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Yahoo Finance Presents: Ryan Serhant

On this episode of Yahoo Finance Presents, Ryan Serhant, a real estate broker, TV personality, and CEO / Founder of real estate firm SERHANT., sat down with Yahoo Finance's Jennifer Schonberger to discuss the increasing role that cryptocurrency is establishing in the real estate market. He discusses the recent sale of an apartment to Ethereum developer Lane Retting, the future of bids / contracts / sales with utilization of blockchain tech, NFTs, and current real estate trends.

Video Transcript


JENNIFER SCHONBERGER: This is "Yahoo Finance Presents." I'm Jennifer Schonberger. Real estate is going crypto. The former core developer of Ethereum, Lane Rettig, just purchased a $3 and 1/2 million apartment at Central Park North in Harlem.

Joining me now to discuss this deal, as well as crypto trends in the real estate sector, is the CEO of the real estate brokerage Serhant, which did the deal, Ryan Serhant. You may also know him from the popular TV show "Million Dollar Listing." Ryan, welcome to Yahoo Finance. It's so great to have you.

RYAN SERHANT: Thank you for having me. Exciting times to be alive and to be in real estate, that's for sure.

JENNIFER SCHONBERGER: It sure is. So tell me about this deal. And how many buyers are you seeing now who have accumulated their wealth in crypto who are looking to buy real estate?

RYAN SERHANT: Well, the deal was really exciting, one, because the buyer is someone of note. And so we knew that when we were doing it and with how he was transferring out of crypto, into cash to buy the apartment that it would be a fun story for us, because it opens up our buyer base, right? Whether you're purchasing in actual tokens or coins or converting into Fiat, so converting into US dollars using something like BitPay, or just kind of another intermediary that way, it doesn't matter now where your currency is coming from or where you have it, right? You kind of know your customer and regulations.

But it opens up buyers to anywhere in any way. And so we have a lot of customers now coming to us who hold a considerable amount of cryptocurrency, a lot of Bitcoin, a lot of Ethereum, a lot of Algorand, a lot of Soul. I mean, it's a lot. And they're now looking at ways to diversify.

We're seeing it a lot more now than we did in 2020 and in the first half of 2021. I think as people have kind of seen the amount of wealth that they've created and now they're trying to figure out, all right, how do I make sure I hold on to it? Let me put it into a tangible asset. Kind of the same way people who are cash rich have been pulling money out of banks and putting it into real estate as well as a kind of fight against inflation, we're seeing something similar with the crypto community.

JENNIFER SCHONBERGER: Yeah, Ryan, so this deal, I understand, wasn't ultimately done in crypto, right? It was traditionally structured. But you've done crypto deals in the past, right? You just mentioned that you're seeing a lot more wealth creation in the crypto space.

RYAN SERHANT: Yeah. And right now, the issue is this is super early in the crypto space, right? It has now become kind of ubiquitous that people do own crypto and it's not a joke the way it was sort of I think institutionally recognized in 2013 and '14. But we've got a lot of banks, especially in New York. And there's a lot of lenders. So in a new development project where you're paying off construction loans and all that fun stuff, it is not yet there where you can pay off a Wells Fargo loan, for example, with Bitcoin or with Ethereum.

But we're going to get there. I predict that within the next five years, 50% of real estate transactions in the US will be done in some way, shape, and form with cryptocurrency. And as soon as the banking industry becomes OK with the volatility and can hold the crypto on their books, then I think there'll be wallet-to-wallet transactions.

And it's super exciting, especially with international purchasers and people who ordinarily might not have been able to afford an apartment. We have people who have regular day jobs. But now because they've created so much this crypto asset wealth, they're able to put down, let's say, 50% to 70% of the purchase price using cryptocurrency. And then they'll finance the remaining amount because the remaining amount is now so small, whereas ordinarily, they wouldn't have been able to even afford the apartment normally if you go to a bank and do the standard credit rating against your W-2s. So it's opening up home ownership to even more people, which for me I think is a really good thing.

JENNIFER SCHONBERGER: Yeah, democratization is always good. Wealth creation is always good. I'm wondering, you said 50% of crypto transactions in real estate at some point. That's a big statistic. You said it's really going to depend on the banks. Is that really the linchpin to opening the floodgates now? Or is there just also more comfort with dealing in crypto that's a part of that as well?

RYAN SERHANT: As far as I've seen, the comfort is there, right? The comfort is there. The understanding is there. The excitement is there.

