A house in Gulfport auctioned off as a non-fungible token on Thursday sold for $654,310, or about 210 ethereum. It’s a first for U.S. real estate, according to real estate transaction firm Propy.
A user named “A.J.” bought the house during an hour-long extension of the auction. The buyer’s first name is Amanda and the person is U.S. based, said Propy CEO Natalia Karayaneva.
Bidders had to provide identification and their full name before participating in the auction to authenticate house ownership. Karayaneva said she couldn’t disclose any more information without the buyer’s consent. She said she doesn’t know why “A.J.” bid for the home or what they will use it for yet.
NFTs are typically used for digital collectibles like art and music, where ownership can be transferred and verified through the blockchain — a decentralized and secured log on the internet. In this case, the property rights were transferred to the limited liability corporation Never Forget to HODL LLC. (The phrase HODL means to “hold on for dear life” and is commonly used by cryptocurrency traders.)
The company was minted into an NFT, where the rights to the company and the property are stored on the blockchain. It had to be paid in ethereum, a cryptocurrency used mostly for smart contracts and NFTs, even though the bidding was based on the U.S. dollar. Technically, “A.J.” didn’t buy the house, but rather Never Forget to HODL LLC did.
Leslie Alessandra, the local real estate investor who listed the home, told the Tampa Bay Times she wanted to showcase the real-use applications of the blockchain. Alessandra is also the founder of blockchain company DeFi Unlimited.
Propy plans to mint 10 more properties across the U.S. as NFTs, Karayaneva said. Propy is interested in unique homes and structures — whether for architecture, location, artwork, historical relevance or price — because NFTs are typically “collectibles.”
Their next listing is in Tampa, Karayaneva said. This time, it’s a condominium unit.
The condo will be listed on the blockchain market March 2, Karayaneva said. She did not specify where the condo is located, but said its current value is about $200,000 to $300,000.
The Gulfport home was expected to garner attention as the first-known NFT sale in the U.S. real estate market. The sale even made national news.
Propy postponed the sale by two days due to high interest. Nearly 3,000 bidders signed up for the online auction, and 50 had been officially verified by Propy, Karayaneva said. Bidding for the auction began at $650,000.
But it didn’t get the same excitement as the first sale Propy hosted for TechCrunch founder Michael Arrington’s apartment in Kiev. Despite the high interest, only two bids went through during the eight-hour auction.
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Alessandra said she knew there was a chance it would sell close to the minimum bid. If the auction failed to get any bids, there were several buyers who expressed interest in making a traditional offer with cash.
“We were comfortable with that risk because we understood that someone needed 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 when more people didn’t race to bid near the end of the auction.
“At the end of the day, the people who really wanted this home, they got it,” Karayaneva said.
Even though the auction didn’t sell high above the starting bid, the home’s value soared. Alessandra bought the Gulfport property on 6315 11th Ave. S for $250,000 in January 2021, according to county property records.
The Spanish-inspired house in Gulfport has four bedrooms and 2½ bathrooms, a bright blue door, large oculus windows and an iron dinner bell in the front yard. The auction included a commissioned mural by a local artist, also minted into 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 St. Petersburg, and titled it Pelicoin Mint.
Currently NFT ownership can only be done through cash transactions, without any additional financing. But as NFTs in real estate become more popularized, Karayaneva said, options like crypto-backed mortgages could be possible, as the house can be placed as collateral.
“Our interest remains in the people who actually want to live in those homes, or if they don’t, they would rent it out and definitely wouldn’t leave those homes unoccupied,” Karayaneva said.
Karayaneva said she hopes the NFT technology puts real estate assets into the hands of the next generation instead of institutional investors. Easing the transactional period of buying a home would lower fees, she said, and give millennial and Generation Z homebuyers more money for a downpayment.
“But of course we need first to make another 10 to 20 deals like the one in Tampa and polish everything to understand both the seller and the buyer,” Karayaneva said. “And then we will provide wider opportunities.”