that duty. I’ve lived in Newport Beach, Los Angeles, etc.…but if I had a client that wanted to purchase property in those areas, I would refer the client to an agent in that area as that’s the right thing to do.

Unless the agent has a vacation home in the area, knows it well, and consistently and recently sells homes there, or perhaps recently lived here and then moved away, there is no way that they will know all the intricacies involved. They don’t know the pros and cons of each City, development, golf course, orientation of the property, vendors, amenities, and rental rules, to name a few, not to mention the culture of each community. Heck, even agents that are located locally may not know these things, which is why you want experienced representation. As a Buyer, you need to know these things to make an informed decision.

In addition, the chances of them driving 2 hours to come out and then 2 hours back for the home inspection, any additional inspections, walk-throughs, and dozens of other things that might come up are slim in our experience. And guess who they ask to do their job for them? This is another reason that local agents don’t care to work with out-of-the-area agents. Not only do they not know the local market, they also may not do their job.

Today, I showed one of my listings for an out-of-the-area agent and his clients. The agent was a very pleasant guy, but he knew nothing about the community that my listing was in, had never been there before, was 15 minutes late because he was relying on GPS to get him there, and didn’t know where the entrance was. I felt terrible for his clients. Luckily for them, I do know everything about the community, and they and their agent had a lot of questions that I was happy to supply them with. However, those Buyers will be out of luck on any of the homes he was showing them where the Listing Agent was not there.

If you are an out-of-the-area agent, send us your buyers, and we’ll take excellent care of them and send you a referral fee.

If you are a Buyer with a friend who is a Realtor that you want to be part of the deal, have them contact us. We’ll take care of you and your Realtor friend. You’ll get the representation you deserve and your friend will have done the right thing by you and get a referral fee.

From Sheri Dettman
In Info For Buyers, Sheri's Palm Springs Area Blog

The Big Swing

With the latest influx of homebuyers, the desert’s country clubs have a younger look.

JUDD SPICERCURRENT PSL, HOME & DESIGN, REAL ESTATE

 

Todd Hewlin and Lo-Ping Yeh, new owners and members at The Reserve Club in Indian Wells look perfectly at ease seated on their broad patio as the breeze ripples the water in the infinity pool situated between the house and the 12th hole, framed by the dramatic Santa Rosa Mountains. The couple, who moved here from the Bay Area and run a tech consulting firm, reflects a growing demographic of desert residents that are more youthful and working from wherever they want.

Before the pandemic, country clubs were trying to appeal to younger buyers by renovating clubhouses, retooling tennis courts for pickleball, and introducing an extensive variety of programming to keep members engaged on and off the golf course. Now, it appears those investments are paying off.

Although Hewlin and Yeh first experienced the desert in earnest during the winter rainstorms of 2019, a return visit a year later gave them a different impression. “We found it incredible,” Yeh says. “So, we went back to Los Gatos and signed a contract to put our house on the market a week later. Then, the pandemic hit.”

When the Bay Area shelter-in-place order lifted in the summer, she and Hewlin hunted for their ideal concept in indoor-outdoor living. Another visit led them to a spec home still in construction.

reserveclubindianwellsmembership

Lo-Ping Yeh and Todd Hewlin

“When we saw the view, it was, ‘Oh my God,’” says Yeh, who was also thinking about how the residence might accommodate their home office. “A lot of people are feeling this way now — that they can live in a place like this and still work in an effective and efficient manner.”

As they moved into The Reserve in fall 2020, their new neighbors changed the couple’s idea of who exactly lives in the desert. “When we first came here, to be honest, Todd said he thought the area might be too old for us,” she says, smiling toward her husband. (Hewlin and Yeh are 55 and 57, respectively, and active in couples golf.)

vintageclubindianwellscalifornia

The Vintage Club in Indian Wells

“I was completely wrong,” Hewlin replies. “Maybe I had that perception from movies or how the area has been written about by people who don’t live here. But after getting to know people at The Reserve, I started feeling like this is the valley of Benjamin Button: People get all that Vitamin D, are active, physically fit, they eat better. People come here and get younger.”