And we're doing right now separately, I think it'll end up being just under $40 million, for a penthouse deal in Lower Manhattan, which I'll tell you about once it's fully done, in complete crypto, so wallet-to-wallet, no loans involved. So we're going to start seeing more and more of that. But you're also going to see contracts on the blockchain. It's amazing to me, it is 2022 basically at this point. We still sign contracts on the internet with a PDF signature and then we email it, the same way we did in 1996, right?

We have not advanced technologically in the way that we buy and sell real estate. And this is now the way that things are going to change. So even when you submit an offer, you can submit an offer on the blockchain and actually own that offer instead of just having it be a text or an email or a written contract in the back of a realtor's car. And that is going to change everything. And so we're really, really, really bullish on it. And it's working.

JENNIFER SCHONBERGER: Yeah, to your point, Ryan, I mean I just learned about real estate NFTs. It's fascinating to me that you can invest in a piece of property through an NFT and earn your pro-rata of the rent. And it sounds like this is kind of what you're speaking to in terms of a new contract, a new technological form of that, and how perhaps NFTs could be applied to the real estate sector. Is that right?

RYAN SERHANT: Yeah, I think that you'll either be signing contracts as the form of an NFT, we're just probably not going to call it an NFT. You'll still feel like you're signing a contract. But the way the contract is held, recorded, and owned and tracked will be on the blockchain in the form of a non-fungible token.

But then the flip side to that is opening up, almost like crowdsourcing, except not, the ownership of luxury real estate. So whereas you would typically need to invest into a REIT, let's say, that goes off and buys luxury properties or multifamilies or commercial, I could take a $10 million townhouse on the Upper East Side, no banks involved, it's owned outright, and I could rent that house for a lot of money. And then I could create 10,000 NFTs out of that house associated with different parts of it-- the front door, the doorknob, the kitchen, the sink, the ceiling, the sound system. And each image would be attached to something in that house that's worth a little bit more and a little bit less and sell off that entire $10 million house to those individual owners that can then sell them and resell them for profit down the line and take, like you said, their pro-rata share of the rent.

And you're basically becoming an investor without all of the headaches. And because the size of the pot is so large-- it's not four people, it's not 10 people, 10,000 people, right, hypothetically speaking, depending on how many you purchase, how many NFTs you purchase, and it's much safer. And I think you're going to start to see a lot of that, like a lot, a lot.

JENNIFER SCHONBERGER: That's incredible. Tell me, do you think there's an opportunity for the metaverse in the real estate sector?

RYAN SERHANT: Mhm, yep, we are working on it. I think there's a lot of opportunities. And it's not just owning real estate in the metaverse. I think that's pretty early. And I think a lot of the real estate deals, kind of like a lot a lot of the NFT deals that are being done right now, are purely fueled by hype and speculation. And I don't see that really lasting.

There is not one centralized world, right? This isn't "Ready Player One" yet, where everyone loads up into one world, where the real estate in that world could, yes, be very valuable. But the majority of the population that understands what the sandbox is, for example, or Decentraland is so, so, so tiny. Once we figure out exactly where that culture is moving to, then the real estate in that space will become very, very, very valuable. But, I mean, all you have to do is be a parent with a kid that has a phone or an iPad and uses Roblox to understand the value and the dollars that can be created in the digital space.

JENNIFER SCHONBERGER: That's amazing. Ryan, outside of crypto trends, what other trends are you seeing right now in the real estate sector?

RYAN SERHANT: Oh man, a lot. It's exciting. A year ago today, I was doing Yahoo Finance and CNBC and CNN. And everyone was asking me why I was so crazy to start a real estate firm in New York City in the middle of a pandemic, because if you remember, a year ago, wasn't so long ago, but we were all talking about the second wave at that time.

There was no vaccine. People were still scared. New York and major luxury markets were dead. Everybody was out. Everyone went and bought a farm.

OK, now what I predicted is now true. Everyone will come back to the cities, if not the same as pre-pandemic, but more so. And that's exactly what we've seen.

People are flooding dollars into real estate in major markets and in suburban markets in a way that I've never experienced in my career. And I think 2022, you will see more real estate bought and sold than ever before in any single year since we've been keeping track, because you have people purchasing as a way to diversify, people purchasing as a way to have a safe haven, people purchasing just because they want to and not just because they need to. For the first time in a very, very, very long time, probably not since like 2006, real estate is one of the most exciting asset classes to own. And we haven't had that since Lehman Brothers filed for bankruptcy. But now it's back with a vengeance. And so all I do is work.

JENNIFER SCHONBERGER: Ryan, fascinating conversation. So appreciate your insight. Hope to see you again soon.

RYAN SERHANT: All right, thank you.