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Real Estate Market Updates

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

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.
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.
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

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.
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.
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

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.

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."
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.
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

Talus – A Bold New Vision of Community, Hospitality & Sustainability

Courtesy of Christine Loomis, Desert Golf & Tennis

Planning a getaway to the Coachella Valley? May we suggest late 2022 or 2023—that is if you want to be among the first to experience the newly imagined TALUS La Quinta, an ambitious rebranding of a resort and residential community that aims to set an extraordinary new standard in desert hospitality. To say there’s a high level of anticipation and excitement surrounding the long-delayed development at SilverRock is an understatement.

NOTE: You must have one of our team accompany you on your first visit or introduce you in order to retain your right to your own representation to look after your fiduciary best interests. Contact Sheri Dettman & Associates for information.

Phase 1 of the 525-acre development includes two luxury hotels, spas, private residences, a new golf clubhouse, extensive dining options and more. The luxury Montage Hotel will feature134 casita-style guest rooms, while the Pendry Hotel, a “lifestyle” brand, will offer 200 guest rooms. In between the two will be a 70,000 square-foot conference center, which will open concurrently with the Montage Hotel.

Randy J. Duncan, general manager and director of golf at SilverRock, says the completed project will elevate golf across the desert. “SilverRock opened on Valentine’s Day, 2005. Since then, it’s been a golf course, clubhouse, golf operations and some F&B, all surrounded by hundreds and hundreds of acres of undeveloped land. When this project is complete, it’s going to be the mecca of the desert. The quality and high standards Montage brings to the community will have a positive impact on the golf experience. I’m excited about the future.”

Work is moving full steam ahead. The Montage is slated to open in Spring 2023, while the Pendry will welcome its first guests in 2024. Both properties are part of Montage International. Jeff Yamaguchi, VP of real estate with TALUS, says the first of the 29 single-family Montage-branded homes will be ready in November 2022. Delivery of the first Pendry-branded condos is scheduled for February 2023. These 55 condo units will be built in 11 three-story buildings, five residences or “stacked flats” per building.

The design aesthetic across TALUS celebrates Desert Modernism, a low-profile style that welcomes the desert landscape in. Montage staff will manage the homes and owners can opt to put residences in a short-term rental program, providing another option for out-of-town guests wanting more than a hotel room for their Coachella Valley stay.

The new golf clubhouse is scheduled to open at the start of the next fall season. Golf and F&B operations will move to the new clubhouse, leaving historic Ahmanson Ranch House ready for its transformation into an exciting new dining venue.

What won’t change is the Arnold Palmer-designed golf course, which completed a significant renovation several years ago. It will remain open to the public—and to hotel guests when they arrive. And residents of La Quinta, wherever they live in town, will still have the La Quinta Resident Program available to them. Duncan says retaining the resident program was always in the plan. “Elements of the program may change,” he notes, “but the program will remain.”

TALUS La Quinta has been described as a community-focused around wellness, activity and sustainability, within the context of respect for and enjoyment of the natural desert landscape. “TALUS is your wellspring in the desert, alive with opportunities to nourish body, mind and soul,” it says on the website. Another spot proclaims, “You feel powerful, yet unusually peaceful as you connect with the cadence and rhythm of the land. It’s the next chapter of SilverRock, a place to truly be alive and well.”

It may be marketing hype, yet the passion of developers for this project makes one wonder if a community, this community, actually can offer all that up in a tangible, meaningful way. Yamaguchi says TALUS absolutely can and will. “There’s a distinct energy derived from the mountains and the land. ‘Talus’ is defined as a gathering of rock fragments at the base of a mountain, and that was the inspiration behind the name change. Our goal is to create a gathering place and a unique assemblage of experiences for every family generation.”

When asked about the more esoteric goals of the project, Yamaguchi’s passion is clear. In terms of sustainability, he says solar energy is a core element of the residences. And though recycled materials won’t feature in construction until after Phase 1, he points out that they’ve reduced concrete and steel in the residential construction in favor of expansive use of glass, which simultaneously helps connect residents to the outside environment and reduces energy costs. “Glass helps keep homes warmer in winter by allowing heat in, and in summer, the double-paned glass will make the homes both cooler and more energy-efficient,” he says.

The health of residents and visitors was also a consideration in construction and hospitality practices. “We’re putting in an air purification system attached to HVAC, which filters out particles down to .03microns,” Yamaguchi notes. “Given the events of the past 18 months, air quality is a huge consideration for everyone. We want to create an extra level of confidence for residents and their guests by providing a safer, healthier living environment.” Most exciting is the vision for a farm in the next development phase. “We’re hoping to create a farm where we’ll grow products for culinary and spa programs, and also create an opportunity for organic composting,” Yamaguchi says. “Additionally, we want to curate a farm-to-table culinary experience that will be available to residents, hotel guests and people in the local community. “Agriculture,” he continues, has been integral to the Coachella Valley’s history and identity. With the evolution of plant-based palates and dietary requirements, we think it’s time to make it a priority going forward.”

