![]() Though they say they've tokenized $2B of real estate, the marketplace is currently very light on deals and the company's revenues small. Red Swan has raised only $1.3M over 3.5 years (?) But Red Swan at this point is just a small startup. As it is, buyers must pay up front in full, without a mortgage, significantly limiting the number of bidders.Red Swan got good press for itself and for Polymath in March 2020. To expand the potential pool of buyers, Karayaneva said in the future Propy also plans to allow buyers to take out mortgages through its technology in USDC, a so-called stablecoin whose price is always on par with the U.S. Unlike the sale this week, the next transaction will use a cryptocurrency called USDC, which unlike Ether, is pegged to the price of the U.S. Karayaneva said the company is selling a house in Tampa as an NFT in March, followed by other listings like a condo in Chicago and a single-family home in San Francisco. Propy’s goal, though its NFT auction, is ultimately to appeal to the crypto-savvy or young homebuyers who are fed up with the cumbersome process of purchasing a house. The seller was required to go through with the auction as designed, unless there were no bidders, said Karayaneva.Īlthough the house sold for about $653,000 on Thursday, by Friday the value of the underlying Ether was down to about $613,000 because of a decline in its price. But they were not through the online auction and its unusual NFT process. Some people offered higher bids on the house than the ultimate winner. “The only bureaucratic process that we had during the auction was a five-minute process of going through the KYC verification where the bidders had to provide their names and their ID and connect their wallet,” Karayaneva told Fortune, referring to “know your customer” rules. People who signed up for the auction were invited to visit the home and review the documents before it took place to make sure they wanted to buy it, she said. The usual due diligence processes that come with buying a home, like completing an inspection, obtaining a title report, and conducting a title search, were done by Propy before the auction, Karayaneva said. Karayaneva told Fortune that Propy’s legal team came up with the LLC maneuver so the ownership transfer could be instantaneous. Propy itself also sold TechCrunch founder Michael Arrington’s apartment in Kiev, Ukraine last year for 96 Ether, about $93,000 at the time. Red Swan CRE Marketplace, lets U.S.-based investors become fractional owners of commercial properties via digital tokens recorded on the blockchain. Other companies have experimented with combining crypto and real estate investments before. Then there are other countries that havent yet reached a consensus about regulations. Even so, not all countries are in favor of full digitization of securities, such as shares and bonds, due to special requirements regarding notarized transfers and paper-based ownership certificates. ![]() Propy charged the seller a flat fee for its services. 1.All tokenization projects are subject to standard securities regulation, which is supported by many countries. The seller was Leslie Alessandra, the founder of a Tampa area–based blockchain company. Karayaneva declined to identify the buyer. After the auction winner was determined, ownership of the LLC was automatically transferred to the winner and the seller received the crypto payment in her digital wallet. The first step involved transferring ownership of the house from the seller to a limited liability company. The use of an NFT in the sale meant that the process involved was hardly ordinary. But in the end, there were only two bidders, each of whom had to have cryptocurrency worth at least $650,000 -the starting price-in a digital wallet. The price was 210 Ether, the equivalent of $653,000 at the time of the sale, according to Propy.Ībout 50 people went through the process of verifying their identities online for the auction. ![]() “We truly feel that we made history, both for the real estate industry and for the crypto community,” said Natalia Karayaneva, the CEO and founder of Propy, which managed the online auction and transaction.
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