Episode 47: Shannon Conradi & ilko Bo — The Future of Real Estate Closings with Crypto

00:00:00:00 - 00:00:19:13
Nate Carver
Hey, it's Nate Carver, your favorite mortgage guy on between two doors, and we are meeting again with property.com for with Ilka and Shannon. And we are going to talk about buying homes with crypto at Title Company for homeowners at home sellers. How about that?

00:00:19:13 - 00:00:40:16
Nate Carver
Hey, I'm Nate Carver and welcome to Between Two Doors.

00:00:40:21 - 00:00:43:04
Nate Carver
Hey, Shannon. Hey, Oka. How are y'all?

00:00:43:06 - 00:00:47:18
Shannon Conradi
Great. We're doing awesome. We're excited to be on this, podcast again.

00:00:47:20 - 00:01:07:19
Nate Carver
Awesome. I'm glad to have y'all. Hey, real quick. So 30,000ft view of profit for people that haven't listened to our previous recording, which I will have a link for down below. Tell everybody what property does and then we'll then I gotta I got a bunch of questions to ask y'all.

00:01:07:21 - 00:01:32:09
Shannon Conradi
Okay, so Property Title has been in business for eight years. We're licensed to close in Arizona, Colorado and Florida, and we're getting California in two weeks. And by the end of the year, probably Texas, which is exciting. We are able to close with cryptocurrency in house, but we are also able to do traditional escrow as well. So if a realtor just wants to send it through email, we can do that as well.

00:01:32:11 - 00:01:45:17
Shannon Conradi
We also have a database, that uses AI technology. So we extract information from AI, and then it goes to our real life escrow officers and okay, you wanna add anything else?

00:01:45:19 - 00:01:52:13
ilko Boyadjiev
Yeah. We are the next gen, your next gen title and escrow agent.

00:01:52:14 - 00:01:53:08
Nate Carver
It's awesome.

00:01:53:08 - 00:01:55:07
ilko Boyadjiev
Okay, so the future now.

00:01:55:09 - 00:02:30:05
Nate Carver
There you go. So let's bring it into. So we did a podcast with realtors and what property means to them. So let's let's guide this conversation for homeowners that need to sell their home. And for home buyers that are that are their cash buyers. And they've got crypto and leveraging that to acquire property. So, let's see big picture and trust for some someone that's brand new, what does it really mean to buy or sell a home with cryptocurrency?

00:02:30:07 - 00:02:31:22
ilko Boyadjiev
Shall I start with that?

00:02:31:24 - 00:02:33:07
Shannon Conradi
Absolutely. I'll come.

00:02:33:09 - 00:03:12:20
ilko Boyadjiev
All right. Well, first, I don't think there's anybody who's brand new into crypto and using that to purchase a home. So usually what we see are very experienced crypto holders that feel that the time is right to diversify their portfolio with no real estate investment. And regardless, those people have been in, you know, dealing with crypto for quite some time, they see a really hard time, like finding the right real estate professional to actually help them and guide them through a transaction like this.

00:03:12:22 - 00:03:41:24
ilko Boyadjiev
And, as far as sellers, hey, we see this pretty much every day, like we have a crypto buyer that wants to place an offer on a very, you know, traditional listing the seller, as far as they're concerned, we make it so they just have another cash buyer. So there's nothing different that the sellers will need to do or prepare for.

00:03:42:01 - 00:03:49:18
Nate Carver
So how does property, property ensure security and prevent fraud when transactions happen on the blockchain?

00:03:49:20 - 00:04:18:13
Shannon Conradi
Yeah. So typically a deed is done in the courthouse, but sometimes fires can happen. So then everything is gone. So we also have sometimes people do online hack and sometimes that can attack and cause issues. So what we do is we still record the deed with the county. We have secondary ledger on the blockchain ownership recorded, data breached prove ownership with blockchain and it's admissible in court.

00:04:18:15 - 00:04:31:10
ilko Boyadjiev
Yeah. Think of it as as a extra insurance policy for the buyers. They can prove their ownership if they need to in court.

00:04:31:12 - 00:04:45:16
Nate Carver
You know, when, when a buyer or seller is using the blockchain over a traditional way of doing title. I guess.

