A home in Gulfport auctioned off as a non-fungible token on Thursday sold for $654,310, or roughly 210 ethereum. This is a first for American real estate, according to the real estate transaction company Propy.
A user named “AJ” bought the house during an hour-long auction. The buyer’s first name is Amanda and the person is based in the United States, said Propy CEO Natalia Karayaneva.
Bidders were required to provide identification and their full name before entering the auction to authenticate ownership of the home. Karayaneva said she could no longer release information without the buyer’s consent. She said she doesn’t yet know why “AJ” bid on the house or what they would use it for.
NFTs are typically used for digital collectibles like art and music, where ownership can be transferred and verified via blockchain – a decentralized and secure log on the internet. In this case, ownership rights have passed to Never Forget Limited Liability Company at HODL LLC. (The phrase HODL stands for “hold for dear” and is commonly used by cryptocurrency traders.)
The company has been transformed into NFT, where the rights to the company and ownership are stored on the blockchain. He was to be paid in ethereum, a cryptocurrency used primarily for smart contracts and NFTs, even though the auctions were based on the US dollar. Technically, “AJ” didn’t buy the house, but rather Never Forget from HODL LLC.
Leslie Alessandra, the local real estate investor who listed the home, told the Tampa Bay Weather she wanted to present the real applications of the blockchain. Alessandra is also the founder of blockchain company DeFi Unlimited.
Propy plans to hit 10 more properties across the United States as NFTs, Karayaneva said. Propy is interested in unique homes and structures – whether for architecture, location, artwork, historical relevance, or price – because NFTs are generally “collectibles”.
Their next roster is in Tampa, Karayaneva said. This time it’s a condominium.
The condo will be listed on the blockchain market on March 2, Karayaneva said. She did not specify where the condo is, but said its current value is around $200,000 to $300,000.
The Gulfport home was expected to attract attention as the first known NFT sale in the US real estate market. The sale even made national news.
Propy postponed the sale for two days due to high interest. Nearly 3,000 bidders have registered for the online auction and 50 have been officially verified by Propy, Karayaneva said. Bidding for the auction started at $650,000.
But it didn’t generate the same excitement as Propy’s first sale for TechCrunch founder Michael Arrington’s Kyiv apartment. Despite the strong interest, only two bids were submitted during the eight-hour auction.
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Alessandra said she knew there was a chance it would sell near the minimum bid. If the auction got no bids, several buyers expressed interest in making a traditional cash bid.
“We were comfortable with this risk because we understood that someone had to be the first to prove the concept,” she said in a statement. “It can be scary and intimidating to be that person.”
Karayaneva said she was surprised more people didn’t rush to bid towards the end of the auction.
“In the end, the people who really wanted this house, they got it,” Karayaneva said.
Even though the auction didn’t sell much above the opening bid, the home’s value skyrocketed. Alessandra purchased the Gulfport property at 6315 11th Ave. S for $250,000 in January 2021, according to county property records.
The Spanish-inspired home in Gulfport features four bedrooms and 2½ baths, a bright blue door, large oculus windows, and an iron bell in the front yard. The auction included a mural commissioned by a local artist, also minted in an NFT. Derek Donnelly, known as Saint Paint, was commissioned to create a mural as part of the sale. He painted a pelican, the symbol of Saint Petersburg, and titled it Pelicoin Mint.
Currently, NFT ownership can only be done through cash transactions, without any additional funding. But as NFTs in real estate become more popular, Karayaneva said, options such as crypto mortgages could be possible, as the house can be placed as collateral.
“Our interest remains in people who actually want to live in these houses, or if they don’t, they would rent them out and certainly not leave these houses unoccupied,” Karayaneva said.
Karayaneva said she hopes NFT technology will put real estate assets in the hands of the next generation instead of institutional investors. Relaxing the transactional period for buying a home would lower fees, she said, and give Millennials and Gen Z homebuyers more money for a down payment.
“But of course we have to do another 10-20 deals like the one in Tampa first and tweak everything to understand both the seller and the buyer,” Karayaneva said. “And then we will provide wider opportunities.”