Another goal is to-take wellness to the next level by establishing regimes and protocols that tap into the spiritual aspects of wellness. There are no concrete plans on that yet, but Yamaguchi says they’ll likely come toward the end of next year.” In the end, he says, “We want TALUS to be a sanctuary, a place where you not only connect with the land, the sky and the mountains but also where you reconnect with family and rejuvenate your soul.”

That’s a tall order for a desert golf resort. But TALUS La Quinta is focused on setting a new standard altogether. “To be able to bring this level of luxury hospitality to the valley is really exciting and really important,” Yamaguchi says. “The Coachella Valley has never had a 5-Diamond, 5-Star resort; given the history of this destination, that’s hard to believe. We believe TALUS will change that.”

Hype? Maybe. But our bet—and hope—is that TALUS La Quinta will live up to everything it’s meant to be.

Contact Sheri Dettman & Associates for a private introduction to the Talus La Quinta homes and development.

From Sheri Dettman
In Lifestyles & Things To Do, Real Estate Market Updates, Sheri's Palm Springs Area Blog

The American Dream in Palm Springs on Fox Business TV

Sheri Dettman on The American Dream

See Sheri interviewed by Scott Griffin on The American Dream. Aired June 26th on Fox Business TV.

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 Dettman & Associates, Sheri's Palm Springs Area Blog, Uncategorized

The Big Swing

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

JUDD SPICERAPRIL 30, 2021CURRENT 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

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 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?

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:

“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:

“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.

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:

“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?

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:

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

“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

“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

“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

“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

“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

“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

“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

“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

“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

“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

2021 State of the Market Real Estate Success Summit

Sheri was honored to be a featured panelist at this year's summit. Click on the link to watch the interview.

From Sheri Dettman
In Real Estate Market Updates, Sheri Dettman & Associates, Sheri's Palm Springs Area Blog

Palm Springs Area Real Estate Market Update

Coachella Valley home prices, sales, and inventory show a healthy real estate market in a time of the COVID-19 pandemic.

Courtesy of Palm Springs Life: STEVEN BILLER MAY 12, 2020 CURRENT DIGITAL, HOME & DESIGN, REAL ESTATE

Photo courtesy of Desert Willow Golf Resort

Home prices and inventory appear stable in the Coachella Valley, and indicators — such as leads, showings, and offers — suggest the COVID-19 pandemic is having little effect on the local real estate market, experts said Tuesday during an industry webinar.

“Ladies and gentlemen, we are not in a real estate crisis,” Brady Sandahl of Keller Williams told the audience of real estate agents and brokers during the Market Watch Spring Webinar, a Palm Springs Life event. “We are in a challenging market. We’ve been in a high tide for the last 10 years, and now there’s a health crisis, an unemployment crisis, and an economic crisis.”

But in the Coachella Valley, Michael McDonald of Market Watch beamed, “Inventory remains contained. There’s no rush to sell or put homes on the market.” On March 1, there were 3,019 available units on the market in the valley. On May 1, there were 2,924. “Inventory is not increasing, yet,” he explained. “If it doesn’t rise, it’s a good sign.”

Likewise, the price per square foot appears stable — $244 a year ago and $238 on May 1. The slight dip coincided with the issuing of California’s stay-at-home order in March.

“Prices will likely stay right where they’re at,” said McDonald, who analyzes sales and price data for single-family homes and condominiums in the market. He also predicted that real estate would be among the first industries to recover nationwide because it requires no risky proximity like, say, a restaurant or a movie theater.

Walter Neil of Franklin Loan Center emphasized the need for real estate professionals to discourage forbearance, which went into effect March 18 and allows borrowers to temporarily stop making payments on government-backed loans without risk of foreclosure.

Someone who’s motivated to sell will likely get the asking price in or around the unchanged average length of time on the market. But a seller hell-bent on fetching a premium price might need to be more patient.

Borrowers will not only make good on those missed payments — often in one lump sum — but their credit score will take a hit, as well. “This should be a last resort,” Neil intoned. “Only people who lost a job and have no resources should consider forbearance.”

Otherwise, Neil was as optimistic as Sandahl and McDonald. “I refer to the three-legged stool of recover,” he said. “One leg is monetary policy — the Federal Reserve keeping unemployment low (because unemployment puts pressure on the real estate markets; people need to pay their mortgages) and putting money into the market, which they’ve done with unlimited quantitative easing. The second leg is fiscal policy, which Congress did with the CARES Act. The third leg is COVID-19 containment.”

Neil points to the record-low interest rate, 3.125 percent, as a reason to get into the market, while Sandahl encouraged agents and brokers to listen to their clients. Ask questions. Understand motivations.

“It comes down to whether a home is priced to sit or sell,” Sandahl says. Someone who’s motivated to sell will likely get the asking price in or around the unchanged average length of time on the market. But a seller hell-bent on fetching a premium price might need to be more patient.

Webinar sponsors included Toscana Country Club, Andalusia Country Club, Franklin Loan Center, Palm Springs Regional Association of Realtors, and the California Desert Association of Realtors.

The fall Market Watch webinar is scheduled for November. For more information on Market Watch, click HERE.

From Sheri Dettman
In Real Estate Market Updates, Sheri's Palm Springs Area Blog

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