00:04:45:18 - 00:05:08:23
ilko Boyadjiev
They know, actually, you don't have to choose. And buyers and sellers, they don't have to choose traditional over blockchain or the other way around. It's a complimentary service that we provide, like along with recording with the county, we will keep a secondary recording on the blockchain ledger.

00:05:09:00 - 00:05:26:10
Nate Carver
Understood. I got it. Okay. So let's, let's focus on buyers for a second. And, how do how does a crypto escrow process work to minimize volatility while a deal is closing?

00:05:26:12 - 00:05:58:16
ilko Boyadjiev
Well, there are like a couple of ways. First, whenever there is a a crypto transaction and the buyers choose to hold the escrow funds in crypto, which there are like a lot of benefits, these are earning it. It helps mitigate early exposure to exchange fees and taxable events. Just so that imagine that you are a crypto buyer and you want to sign the contract.

00:05:58:17 - 00:06:29:21
ilko Boyadjiev
You know, you need to liquidate. You need to place those funds in a traditional bank account, you know, let it sit and then sign the contract. And then if the deal falls through, you're stuck with fiat exposure that you don't really need, you know, exchange fees and you're liable for capital gains tax. So what we do is we allow buyers to hold crypto in escrow until the funding date.

00:06:29:23 - 00:07:13:14
ilko Boyadjiev
Now, of course, most of the times we suggest that they do this with stablecoin. So this eliminates volatility as stablecoins are back to the dollar. However if there's Bitcoin Solana, XRP or any other cryptocurrency that is not volatile, it goes with the market and we have a lot of different ways to add a like add a buffer percentage, introduce margin calls that really protect sellers interest and make sure that they have a minimum amount of value in our escrow account in U.S. dollars.

00:07:13:16 - 00:07:31:06
Nate Carver
Okay. So do you like with Bitcoin, Ethereum, other stablecoins just probably have a preference. Or do you I mean, there's a lot of different coins out there and there's some that disappeared.

00:07:31:08 - 00:08:08:18
ilko Boyadjiev
Through them, through the. So yes, like we can accept different coins. Okay. But that doesn't mean that we will accept all. So, like, it's a really good practice whenever a real estate agent receives a call from a potential buyer or during their conversation, a question is like, hey, can I use crypto for a deposit? First thing they need to ask is what kind of crypto they want to use.

00:08:08:20 - 00:08:25:19
ilko Boyadjiev
And of course not everybody's familiar with all the coins. But Shannon what would you say. Like how would the real a realtor like have an idea of what kind of token the buyer is talking to?

00:08:25:21 - 00:08:35:15
Shannon Conradi
They could always go to Coinbase cap, and that's where the top ten, coins show up. So they can look on there to see kind of the coins that are out there.

00:08:35:17 - 00:08:39:01
ilko Boyadjiev
Perfect. So this is Coinmarketcap.com.

00:08:39:03 - 00:08:40:12
Nate Carver
Yeah.

00:08:40:14 - 00:08:57:23
ilko Boyadjiev
And just get familiar with the top ten. But yeah, you don't really have to validate the buyer's response. You just need to ask them, hey, what kind of crypto do you accept. And then second thing is send them through properties identity identification check.

00:08:58:00 - 00:09:03:06
Shannon Conradi
WW dot dot com slash KYC. Know your customer.

00:09:03:08 - 00:09:04:04
Nate Carver
Know your customer.

00:09:04:04 - 00:09:09:02
ilko Boyadjiev
Thing. And now you know that you have a legit buyer on you know that you're dealing with.

00:09:09:04 - 00:09:30:22
Nate Carver
Absolutely right. Awesome. So you touched it on a little bit tax considerations. So with the crypto buyer and they're preparing for to use their digital assets as payment, what are some considerations there. I see some huge benefit to doing it with property. And you touched on that. So I'd like to little a little bit more on on that please.

00:09:30:24 - 00:09:42:18
Shannon Conradi
Well Nate, ask your CPA. I'm just kidding. Crypto property not currency liable for capital gains tax. That's how I would answer that question.

00:09:42:20 - 00:10:12:13
ilko Boyadjiev
Okay, then every time a buyer uses crypto to buy, invest, exchange, they would be liable for sure gains on that token. However, we introduce the option to, you know, use the crypto as collateral and they use it to secure a crypto backed loan. In that case that's not a taxable event. And it, as you said, holds a lot of benefits.

