A four-bedroom property in Gulfport, Fla., is on the market this week with a starting price of $650,000, an otherwise typical listing in a busy real estate market.
Unless there’s a crypto caveat: buyers can buy the house using ether and receive a property deed via an NFT, making it one of the first such transactions in the US real estate market. Despite the fact that it is now normal for postings to draw a large number of buyers, the auction had 1,500 people registered by Tuesday. Let’s talk about rivalry.
Propy, a blockchain startup, will host the auction on its website. According to CEO Natalia Karayaneva, the company’s services could “become a norm in the [real estate] market.”
“NFT sales reached $4 billion in December 2021, and real-world assets will soon represent a significant portion of that market,” Karayaneva said. “We have developed all the necessary smart contracts and a compatible legal framework that allows tokenizing any real estate property in the United States.”
The property rights to the Florida home will be minted as an NFT — a token that represents ownership on the blockchain — which Karayaneva claims will speed up the closing process. The land will be owned by the NFT owner through an LLC that houses the NFT.
Last year, the startup sold TechCrunch founder Michael Arrington’s studio flat in Ukraine for $113,176 in ether.
“The traditional real estate sale process is arduous and broken…It’s an opaque, dated, and unnecessarily lengthy process, full of risks such as wire fraud,” Arrington said.
According to Karayaneva, Propy can help streamline the process of real-world property sales while also luring younger investors to the market.
“Now, Gen-Z and millennials can transact real estate very easily,” she said. “This is what they [want.]”
Propy’s tokenized real estate business, on the other hand, only functions if the home buyer has enough ether to fuel the transaction – a possible stumbling block for bidders. According to Karayaneva, the firm is looking at funding opportunities for real estate-backed NFTs.
The National Association of Realtors and venture capitalist Tim Draper are two of the company’s backers.
When it comes to NFTs and smart contracts, Braden Perry, a former CFTC enforcement attorney, told Blockworks that real estate has “great upside potential,” but the US regulatory structure “lags innovation” to enable it.
“The [real estate] title process is ideally suited for streamlined and protected recordings on a blockchain,” Perry said. “But the regulatory system is still new, and there are a lot of questions regarding the government’s role in crypto.”