THE PANDEMIC HAS seen golf’s natural social distancing turn days of lemon into lemonade. As city dwellers look for elbow room in the Coachella Valley, the spike in the number of golf rounds being played reflects the surge in new club memberships. Americans played approximately 60 million more rounds in 2020 than they did in 2019, a 14 percent increase, according to the National Golf Foundation and Golf Datatech. Meanwhile, the nation’s private clubs reported a 19.9 percent rise in play compared to 2019.

andalusiacountryclublaquinta

Andalusia Country Club in La Quinta

Desert residents only need to swivel their collared shirts to see new golf members flocking largely from Los Angeles, San Francisco, Orange County, and the Pacific Northwest.

As Palm Springs Life reported last fall, the first seven months of the pandemic saw single-family home sales in the Coachella Valley rise 56 percent over the same period a year earlier. Subsequently, end-of-year statistics from the California Desert Association of Realtors showed all of the valley’s nine cities with year-over-year increases in home sales.

“The Coachella Valley has become a haven to those who want to escape the cities and have a place where they can enjoy an outdoor lifestyle,” says Julie Bloom, senior vice president of operations for the Sunrise Company, which operates Toscana and Andalusia country clubs. “In addition, since travel is not as easy, people want to have a place to go that feels like a resort and where they can gather their families together.” With the spike in sales and memberships comes a rush of new residents and golfers. A Palm Springs Life survey of 13 luxury country clubs conducted early this year revealed uniform growth when comparing March 2019–January 2020 with the period a year later.

bighorngolfclubpalmdesert

Bighorn Golf Club in Palm Desert

In La Quinta, the 36 holes at The Hideaway Golf Club experienced a 103 percent rise in new members, with a spike from June to December 2020, fueling a record-breaking year in terms of home and membership sales. At the Tradition Golf Club, a 150 percent rise in club tours resulted in a record number of new members, and golf membership sales doubled. “Approximately 80 percent of our new member spouses are beginner golfers,” says Tesha Vann, membership director at Tradition. “Our short course is getting more use than ever, as it’s the perfect venue to learn the game.”

At nearby Rancho La Quinta, the two-course spread saw a 30 percent increase in golf memberships, with home sales jumping 60 percent, and Andalusia Country Club had an 87 percent increase in golf memberships with a jaw-dropping 300 percent increase in home sales.

In Indian Wells, The Vintage Club experienced a 145 percent increase in home sales and a 100 percent gain in new golf memberships. Toscana Country Club gained 34 percent in home sales and its 36 holes drew a 77 percent rise in golf memberships. At The Reserve, Todd Hewlin and Lo-Ping Yeh were among 24 new golf members representing a 120 percent increase in home sales.

bighorngolfclubmembership

Mike Kirby and Sandi Marino

“The trend is more couples,” says Denise Adams, membership director at The Reserve Club. “Both the member and spouse, or significant other, play golf, as do their high school- and college-age children.”

Likewise, at Bighorn Golf Club, “We’re seeing quite a few of our current golf members’ spouses taking up the game through lessons, afternoon play as a couple, and our 9-holer group,” says Kirstin Fossey of Bighorn Properties.

In Palm Desert, the two-course Bighorn Golf Club had a 44 percent increase in new golf memberships and a 28 percent increase in home sales, while Stone Eagle Golf Club reported a 62 percent increase in memberships.

traditiongolfclublaquinta

Tradition Golf Club in La Quinta

In Rancho Mirage, the three-course spread of Mission Hills Country Club has seen an 8 percent uptick in new golf memberships and a 60 percent increase in home sales. And at Tamarisk Country Club, a 9 percent boost in golf members has contributed to a 12 percent rise in overall memberships.

“In many ways, our club has become more important in our members’ lives,” Brett Draper says of Thunderbird Country Club, where he’s general manager. During the pandemic, “activity around the club, namely golf, is up to levels we have not seen in the past 15 years.”

FOR MIKE KIRBY, the desert has always been a home away from home. Long familiar with the valley’s east end by virtue of visiting his parents at La Quinta Country Club and his siblings now in the area, Kirby always figured that, someday, he too would have a desert home.

Someday came a bit sooner than Kirby and his fiancé Sandi Marino expected.

“In the last three or four years, we’ve been thinking we should land someplace out here,” he says. “Now, working from home during COVID [has] been a catalyst for us to make the move.”

Last September, the prime-of-life couple purchased a spec house at Tradition Golf Club, the longtime West Coast base for Arnold Palmer. Kirby is an avid player, and Marino is a beginner who’s refining her game on the club’s nine-hole short course. Their home overlooks the top-handicapped hole 3 on the Palmer-designed course, carved in the bosom of the Santa Rosas. The view also includes the scene-setting stone wall and iron gate, Tradition’s original entrance, marking the end of what is now Washington Street.