00:10:12:15 - 00:10:24:13
ilko Boyadjiev
You know, you still hold on to your crypto. Let it depreciate. Have an investment in real estate and avoid right.

00:10:24:15 - 00:10:46:12
Nate Carver
Yeah. And I've seen as you know in the traditional way you know when people are liquidating crypto to purchase a home that seasoned time in their bank account and the time it takes to actually get to closing and heaven forbid, if a loan falls apart for whatever reason, you know, they're out. You know they that that liquidation has cost them.

00:10:46:12 - 00:11:09:22
Nate Carver
So I like what you were saying when how you know, you're able to streamline that at closing with their crypto. Tell me on how do y'all integrate with other lenders. So as a lender, if I brought you a client that was looking to buy a home, or someone that was selling the home and the crypto's on the table, but is there a hybrid?

00:11:09:22 - 00:11:18:08
Nate Carver
So they could do mostly crypto or 50, 50, 50 crypto 50 financing? Is that something that can be done?

00:11:18:10 - 00:11:25:23
Shannon Conradi
So traditional lender buyer balances, crypto friendly lenders is something very important to us.

00:11:26:00 - 00:11:27:02
Nate Carver
Okay, okay.

00:11:27:04 - 00:11:57:20
ilko Boyadjiev
Well of course we will work with the lender. And you know, in educate them on how to actually read through, blockchain data and wallets and wallet balances. But it doesn't work every time. We just close the deal. A couple of weeks ago, the the buyers there did exactly that. And, so they put stablecoin for deposit.

00:11:57:22 - 00:12:34:15
ilko Boyadjiev
They wanted to close with a traditional loan. It didn't work out with the first lender, although we put a lot of effort into educating them and showing them balances and providing all the statements, verified. But, hey, we we've we managed to find a, not a lender that actually managed to almost manage to get things through because you this this this was a funny story, because it it took us a quite some, you know, effort going back and forth.

00:12:34:21 - 00:12:53:14
ilko Boyadjiev
And now we are at the closing table, so to speak, because we are remotely everything was ready and we call the buyers like, hey, let's schedule the online notary. And you know what they told us? Oh, we're in the middle of the Atlantic on a yacht. And I.

00:12:53:14 - 00:12:56:24
Nate Carver
Said, I'd like, yeah.

00:12:57:01 - 00:12:57:17
ilko Boyadjiev
To.

00:12:57:19 - 00:12:58:23
Nate Carver
Pay.

00:12:59:00 - 00:13:23:09
ilko Boyadjiev
For five weeks. So needless to say, the sellers did not want to extend the loan. The option was a no go because they, you know, we we could still do a remote, you know, online, not the other way, but they, they needed to be in the US in order to work. So we just scrapped that option, changed it to a cash offer.

00:13:23:11 - 00:13:26:21
ilko Boyadjiev
And they funded the whole deal in crypto.

00:13:26:23 - 00:13:33:06
Nate Carver
Wow. In the middle of the panic. Yeah. Well.

00:13:33:08 - 00:13:47:21
Nate Carver
What do you do? All of the lending by the house. Tell me, on the seller's side, what stance does a seller need to take if they want to accept crypto for their property?

00:13:47:23 - 00:14:20:14
ilko Boyadjiev
That's, unusual scenario. Most of the times we will see, crypto buyer coming in with an offer. Very traditional seller. They don't really want to talk about crypto role. We facilitate the deal. We found the deal. And as a cash, however, whenever there is a seller willing to accept the crypto directly wallet to wallet, that can be even easier because funds flow directly from one wallet to another.

00:14:20:16 - 00:14:21:23
Nate Carver
Oh, wow.

00:14:22:00 - 00:14:53:24
ilko Boyadjiev
Of course, not all fees, will be disbursed in crypto, so we would still need to liquidate certain amount to satisfy county tax. Broker commission, or even the agent commission. But agent can choose to accept that in crypto as well. You never know. But we can do we can do it all. I mean, I'm just like a buyer can choose a hybrid, you know, payment system.

00:14:54:01 - 00:15:08:23
ilko Boyadjiev
So the the seller, they can accept most of the proceeds in U.S. dollars, but let's say keep half of Bitcoin, right. Just for the fun of it or only if they're interested.

