Last updated March 7, 2023
How long does it usually take to purchase real estate? Imagine buying real estate within a couple of minutes. And a marketplace that allows everyone to purchase real estate that way.
Real Estate NFTs
Propy, a proptech startup that allowed Techcrunch’s founder to sell an apartment in the Ukraine in 2017 via blockchain technology, is now selling the first U.S. real estate NFT in Tampa, Florida.
The company’s goal is to automate the real estate transaction process. It’ll make its NFT service available for everyone in the world, and market it to owners and brokers, to enable real estate trading within minutes globally.
Non-Fungible Token Technology
NFTs became hugely popular in 2021 and trading NFTs allowed many people to make hundreds of thousands, and sometimes millions of dollars. NFT artist Beeple went from being mostly unknown to selling his NFT works at Sotheby’s for $69 million last year.
Non-fungible tokens are not just a technology which makes it possible to sell the rights to digital art, it’s allowing the integration of blockchain technology with all kinds of assets, including music (i.e. Royal) and soon real estate.
Tokenizing Real Estate
Propy’s service uses smart contracts and a compatible legal framework to place the record of purchase on the blockchain. This allows tokenizing any kind of real estate property. It’ll reduce the need for middle men, automate the closing process and make every real estate transaction faster, simpler, more secure and less costly.
The main difference to a normal real estate transaction is that the buyer of the first U.S. real estate NFT at the upcoming auction is going to buy a Florida-based investment property, a US-based entity that owns the property the ownership rights of which are associated with an NFT.
Propy answers more questions about the auction in these two Q&A videos.
Benefits of Real Estate NFTS
The automation of the real estate transaction process is going to simplify the purchasing process and make it easier for people to buy and sell real estate.
The ownership of Propy’s first NFT property is not fractional, but turning properties into NFTs will make it possible to fractionalize them.
Leveraging your digital property will also be possible. Property NFTs could be borrowed against with decentralized finance (DeFi) platforms like nftfi or Drops, meaning they could be liquified and used to purchase additional assets or to earn interest.
Homebuilders, homeowners or real estate agents could build royalty fees into the NFT to benefit from secondary sales as future compensation for the effort it took to bring the property on chain.
The Future of Real Estate NFTs
Following in Florida’s footsteps, Vermont and Arizona are also passing a legislation that makes smart contracts legally admissible records. Propy is planning more real estate NFT sales in Tampa, Miami, San Francisco, and Chicago. Additionally, the company is rolling out its marketplace and will be making its service available to everyone.
There aren’t many competitors at the moment that offer similar services. RealT allows anyone in the world (except US residents) to invest in fractional U.S. real estate through a token-based blockchain network, however the concept and technology is slightly different from Propy’s model.
Real estate NFTs will most likely attract investments from successful crypto investors who would like to diversify their crypto portfolio and invest some of it in real estate, while staying in crypto.
As this is also a brand new space it is expected that it will be heavily reported on and could become a new mainstream trend, similar to where NFT art is at the moment, and where music NFTs might be going in the near future.
Another interesting aspect is the fact that NFTs are often used as status symbols; everyone can see NFTs in public wallets. Trophy real estate of prime properties could be owned by celebrities and other people who would like to show off their assets like collectibles.
Propy’s token was recently listed on Coinbase and rallied by over 200% upon the announcement of the listing, as well as the upcoming historic auction. If real estate NFTs take off, this will also boost Propy’s token value in the future.
By: Avid Insights Team
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