Real estate broker Serhant: 50% of deals can be done in crypto, bullish on NFTs
Cryptocurrency is making its way into real estate, the latest sign of digital coins’ incremental use in everyday transactions outside of market trading— and at least one prominent broker thinks it's only the beginning.
Lane Rettig, a former core developer of the cryptocurrency, Ethereum (ETH-USD), recently purchased a $3.5 million apartment at 145 Central Park North in New York City’s Harlem. That sale, led by real estate brokerage SERHANT and NestSeekers International, holds the record for the highest condo contract in Harlem so far this year.
Rettig paid for the condo the old fashioned way — with dollars. But Ryan Serhant – CEO and founder of the real estate brokerage bearing his name – is a true believer of crypto in real estate. Rettig is emblematic of a lot of buyers he’s seeing now, who have accumulated wealth in crypto looking to purchase real estate, Serhant said.
“We're seeing a lot more [crypto buyers] now than we did in 2020 and in the first half of 2021,” Serhant told Yahoo Finance. “People have amassed wealth, now they're trying to figure out how to hold onto it, and they’re saying, let me put it into a tangible asset.”
He added: “In the same way people who are cash rich have been pulling money out of banks and putting it into real estate as a kind of hedge against inflation, we're seeing something similar with the crypto community. Clients are looking for ways to diversify.”
According to Serhant, people have created so much crypto asset wealth that they're able to put down 50% to 70% of the purchase price using cryptocurrency. Then they'll finance the remaining amount because the remaining amount is now so small.
“Ordinarily they wouldn't have been able to even afford the apartment if you went to a bank and did the standard credit rating against your W-2s,” he told Yahoo Finance. “So it's opening up home ownership to even more people.”
The real estate pro is working on a fully crypto deal worth close to $40 million, a penthouse in lower Manhattan with no loans involved, and insisted the market will see more of these deals.
Already, there have been a sprinkling of NYC residential properties — and just last month, the first commercial property — as well as ski homes on the West coast – have sold in complete crypto.
It’s early in the crypto space, but Serhant predicted that within the next five years, 50% of real estate transactions in the U.S. will be done in some way, shape, and form with cryptocurrency.
Currently, a barrier to more adoption is crypto’s volatility, and the inability of financial institutions to hold it on their books. Yet Serhant thinks eventually, there will be direct wallet to wallet transactions where crypto can be transferred instantaneously from buyer to seller.
He also believes new development projects that are paying off construction loans will eventually be settled with Bitcoin (BTC-USD) or Ethereum.
“It’s not yet, but we're going to get there,” he told Yahoo Finance.
Crypto will change real estate contacts
When purchasing his Harlem property, Rettig flirted with – but ultimately decided against – using crypto for the purchase.
“We had an honest conversation with the developer about the possibility of doing it in crypto. They were super open minded about it,” Rettig told Yahoo Finance, before going the more traditional route to close on the three-bedroom, two-bathroom home with panoramic views of Central Park.
Rettig said it was more of a logistical question of compliance for the developer and how they receive it and custody a deal with debt denominated in crypto. Yet he said he thinks he was able to get a slightly larger mortgage because of the crypto assets he holds.
Nevertheless, Serhant is all in on the future of blockchain in real estate.
“We still sign contracts on the internet with a PDF signature, and then email it the same way we did in 1996. We haven’t advanced technologically in the way that we buy and sell real estate,” says Serhant.
Crypto, he argued, “is going to change this. You'll be signing contracts as the form of an NFT,” he added. “We're just probably not going to call it an NFT. You'll still feel like you're signing a contract.”
Also, he thinks the way the contract is held, recorded, owned, and tracked will be on the blockchain in the form of a non-fungible token (NFT), which are opening the door to mass investment and ownership of luxury real estate. He sees a future in which entire deals can be executed using NFTs, and even used to collect rent.
“You're basically becoming an investor without all of the headaches,” he told Yahoo Finance. “It's much safer; and I think you're going to start to see a lot like that.
For more information about cryptocurrency, check out:
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