00:15:09:00 - 00:15:35:24
Nate Carver
So I get this question all the time. And in the traditional sense is when is that loan going to fund. So in the crypto world, how long does it take to convert for it to be converted from crypto to U.S. dollars and ultimately fund a deal, getting buyer or getting the seller pay, and getting the realtors pay, what does that look like timeline wise?

00:15:36:01 - 00:15:41:24
ilko Boyadjiev
Probably you're looking, it's from 1 hour to 3 hours.

00:15:42:01 - 00:15:43:07
Nate Carver
Oh, wow.

00:15:43:09 - 00:15:44:06
ilko Boyadjiev
Yeah.

00:15:44:08 - 00:15:45:09
Nate Carver
So same day.

00:15:45:11 - 00:15:53:21
ilko Boyadjiev
You know, awesome day. It can be so much quicker. Morning. We had a, French buyer.

00:15:53:23 - 00:15:54:17
Nate Carver
Yeah.

00:15:54:19 - 00:16:25:01
ilko Boyadjiev
Seven business days to get the funds over from their Paris bank. Over to our escrow account. Yeah. You know, it was like, big. They had to, sign an addendum because the deposit was late. The sellers were participating, of course. But for the final payment, they just decided to go. And there were not do that. There were not crypto people, but they decided they convert it into stablecoin centers.

00:16:25:01 - 00:16:34:10
ilko Boyadjiev
The funds we converted, we had the funds received in escrow and funded within like a couple hours.

00:16:34:12 - 00:16:37:05
Nate Carver
Wow, wow. Just thinking of other.

00:16:37:06 - 00:16:44:06
Shannon Conradi
Part of title and escrow where the and yeah in the Amazon Prime we want it is fast and quick and easy.

00:16:44:08 - 00:17:02:24
Nate Carver
Yeah. You've got I was just thinking like. So someone comes to me and they're, they've got money in a 401 K that they want to use to buy a house. Seven and ten business days. From the moment you liquidate that account or anything out of that account, not say anything about the fees that they got to pay or the penalties.

00:17:03:01 - 00:17:25:01
Nate Carver
But it's 7 to 10 business days before that money gets released. And then there's the however long they're they're in financial institution takes to deposit clear and deposit those funds. So you're adding you could add another week to that. And here you are. You can do it in a couple of hours. It's state tastic.

00:17:25:03 - 00:18:00:10
ilko Boyadjiev
Oh but there's also another, application to it. Like you have like, international buyers coming in from Colombia or Ecuador. What they shared is that just transferring traditional through the traditional banking system, U.S. dollar amounts, is extremely expensive. Over to us. Yeah, like converting this into stablecoin and converting back to U.S. dollars here. It's so much not just quicker, but cheaper as well.

00:18:00:12 - 00:18:14:06
Nate Carver
Well, so last question for sellers. Is there any kind of marketing advantage, by listing their homes in that, that as crypto friendly?

00:18:14:08 - 00:18:46:08
ilko Boyadjiev
About 50 million of them that they're very much, many U.S account holders are in Coinbase. We partner with Coinbase. This is the largest, crypto exchange in the US. So imagine being able to open up your listing to millions of potential buyers that usually nobody markets do.

00:18:46:10 - 00:18:56:03
Nate Carver
Right. And am I right in thinking you all are doing some marketing there with the realtors? Or there's some listing stuff that you all do with realtors?

00:18:56:05 - 00:19:24:00
ilko Boyadjiev
We do it, we do this, we do educational stuff. We have, crypto and blockchain continue with the the courses that are certified for credits. So there's like a lot that we are, you know, doing just to show agents, educate them on how to leverage technology. It's not just about crypto, just also about blockchain, about the technology, how to be more efficient and productive.

00:19:24:02 - 00:19:24:20
Nate Carver
Right.

00:19:24:22 - 00:19:27:12
Shannon Conradi
In the ambassador program as well, which is huge.

00:19:27:12 - 00:19:41:16
Nate Carver
You there you go. What for buyers and sellers using crypto, would you say has been maybe the biggest challenge that you all.

00:19:41:18 - 00:20:02:03
ilko Boyadjiev
Biggest challenge? What do you think? Like number one, I would say how to really know that that person on the other side of the line really has the money. Yeah. And is ready to buy and not trying to get you in some kind of a, you know.

