James Pratt is the CEO of James Pratt Auctions Group and is regarded as one of the industry’s elite agents in Australia. He has also been the host of Conversation Hollywood Season 1 since October 2018. We’re with him today to discuss the world’s first online auction that will be done entirely in Cryptocurrency.
The auction will be held next Monday, April 8, 2019, in Sydney at 11am.
Why use Cryptocurrency?
James Pratt took a quick trip to Vancouver once and was introduced to Nguyen, a blockchain group. The company had a property they wanted to sell, wanted to auction, but they didn’t understand the auction site. It all just went together.
What James took away from it was that Nguyen didn’t talk about Cryptocurrency like it was a pipe dream or a fun experiment. They had the technology, they had the property, they just needed auction expertise, which James Pratt, of course, had.
As for feedback, it has been a mixed bag. There have been a few interested people in Australia that wouldn’t have been interested if the bidding was a regular auction. Mainly because they have cryptocurrency and just don’t know what else to do with it. But there also has been a steady increase in foreign interest, mostly from China and the USA.
There will always be a little bit of pushback from conservative thinkers, but we can say that it’s mostly a positive response from the industry.
Australia is a country that does auctions really really well, so countries who don’t really do auctions, like the US, can learn quite a bit about the process as crypto might be a good fit for the medium.
It won’t take away from tradition
James Pratt doesn’t think that using cryptocurrency for auctions will take away from the traditional way of doing real estate. “It's just basically adding another branch to the tree, just adding another aspect. You can buy and transact real estate, which may capture another buyer or suit a vendor better.”
What about people who don’t have cryptocurrency?
The bid will be called out in Bitcoin, but there will be a screen on the background that shows the cryptocurrency converted to AUD and USD.
“If you do have cash, and you don't have Bitcoin, but it's up to say, you know, 500 Bitcoin and that converts to, you know, $2 million, and you've got $2 million dollars cash, there's an opportunity for you to buy it in Bitcoin and have that be converted to cash, so that your deposit is technically cash. You just bid in Bitcoin. But on the screen, you can see the exchange of the day–what it is, and what it will go up to.”
The buyer has two options for the post-auction, depending on what will make it easier for them. The most common way will be a 4% deposit if they buy it in Bitcoin–more convenient than the regular 5 or 10% deposit. The deposit will be converted into cash, and it will sit in the trust account.
Basically, the bidder buys in Bitcoin, it’s converted to cash on the exchange, and then come settlement, the bidder has the rest of that time to pay out in Bitcoin.
For bidders willing to pay in full cryptocurrency and desire a shorter settlement, the owners are willing to work with them into getting a short a settlement as they can. Which is a good thing for overseas buyers, who don’t have the longest time.
James also mentioned that he found during the process with this is that a lot of development companies are coming out and they're saying this work great for them. They’re working on mass volume and as a lot of their clientele are foreign-based, they're looking for an investment property. The buyers may not ever live there, but the most important thing for them is the easy transaction.
So, a world-first auction like this could be the start of a new trend in the industry.