If you talk about using crypto to buy real I don't know if you are specific to Bitcoin, because Bitcoin is a digital asset and money too, whereas Real estate are physical assets, Therefore if I'm holding a portfolio of Bitcoin, Then it makes no sense to using Bitcoin to acquire that property, I would rather use fiat or any stable coin to do so, except for the fact that I only have all my money in Bitcoin, and there's such need to diversify my wealth and own some landed properties or houses then I will use Bitcoin for the purchases.

Ohh wow, that's a pretty cool topic!!! 
But anyway, let jump to the main spot.

The country where I am affiliated with has imposed sanctions regarding crypto. Like, business dealing with crypto is prohibited. So firstly, I think it is not possible to do this in my country due to the government, and suppose if it is possible then let me tell you that I will never buy real estate in exchange for Bitcoin because according to me, Bitcoin is a valuable, privac and immutable asset, while real estate is an unnatural investment in which you have to handle many matters, and the returned ratio with respect to time is also low as compared to Bitcoin.

So I would recommend Bitcoin for myself as compared to real estate. Because Bitcoin has the advantage that it can store a big amount in a small hardware wallet that can easily carry with him everywhere. While real estate requires a security stance and you cannot carry it everywhere.

I'm a bit confused with the above two quotes for various reasons... First you mentioned "conversion escrow company" that handles the escrow & conversion parts for 1%, but on the next quote, you seem to have divided the process into two parts ^{[excluding the very last part of the deals]}. Which one is the accurate one? From where I am, both traditional and modern escrow companies don't handle the conversion part!

Although one of the use cases of Bitcoin is to serve as a medium of exchange but based on the traction Bitcoin get from institutional investors, and organization I believe it's hard to see a Bitcoiners that will use BTC as the payment for real estate unless if the person want to take profit, and do the payment in USDT.
Personally, This is what I would do if I were in the situation of acquiring real estate.

Unfortunately, crypto is still not accepted as a payment tool in every country in the world. In my country, it is illegal to pay any goods or services with crypto coins. So, there is no way to purchase Real Estate with Bitcoin or any altcoins. Here, we only have an option that we convert our crypto coins in local exchange to our national currency (Rupiah). Then we can purchase any good or service, including Real Estate.

I would never think of using the bitcoin in my portfolio to buy real estate unless if I have accumulated as much bitcoin and even after purchasing the real estate assets I should still be left with a reasonable amount of bitcoin in my portfolio because I would never want to become a no coiner .lastly the transaction fees is also one thing that should be put into consideration.

Partly youre right that it could do good since bitcoin value can increase in future but real estate too is same like bitcoin, you buy it and it also increases it value. Never seen a lot or house loses its value in time since like bitcoin its also a necessity and appreciate its value too in due time. In my opinion, doing both is better. Not against bitcoin but real estate is also something worth for if in any case we would trade our asset for that. Also it can generate revenue through rentals or new system right now like airbnb.

Well, first of all I will answer with the assumption that I have the ability to do so. As long as the seller can accept it without involving Bank and other fees, I think it is acceptable for me. I don't know if it is possible outside my country, but as far as I know it is possible in my Country. But on the other hand, I feel it is not right to exchange a much more valuable asset like Bitcoin for exchange, unless you have so many other savings and it is only a few percent of the total, So I choose number 5 from OP question.

It's going to be a sad moment to let go of the BTC holdings that I have but as long as I won't sell them all for a real estate, that will be fine.

I'll still hold and I think it's an ease of transaction if the property that I like to acquire can be purchased with Bitcoin or any other crypto that I have.

But I think, the process might be at ease but the taxes, I don't know yet on how it will go since I haven't done this personally.