The first ever NFT real estate auction happened in Kyiv, Ukraine, on June 9th 2021. The apartment was put up for auction by Michael Arrington, the founder of TechCrunch and Arrington Capital. Arrington first bought this apartment using ETH in 2017. The transaction was completed using a crypto project called Propy, which is an ERC-20 token.
Propy has created a space where the complete real estate transaction occurs on the blockchain. This goes from the initial purchase offer to the payment, and deed transfer will all be loaded onto the immutable blockchain. Propy has allowed buyers and agents to complete over $1 billion in transactions and over 1000 title transfers using the Ethereum blockchain. The purchase of the property in Kyiv was made via Seen.haus on June 9th. It was sold to Devon Bernard, a software engineer, for 36 ETH. The complete NFT contains the ownership transfer paperwork, pictures of the apartment and digital art and a physical print that graffiti artist Chizz created.
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Propy and Arrington aim to move more real estate onto the blockchain using NFT’s. They have even created the correct legal requirements to be allowed to transfer ownership once the NFT has been sold. There is a process that they have created for the sale of real estate NFT’s. First, the owner will sign legal documents stating that they intend to sell and therefore sign over the ownership of the NFT to any future buyers. The NFT will then go on auction, and once the auction has been completed, the seller will receive the payment via cryptocurrency, and the buyer will become the new owner of the NFT and property.
NFT’s are a great new concept that has the potential to create more real world applications for blockchain technology. NFT’s have gained popularity in 2021 because it is a more concrete proof-of-concept than NFT’s like digital art. As with other NFT’s, the person that owns the NFT owns the property. Having your title as an NFT provides the security of an immutable blockchain, which will give you the option of borrowing against your property without having to use a middleman. People will no longer have to go through the slow, intricate banking systems to borrow against their property. This is one step closer to bringing DeFi into the mainstream market.
People may be hesitant to participate due to the legal aspect, but Propy has already taken care of this. In 2019 the U.S. National Association of Realtors, the largest real estate association in the United States, invested in Propy. Propy has so far developed smart contracts that are in line with the legal requirements within the United States. Propy has a great business model and holds more tangible value than many crypto projects.
NFT’s in real estate is a huge step in the right direction. Propy could reshape real estate by making transactions and transfer of titles a smoother process. It is more secure, and it is more affordable when buying through the blockchain.