Splitting time between La Quinta and Newport Beach, Kirby seamlessly runs his real estate research and analysis firm. “I can work just as well here as I can from Newport,” Kirby says. “I’m not so sure we would’ve pulled the trigger on the purchase this early, but once we had this epiphany that I could still be very effective in my job in the home office I have in our new home, we went for it.”

Marino, who mixes charity and interior design work, believes the club’s on-site marketplace for groceries and take-out and home delivery services offer comfort during the pandemic. “Tradition is low-key and genuine,” she says. “And the amenities are amazing; the club makes it easy to stay.”

Therein lies the prevailing appeal of the Coachella Valley. The weather and lifestyle sell the location, and the ability to work from anywhere seals the deal.

PORTRAIT PHOTOGRAPHS BY TRACY NGUYEN

• READ NEXT: The Coachella Valley Real Estate Market Has Turned Into a Bidding War Among New Buyers.

From Sheri Dettman
In Buying - Info For Buyers, Buying – Info For Canadian Buyers, Golf Communities, Info For Buyers, Lifestyles & Things To Do, Real Estate Market Updates, Sheri's Palm Springs Area Blog
Bitcoin Basics in 2021

Bitcoin Basics in 2021

Bitcoin Basics for Real Estate Agents in 2021 ( + Expert Predictions)

At Sheri Dettman & Associates, we have always prided ourselves on being ahead of the curve. Bitcoin, and blockchain, although they have been around for a few years, are still something that is not yet widely understood in the Real Estate world. This article makes it easy to understand! We look forward to using blockchain tech and being your go-to agents with, as always, the latest, and best technology along with the best personal service.

February 4, 2021/Courtesy of Emile L'Eplattenier

One of the most common questions we get from real estate agents these days is when, or even if, bitcoin will finally make its way into real estate transactions.

Of course, if agents are asking us that, it means their buyers and sellers are probably asking them. So it’s only a matter of time before understanding how this technology works will be necessary for any agent who doesn’t want to get left in the dust of yet another disruptive technology for real estate.

The only problem is that bitcoin is—and there’s no other way to say it—confusing. Don’t worry, though. Even people who are so-called experts in the field can have a hard time explaining it.

That’s why we put together this quick explainer on bitcoin for real estate agents and also talked to a few agents and brokers who have already taken the leap to get their take on how they think bitcoin will transform the real estate industry in 2021 and beyond.

Can My Buyers Purchase a Home With Bitcoin Yet?

Coding

Kind of. However, almost all real estate transactions using bitcoin have used a service called BitPay to convert bitcoin to U.S. dollars (USD) to transfer funds to the seller.

As far as “bitcoin-to-bitcoin” transactions go, where title changes hands and the bitcoin is never converted into USD—they still remain very rare. The sticking point is generally title companies and lawyers, both of whom are still somewhat reluctant to use the digital currency.

Douglas Elliman’s Stephan Burke and Carol Cassis sold the first property using bitcoin wallets in 2017, as well as a $6 million transaction after that, the largest fully bitcoin translation to date. Since then, they have closed more than $34 million in volume using cryptocurrency converted to cash.

However, while it has been slow going here, where bitcoin and blockchain show the most promise is for overseas transactions.

Over at the always-excellent Mansion Global, EminGun Sirer, associate professor of computer science and co-director of the Initiative for Cryptocurrencies and Smart Contracts at Cornell University, weighed in on why cryptocurrencies are ideal for foreign buyers:

EminGun Sirer Initiative for Cryptocurrencies and Smart Contracts

“Cryptocurrencies enable the quick, frictionless transfer of value across the globe. This enables someone in Russia to be able to easily send bitcoins to purchase land in Belize.”

Should I Advise My Sellers to Accept Bitcoin?

In today’s market, bitcoin may not be ready for prime time, but there is one thing that is undeniable. Offering your listing for sale in bitcoin will get you instant free press. Remember the first listings that had drone videos? Imagine that times 10. Here’s Seattle Realtor, Sam Debord:

Sam Debord Seattle Realtor“I’ll sell my house for bitcoin” is the latest marketing tactic, and it’s working … at least for publicity.”

