A recent real estate transaction could signal a change in the way Kentuckians buy and sell their properties in the future.
Local firms Millennial Title and Homepage Realty recently facilitated the sale of a property in Louisville using bitcoin. Chip Ridge, president of Millennial Title who represented the seller, said this is one of the first sales to use the cryptocurrency in Kentucky.
The investment property is located at 1022 Navaho Place. According to the Jefferson County Property Valuation Administrator website, the seller was Villehomes LLC, and the buyer was Unimportant LLC. The single-family home sold for $65,000, which is a little over 1 bitcoin.
Ridge said most aspects of the sale remained the same as typical transactions. In a traditional deal, when the buyer and seller come to the closing table, they bring the funds, which could be in the form of a cashier’s check or wire transaction. In a cryptocurrency sale, Ridge said the money transfer between the buyer and seller happened at the click of a button.
“They did what we call a wallet-to-wallet exchange, so they directly paid bitcoin to the seller,” Ridge said. “It was pretty cool, and they did it right at the closing table.”
Ashley Brown was the agent with Homepage Realty who represented the buyer. The buyer wasn’t planning to pay with bitcoin when they first came across the property. Brown said they happened to ask her why it was being sold, and she told them the seller was hoping to take the money and invest it in bitcoin.
“I kind of said it in a joking way, and then my buyer was like ‘well what if I just bought this property with bitcoin?’” Brown said. “Then we just kind of went down that road.”
There were a lot of questions, including if the parties should negotiate in bitcoin or in U.S. dollars. Brown said completing this transaction felt like pioneering a new way of doing business.
Ridge wouldn’t have entered the deal with someone that didn’t fully understand how the technology, like digital wallets or blockchain, worked. Millennial Title’s Louisville office, like many in Kentucky, are still early in the adoption phase of using cryptocurrency. He said Brown was comfortable with bitcoin and able to coach her client through the transaction.
“They understood the technology piece of it, which was really the key,” Ridge said.
There are a few benefits that come with using bitcoin in a real estate transaction. One of them is security. Ridge said other forms of payment can come at the risk of fraud. In the bitcoin transfer, he said the buyer scanned a personalized QR code from the seller, acting as a direct link and ensuring the money was going exactly where it was intended.
Another benefit was timeliness. Ridge said traditional funding, whether it be wiring or checks, can take hours, sometimes longer, to finalize. In this transaction, the buyer was able to transfer the money in less than 30 seconds.
Although becoming increasingly popular in certain parts of the U.S., Ridge said using cryptocurrency in real estate transactions is not a common method yet in Louisville. Internationally, many countries have jumped at the chance to adopt cryptocurrency. In the U.S., he said only certain pockets have really taken to the idea. These pockets tend to be more populous states, like California, Texas and Florida.
“In Kentucky, we’re definitely not what I would consider early adoption, so you don’t see nearly as much. But there are groups…that are very blockchain/cryptocurrency focused, even here in Louisville,” Ridge said. “Real estate is really primed to use blockchain and digital currency as one of the backbones of how we do business in the future.”
Ridge said although it will likely be a slow process, he can envision more bitcoin usage in Kentucky’s real estate market. With blockchain, investors are able to securely store and readily access deeds and transfer records. He said using digital currencies could enhance how quickly parties transact, cut down on intermediaries, and bring a more transparent price discovery.
Before Kentucky reaches that point though, he said there needs to be more education in the technology of it. He’s starting to see more banks and people in the financial space investing in blockchain and learning to manage in digital currency, as well as the government engaging more with the platform and sharing more guidelines.
“We see as there’s more people that are invested and hold the cryptocurrencies... there’s a marketplace there,” Ridge said. Those people want to continue to transact in that digital currency, "and that’s the real potential.”
