A Seattle-area man used a form of cryptocurrency to buy his first house and ran into one interesting obstacle along the way.
Although cryptocurrency, especially bitcoin, has become popular in recent months with a sudden spike in value, buyer Cary Kuo discovered the real estate industry is still figuring out how to deal with forms of digital currency.
“Is it actual money — what the heck is it, right?” said Nelya Calev, broker with John L. Scott real estate.
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Although she knew a little bit about bitcoin, she still had to do plenty of research when Kuo came to her, wanting to buy a house with his cryptocurrency investments.
Bitcoin is one of several digital currencies not tied to a bank or government. People can use it to buy things from each other or businesses and a network of computers tracks the transactions and verifies them.
Kuo bought bitcoin cash, a form or offshoot of bitcoin, as well as other cryptocurrencies back in June.
"I don't invest only because I'm trying to make money, but I also believe in it," he said.
But because the seller of the Tukwila home Kuo wanted to buy was asking for regular old U.S. money, Kuo had to cash out.
“Just like you would sell your Microsoft stock, you would sell it, cash it out, and then write a check and send it off to escrow,” Calev said.
But it wasn't quite that easy when it came to finding a lender— at least, at first.
“She said it's pretty much not going to be possible, please find another fund source to buy your house and at that point I was like, ‘Oh no,’” Kuo said of one interaction with a mortgage officer.
The problem wasn't whether he had the money. It was tracking where it came from and proving it was his, not a loan.
"Any time you want to have a down payment, it has to be ultra-clear it's the borrower's own funds," Oleg Tkach, branch manager at Guild Mortgage, said.
But despite their initial hesitation, they decided to give it a try, even while other lenders simply wouldn't consider it. Tkach said they improvised and did a little math.
“We had to take a more common sense approach to say, ‘OK, this is when he bought it. Here are the funds coming out of his account,’” he said. “’Since then here's what that cryptocurrency has done as far as an increase in value, therefore, he should have roughly this amount,’-- and he did.”
And before long, the $415,000 house was Kuo’s. Someday, he says, “The hope is that everything will be able to be purchased with cryptocurrency.”
As for now, Calev points out the system is still not set up for direct bitcoin purchases. King County needs to get paid taxes, real estate agents need commissions and lienholders need to be paid off.
Cox Media Group