In order to accept bitcoin, you can either have the seller transfer into USD, work with a title company that will accept bitcoin, or have a lawyer write up a contract that covers all risks from bitcoin. At this point, most people will avoid actually paying in bitcoin, but the free press might be a good trade-off.

Can My Buyers Get a Loan With Bitcoin?

Yes. Startups like Unchained Capital allow people who hold bitcoin to borrow up to $1 million with no credit check and interest rates between 10% and 14%. However, these are not long-term loans; Unchained offers loan lengths ranging from three months to three years.

While not for everyone, hardcore bitcoin owners use services like this to get quick liquidity without cashing in their bitcoin portfolios. Think down payments, or maybe even bridge loans.

There Must Be a Catch … Is There Capital Gains Tax for Transferring Bitcoin to USD?

Yes. As of January 1, 2018, the federal government considers cryptocurrency as property and anyone selling (or trading bitcoin for U.S. dollars) will be hit with capital gains tax on the amount their bitcoins appreciated since they purchased or mined them.

Are Bitcoin & Blockchain the Same Thing?

No. While bitcoin is a digital currency that you can exchange for goods and services, blockchain is the underlying technology that stores bitcoin or other cryptocurrency transactions in a digital ledger.

Bitcoin

Okay, Then What Is Bitcoin Exactly?

Bitcoin is a fully digital currency created in 2009 by an anonymous person who goes by the name Satoshi Nakamoto online.

Like any other currency, bitcoin can be used to pay for goods and services, transfer funds, or as an investment. Currently, over 15,000 vendors accept bitcoin, from Microsoft to small businesses.

The main difference between bitcoin and say, an ACH transfer through a traditional bank is that there is no middleman in the transaction. The entire transaction from buyer to seller takes place on the Bitcoin network. Since a bitcoin transaction bypasses the different bank policies, or different regional banking laws that are part of any other transaction, transfers are much faster.

Since there is no bank or government to get in the way, bitcoin can be a great way to transfer money or make purchases overseas. Foreign buyers may find bitcoin’s speed and simplicity ideal for buying property in the United States.

Bitcoin is an example of a fiat currency; its value is not backed up by gold or other tangible assets. Instead, bitcoin relies on something called blockchain to verify transactions.

Got It. So What’s Blockchain?

Although blockchain is very complex, the best way to describe it to your clients is to compare it to ACH, the technology that lets you “wire” money from one bank to another. The main difference is that blockchain does not rely on banks to verify transactions have been completed. Instead, once a transaction is completed, it is stored in an encrypted digital ledger that is distributed among everyone on the blockchain.

This means that instead of relying on trusted institutions like banks to verify transactions, the verification is done very quickly by algorithms that check the stored transaction data on the millions of users on the blockchain.

What makes blockchain so powerful is that the ledger is stored on every single computer (node) in the system. This makes faking a transaction virtually impossible. Since the blockchain is extremely secure, it has many applications beyond verifying and storing bitcoin transactions. Everything from contracts to voting records can theoretically be stored on blockchain.

Which Technology Will Have a Bigger Impact in the Real Estate Market, Bitcoin or Blockchain?

According to most experts, blockchain will have a bigger impact on real estate than bitcoin or other cryptocurrencies. Here’s why: Transaction speed is not a very pressing problem for real estate transactions, but record-keeping and middlemen are. Here’s Jason Shepherd, co-founder of Atlas Real Estate Group, on why he thinks blockchain technology, particularly smart contracts and other applications built on Ethereum, an alternative to bitcoin, will change the real estate market:

Jason Shepherd Atlas Real Estate Group

“It is important to separate the cryptocurrency from the underlying blockchain technology when discussing real estate disruption. The disruption in real estate will come from the blockchain technology (distributed ledger) and smart contracts like those found on the Ethereum platform.”

So What Are Smart Contracts?

Smart contracts are contracts between two parties that are verified and stored on the blockchain. Today, most smart contracts are built with the blockchain protocol behind Ethereum, another cryptocurrency.

The main benefit behind smart contracts is that there is no need for a middleman in the transaction. Everything is verified and stored on the blockchain.

In the future, blockchain can be used to store records of a transaction all the way from a blockchain-enabled MLS, to escrow, inspections, title, and sales contracts. Leases and other commercial real estate contracts could also be on the blockchain.

While smart contracts haven’t yet hit the mainstream for real estate, startups like Propy and Ubiquity.io are changing that.

