Tampa Bay is known for its year-round warm climate, gorgeous white sand beaches, champion sports teams, and now a burgeoning cryptocurrency real estate market.
With escalating home prices and historically low inventory in the bay’s competitive marketplace, both buyers and sellers may soon find the best values involve crypto and the blockchain. And since crypto can bypass traditional real estate processes, becoming a crypto expert can make agents a vital guide in this new space.
In the first quarter of this year, Tampa Bay made American history when a home in Gulfport became the first in the U.S. to be auctioned as an NFT or non-fungible token using cryptocurrency. The house sold for around 210 Ethereum, a type of cryptocurrency, amounting to $631,790 after currency conversion.
Cryptocurrency is simply a digital currency exchanged through a computer network and is not reliant on any central authority such as a government or bank. Coin owner records are stored in a digital wallet. Blockchains are open decentralized networks of computers used as proof of work or, in the case of a real estate sale, proof of stake.
The sale was facilitated by Propy, an offer management and transaction platform that streamlines real estate transactions entirely online with just a few clicks.
Propy followed the Gulfport sale with the sale of a Hyde Park condo as an NFT just weeks later for $185,000 USDC, following multiple bids in 24 hours. Ownership of the NFT transferred within 15 minutes, thanks to blockchain technology.
NFTs are commonly used to buy and sell digital assets, such as music or art. You may have heard that our own MVP Tom Brady recently acquired a unique collection piece, Bored Ape #3667 for the price of $430,000 or 133 Ether. Bored Ape Yacht Club is a collection of 10,000 unique NFTs bearing a cartoon image of disinterested apes.
NFTs also can also be used to trade ownership rights to physical objects like homes and other tangible property.
Currently, within the legal frameworks of real estate transactions, the use of a token or crypto asset cannot hold or own a title to a property because it will not transfer rights. In order to track ownership of a property, it would need to be absorbed with a legal entity such as an LLC.
So how did the digital sale of the Gulfport property work? The process involved the seller of the property, their real estate agent, and Propy, who was responsible for minting the NFT (creating a token on the blockchain) and setting up the online auction. More than 7,000 users registered to place an online bid for the home, confirmation that this type of digital transaction has simulated buyers’ interest in this innovative technology and process.
Benefits of the digital transaction: Bidders can view the offer process in real-time, permitting them to update figures as necessary to be competitive; rapid transfer of ownership – no long closing periods; conversion of a digital asset to a tangible one, and because blockchain technology can eliminate intermediaries from the real estate transaction process, costs can be less.
“We have eliminated the “worry and wonder” associated with the purchase process,” says Natalia Karayaneva, Propy’s CEO and founder told RisMedia. “Because the process is transparent, interested buyers and their agents were able to view offer activity and adjust their price points accordingly. They didn’t have to worry about whether or not their offer was accepted or high-enough.”
Additionally, the launch of smart contracts in blockchain tech platforms now permit assets like real estate to be tokenized and traded like cryptocurrencies such as Ethereum and Bitcoin.
There are disadvantages, as well. In the sale of the Gulfport home, when the cryptocurrency was converted, the actual sale price was less than the $650,000 asking price. Crypto can undergo wide valuations in a short period of time. USDC, used in the Hyde Park condo sale, is considered a “stablecoin” because it is pegged to the U.S. Dollar, helping to eliminate some of the volatility.
While still very preliminary, comprising many unknown potential risks, NFTs and blockchain technology appear to have a solid future in real estate. Through platforms like Propy, real estate professionals can receive their Crypto Certified Agent* accreditation for just under $500 providing them with the knowledge and tools needed to improve their understanding of this digital arena.
Greater Tampa REALTORS® welcomed Chief Revenue Officer of Propy, Joe Budelli to discuss the future of real estate through blockchain, crypto, NFTs and the metaverse in April 2022. With 130 virtual attendees, this successful turnout yet again proved the importance and need for more education around this technological shift in our industry.
On Thursday, June 30, GTR will host its second crypto class. We invite all members to gain the skillset needed to improve their understanding of this digital arena in our next course, ACE Crypto. Here, agents will learn the fundamentals of how crypto currency works, the benefits to customers and how REALTORS® can integrate the technology into their business.
The use of a token or crypto asset cannot hold or own a title to a property because it will not transfer rights.
* Crypto Certified Agent accreditation is not a National Association of REALTORS® certification
Sources: www.magazine.realtor/daily-news/2022/05/06/as-sun-belt-relocations-increase-home-prices-follow