00:20:02:05 - 00:20:22:02
Shannon Conradi
Scheme, right? Yeah. I think people hear crypto sometimes it's stigmatized to be fraud. And that's why we place ourselves to have the KYC system. Probably not common KYC. So you can make sure that wallet identification number is who you say you are. So you don't have fraud on your end as well as our end. So we're protected.

00:20:22:04 - 00:20:24:14
Shannon Conradi
That's why we go through the KYC.

00:20:24:16 - 00:20:39:14
Nate Carver
Nice. So look this is innovative already. So but trying to think for thinking forward. What do you in the future crypto real estate transactions. Where do you see it in like in the next five years?

00:20:39:16 - 00:20:40:02
Shannon Conradi
Boom.

00:20:40:04 - 00:21:21:17
ilko Boyadjiev
And mass adoption like a more and more general consumers are turning into know some form of crypto holdings. It's already like I believe it was, 41% of us adults aged 18 to 38, I believe was the statistics. They have a crypto wallet doesn't mean that they have enough funds to buy to fund at home, but they can use this for a deposit or use it for collateral to secure a loan.

00:21:21:19 - 00:21:37:00
ilko Boyadjiev
And more and more people will be looking into it, especially with all the changes that are push with the new administration. It's designed to drive the general consumer's attention towards. Yeah, so better be ready.

00:21:37:02 - 00:21:48:18
Nate Carver
All right. So okay, here's one. How how how might smart contracts change things like title escrow or even mortgage payments.

00:21:48:20 - 00:21:52:07
ilko Boyadjiev
Well. Sure.

00:21:52:09 - 00:21:54:01
Nate Carver
You want to say, but you.

00:21:54:03 - 00:21:58:04
Shannon Conradi
Guys, I think this might be our next podcast. I think we're on. Okay.

00:21:58:06 - 00:21:59:20
Nate Carver
Let's,

00:21:59:22 - 00:22:04:03
ilko Boyadjiev
I mean, and it's going to be an interesting one because a lot.

00:22:04:05 - 00:22:05:00
Nate Carver
I, I.

00:22:05:01 - 00:22:05:12
ilko Boyadjiev
I'm all the.

00:22:05:12 - 00:22:19:09
Nate Carver
Time I remember like it was probably five, six years ago. I was in on a conversation and they were talking about blockchain for real estate. And so let's do a podcast. We'll do we'll come back and do another podcast on that one.

00:22:19:12 - 00:22:53:12
ilko Boyadjiev
So definitely that definitely deserves like a dedicated podcast. Just so that you have and the idea is, I was in a conversation last month with a realtor in, Massachusetts, I believe, and he was tasked with the force to write an article on how the real estate has changed since Covid and his main topics were transactions are going paperless.

00:22:53:14 - 00:23:21:13
ilko Boyadjiev
Let's use a fax transfer communication. Yeah. And I was like, are you really ready to write this article? Like, there is so much more to it. Like talking about all the technology that I blockchain, tokenization of real estate. There's a lot that we can discuss on the future and how it implements into real estate.

00:23:21:15 - 00:23:27:13
Nate Carver
We'll we're going to come back and do that podcast. That's going to be the nerdy podcast for sure. So all right.

00:23:27:19 - 00:23:30:06
Shannon Conradi
So much for your glasses again.

00:23:30:08 - 00:23:41:13
Nate Carver
Yeah. Go there. Let's do the glasses. So last question. What advice would you give a buyer today? Who wants to use crypto for their first home purchase.

00:23:41:15 - 00:23:45:21
Shannon Conradi
You only live once. So.

00:23:45:23 - 00:23:53:08
ilko Boyadjiev
Well, just do it. Absolutely. And, Shannon, I believe your favorite quote was.

00:23:53:09 - 00:23:58:07
Shannon Conradi
Oh, yes, I do have a quote for us. Don't get sloppy. Utilize crappy.

00:23:58:09 - 00:24:20:18
Nate Carver
There you go. All right. We're going to put the links down below for everybody. And we're going to set up another podcast, to talk about, my awesome title and escrow and mortgage question and the changes that we perceive coming. Thanks, guys. And, for meeting with me today to talk about crypto and what we can do or what y'all can do over at Profit.

00:24:20:20 - 00:24:24:14
Nate Carver
I really enjoyed it. And, look forward to seeing you all again.

00:24:24:16 - 00:24:27:09
Shannon Conradi
Property. Goodbye again.

00:24:35:04 - 00:24:43:06
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