To learn more about smart contracts, check out this excellent guide over on Block Geeks.

What Is This ‘Mining’ for Bitcoins I Keep Hearing About?

Man Mining

OK, from here on in, the process gets a bit more technical, and therefore much harder to explain. While it’s unlikely your buyers or sellers will grill you about this, having a basic understanding can help.

Remember how we talked about how transactions on the blockchain are verified by other users? Well, bitcoin mining is the process that verifies transactions and adds them to the public ledger.

Bitcoin “miners” are rewarded with bitcoin for using their computer’s processing power to verify transactions. Before you get too excited and start mining bitcoin out of your broker’s office, understand that in most places, the payment for mining bitcoin will probably be less than the electricity costs to run computers long enough to verify transactions.

What Advantages Do Other Cryptocurrencies like Ethereum, Litecoin & Ripple Have Over Bitcoin?

OK, now we’re getting a little too far into the weeds. Worse, the crypto industry changes so fast that by the time you read this, something will have inevitably changed. If you’re feeling brave, check out this cool infographic from Visual Capitalist:

Infographic Bitcoin Ethereum Comparison

How 10 Real Estate Experts Think Bitcoin Will Disrupt the Industry

So now that you have a basic understanding of bitcoin, here’s how 10 real estate industry experts see bitcoin transforming the real estate market in the coming years.

1. Jason Penner, Douglas Elliman, New York City

Jason Penner Douglas Elliman

“A brief way that I explain bitcoin is, it’s as if technology and finance had a baby. Humans survived for hundreds of thousands of years (if not longer) without money. Money is a relatively new concept to humans, and to think that the current financial system is the peak evolution of money and the storage of value is nothing short of naive. Bitcoin and cryptocurrencies represent that next step in the evolution of storing and exchanging value.”

2. Jim Merrion, Coldwell Banker Realty, Colorado

Jim Merrion Coldwell Banker Realty

“The real estate industry’s appetite for using bitcoin to purchase real estate seems to be coming back in a big way in 2021! Being a Realtor who has helped a buyer purchase developable land using bitcoin converted to cash and marketed several listings willing to accept bitcoin as payment, bitcoin investors are finding me online and reaching out with plans to purchase property using these funds in 2021.

 

“Currently, I have one bitcoin investor looking to buy a 35+ acre ranch property and have spoken to several others over the past few months about how the process could successfully work for them.

 

“And Smart Contracts are starting to be seriously considered by at least one title company in Colorado now. With their inherent security and ability to prevent wire fraud, there is a lot of motivation by the transaction processing entities to find new technology solutions that reduce their risk and enhance the efficiency of the closing process.”

3. Tristan Ahumada, Realtor, Speaker & Co-founder of LabCoatAgents

Tristan Ahumada LabCoatAgents

“So far, most of the bitcoin transactions in the real estate world have had only one party dealing in cryptocurrency and the other one doing it the traditional way. The deal can still take place, but the cryptocurrency has to be turned into cash. I do envision cryptocurrency catching on more, but our society has to start using the bitcoin/blockchain technology more. I do see it becoming normalized—it’s just a matter of people getting used to it. It is just as easy as people using credit cards and Apple pay.

“For now, there are companies like BitPay and some other international banks that allow people to convert their bitcoin into cash.”

4. Jason Shepherd, Co-founder of Atlas Real Estate Group

Jason Shepherd Atlas Real Estate Group

“The disruption in real estate will come from the blockchain technology (distributed ledger) and smart contracts like those found on the Ethereum platform. The escrow process will be replaced by a smart contract, using code as the intermediary to distribute earnest money. Imagine a real estate transaction where all of our inspection and due diligence information can be found in one public ledger on the blockchain—ownership, encumbrances, repair receipts, improvements, liens—all viewable and indisputable on the distributed ledger.

 

“This transparency reduces the need for title insurance and truncates the purchase timeline for a home from 30 days to a few days. Title and escrow will be the first layer of disruption, but increasing transparency will allow the public to access more information and be less reliant on real estate brokers. This won’t replace brokers, but it will warrant a repricing for what brokers can charge their clients.”

