Real estate and non-fungible tokens have collided in what could be the first auction of a home as an NFT. 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.
The first auction of a home as an NFT
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.
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.”
“In December 2021, NFT sales hit $4 billion, and real-world assets will soon account for a considerable share of that market,” Karayaneva added. “We’ve created all of the necessary smart contracts as well as a legal framework that permits any real estate property in the United States to be tokenized.”
The property rights to the Florida home will be minted as an NFT — indicating ownership on-chain — which Karayaneva claims will reduce closing time. The property will subsequently be owned by the NFT owner through a limited liability company (LLC) that will house the NFT.
Last year, the startup sold TechCrunch founder Michael Arrington’s studio flat in Ukraine for around $113,176 in ether at the time of writing.”The standard real estate sale process is time-consuming and inefficient…
“It’s an opaque, archaic, and excessively lengthy process that’s riddled with threats like wire fraud,” Arrington added. According to Karayaneva, Propy can help streamline the process of real-world property sales while also luring younger investors to the market.
“Gen-Z and millennials may now readily transact real estate,” she said. “This is exactly what they’re looking for.”
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 simplified and safeguarded blockchain recordings,” Perry explained. “However, the regulatory system is still in its infancy, and there are many unanswered concerns about the government’s role in crypto.”
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