How a real estate NFT works today…
On a Facebook video chat, Amy Heckler of Heckler Realty in St. Pete’s Beach, Florida answered real estate agents’ questions, surrounded by a white and red Heckler Realty banner and two office plants. Heckler was the listing agent of the auctioned off Gulfport home. As she catalogued her experience, bubbling excitement around NFTs transformative thrall slowly subdued.
The Gulfport seller, Heckler explained, created a limited liability company that held ownership of the home. In creating a Delaware LLC, the Florida seller and Heckler joined forces with Propy, a five-year-old company headquartered in Palo Alto, California.
Propy then guided the seller into minting the LLC as an NFT. NFTs are digital tokens providing a certification of authenticity that you are acquiring the rights to what an NFT represents. For example, purchasing an NFT of a JPEG of a painting transfers the intellectual property rights of the painting. For the Gulfport home, the NFT did not represent the property itself. It represented LLC ownership of the property.
Next Propy auctioned off the NFT. Bidders were required to be cash buyers, or more precisely cryptocurrency buyers, or – more precisely still – have a virtual wallet on the Ethereum blockchain.
Unlike currencies issued by a country’s government, cryptocurrency is digital and has no central administration. A blockchain ledger facilitates and records cryptocurrency exchanges. Bitcoin is perhaps the best-known cryptocurrency. But Ethereum was the first with a blockchain that enabled NFT sales.
“Propy is blockchain agnostic,” said the company’s CEO, Natalia Karayaneva. Still, Propy used Ethereum for the auction, where the winning bidder used the cryptocurrency Ether.
Generally, listing agents extract a commission from the homeseller and then split it with the buyer’s agent. In this particular sale, Heckler worked out an arrangement to receive the commission…