5. John Gilbert, Co-founder/Director Prime-EX

John Gilbert Prime EX

“The acceptance of cryptocurrencies into mainstream investment portfolios equals more buyers this year for major ticket items, such as houses. Many purchases are coming from people who have never purchased real estate before. This equals more sales for real estate agents who are willing to learn about cryptocurrencies, more sales for real estate agents who are willing to market to people who are invested in cryptocurrencies, and more sales for real estate agents who are willing to specialize in educating their home sellers on how to accept cryptocurrencies as payment in kind for their real estate.

 

“The cryptocurrency genie will not be put back into the bottle.”

6. Avani Desai, CEO & Co-founder of MyCryptoAlert

Avani Desai MyCryptoAlert

“Crypto will allow a homebuyer to gather funds quickly, sometimes in less than 60 seconds, and into the hands of the seller, instantaneously. All of this is done on the blockchain, so the transaction is recorded in an open distributed ledger using encryption techniques that ensure that a transaction was complete and accurate and can never be retroactively changed. I believe what brokers and agents are going to see aside from transactions being done with crypto are technology platforms that are built on the blockchain. Therefore, understanding the two most known and built on blockchains that are out there—the bitcoin blockchain and the Ethereum blockchain—is crucial. Agents will see everything from smart contracts executed, to title storage, to international money exchanges.”

7. Alan Lewis, Chief Investment Officer at DiversyFund

Alan Lewis DiversyFund

“We are already seeing real estate sellers finding creative ways to accept crypto from a buyer in order to expand the pool of potential purchasers. As a real estate investment platform, our online customers have prompted us to look into accepting crypto and also launch an Initial Coin Offering (ICO) that is backed by real estate assets, which creates a perfect marriage of old and new asset classes.”

8. Sheryl Lowe, Broker Associate, Kuper Sotheby’s International Realty

Sheryl Lowe Kuper Sotheby's International Realty

“In all of my 33 years of closing transactions, I honestly couldn’t have expected something so unique to go so smoothly. In a matter of 10 minutes, the bitcoin was changed to U.S. dollars and the deal was done!

 

“Of course, it helped to have the right team behind this—Laura Pagnozzi of Independence Title was a key player in keeping everything together.”

9. Hyun Lee, Communications & Marketing Director, Mothership Foundation

Hyun Lee Mothership Foundation

“With Ethereum, there are companies that wish to build smart contracts around existing services, including real estate. This allows for a fully digital real estate transaction. In fact, the first real estate transaction using only the Ethereum blockchain already happened. Michael Arrington, co-founder of TechCrunch, recently purchased a Kiev studio apartment for $60,000 via smart contracts on the Ethereum blockchain.

 

“In this case, the smart contract allowed the sale of the property. If this template was to be copied and applied to all future sales, I would imagine real estate agents would need to pick up on using smart contracts.”

10. Dr. Lucas Lu, Founder/CEO, 5miles

Dr. Lucas Lu 5miles

“Fractional ownership. The high cost of home ownership in more and more markets has priced out many potential homebuyers, leaving them on the sidelines.

 

“Just as USD can be bought and sold in fractions, in a similar way the number of whole bitcoins (BTCs), for example, has a limit and can be used fractionally. This means that cryptocurrency holders can see the value of their currency rise, but also can pool their crypto resources with owners to purchase properties collectively, as investments.”

Bottom Line

No matter how much you fight it, bitcoin and the blockchain technology it runs on will revolutionize the real estate industry. Since your buyers and sellers will be curious about the potential of bitcoin for their transactions, agents need to have a basic understanding of how this technology works. This will not only allow them to represent their clients better, but also help attract and retain tech-savvy buyers and sellers, and create a buzz with marketing.

About Emile L'Eplattenier

As Managing Editor for The Close, Emile is responsible for the editorial direction of the site’s real estate content as well as curating actionable insights from top producing agents and brokerages from across the country. A licensed New York City Real Estate Agent and veteran of the marketing department at Tishman Speyer, Emile has been involved in every aspect of residential real estate from branding new developments to pre-war rentals and resales. Emile also regularly provides market insights and commentary for publications like The New York Times, Realtor.com, Apartment Therapy, Fox News, Yahoo, and US News & World Report. When he’s not writing or editing, Emile enjoys collecting vintage furniture and playing his guitar.

From Sheri Dettman
In Buying - Info For Buyers, Buying – Info For Canadian Buyers, Info For Buyers, Info For Sellers, Real Estate Market Updates, Selling - Info For Sellers, Sheri's Palm Springs Area Blog
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