A home in Gulfport will be auctioned off Tuesday as an NFT.
It’ll be the first piece of U.S. real estate to be auctioned as a “non-fungible token”, said current owner Leslie Alessandra.
Palo Alto-based real estate technology company Propy will mint the property rights into a digital token and host an online auction. Bidding for the home at 6315 11th Ave. S will start at $650,000, according to Propy’s website. Bidders will pay using cryptocurrency. Last year, Propy sold TechCrunch founder Michael Arrington’s apartment in Kiev as an NFT.
The Spanish-inspired house in Gulfport has four bedrooms and two and a half bathrooms, a bright blue door, large oculus window and an iron dinner bell in front.
Alessandra, a local real estate investor and founder of Tampa Bay blockchain company DeFi Unlimited, said she chose to list the home as an NFT to showcase the use of the evolving technology. An NFT is stored on a decentralized ledger known as the blockchain and is typically used for digital assets like music and art. In the case of the Gulfport house, it’s a digitally secure certificate of authenticity, similar to a deed.
“Is this just hype or is there a real world application? (The auction) is really to stimulate conversation,” Alessandra said.
Minting property rights into an NFT would allow owners to sell a home as quickly as a Venmo transaction, she said. It would accomplish that by putting ownership documents under a limited liability corporation. In short: The NFT is an LLC.
“You’re essentially just selling a company and a company owns that house,” said Christopher Vasilakis, a local real estate and virtual-reality expert.
Using NFTs in real estate transactions would bridge the physical and digital worlds, he said. Vasilakis owns Guided Virtual Tours, which creates virtual reality tours of houses for sale, and is looking for ways to expand his real estate ventures in the metaverse.
The property rights for the home will also have another NFT attached to them: a mural from a local artist.
Derek Donnelly, aka Saint Paint, will create an indoor mural on one of the home’s exposed brick walls as part of the NFT sale. The work will also be created into an NFT to be included with the house in the auction, he said.
He described the work as ”something elegant to complement the already beautiful architecture” of the house. Donnelly said one day he hopes NFTs can immortalize the street art Tampa Bay is known for.
As part of the home buying process, a sale must be recorded within the county to transfer ownership rights, Vasilakis said. That process can take days or weeks. To get around this, a legal entity must own the property, he said. That company is responsible for paying property taxes.
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“There probably will be ways to sell the property and then throw in crypto-backed mortgages,” Vasilakis said. “But we’re just not at that moment.”
NFTs are relatively new and it’s hard to say how this could work in the future, he said. There could also be challenges with cryptocurrency volatility. It’s not clear if the value of a house tied to an NFT would be affected by the crypto market.
Kendall Bonner, a Tampa real estate agent and attorney, said she expected blockchain to impact real estate, but not for NFTs to enter the housing market so quickly. Real estate is typically slow to embrace change, and lawmakers are rarely ahead of technology. It would be interesting to see, she said, if there’ll be any legal pressures in the future from transactions like this.
Closing times in the Tampa Bay area have accelerated in this red-hot sellers market. In 2017, most homes in Pinellas County took 80 days to sell, according to data from Florida Realtors. Now it takes less than 50. There’s also a record number of investors buying homes in the region, typically through cash transactions, according to data from RedFin.
Alessandra said she wasn’t driven to sell in this unconventional way because of the competitive housing market. She said she was already planning on selling the Gulfport house when the idea came up during a conversation with Propy representatives about how to showcase blockchain technology.
While this home will be her first real estate NFT, Alessandra said it won’t be her last. Her company, DeFi Unlimited, is hosting an NFT launch party Friday night at Nova 535 in St. Petersburg to promote the auction.
“There’s certainly something special about being the first, for sure. It’s kind of like having the first computer that was ever connected to the internet,” Alessandra said. “But I certainly hope that the owner will be someone that’s an advocate for blockchain and NFTs and it would be a representation of the future.”