A version of this article first appeared in the CNBC Property Play newsletter with Diana Orrick. Property Play covers new and evolving opportunities for real estate investors, from individuals to venture capitalists, private equity funds, family offices, institutional investors and large publicly traded companies. Sign up to receive future editions directly to your inbox. Anyone who has ever bought or sold a home knows how long and tedious the closing process can be. It requires outdated paperwork that requires multiple signatures, disclosures, and mountains of compliance forms from various parties. Some of the processes are digital, but most are not. One solution is emerging. That means putting everything on the blockchain. Propy, a Miami-based blockchain technology company founded in 2017, is working to modernize the closing process and recently received significant funding to do so. In late January, Propy announced it had secured a $100 million financing facility from private investment firm Metropolitan Partners Group. The company said the funding will be used to integrate title and escrow companies into an end-to-end closing platform powered by AI. “We are convinced that blockchain is the next phenomenon of the internet,” said Natalia Karayaneva, founder and CEO of Propy. “The internet moves information, blockchain moves value. It’s already moving money and moving treasuries. But the real estate industry is still lagging behind.” The main reason for this is that the industry doesn’t understand blockchain correctly, Karayaneva said. Blockchain is like a giant shared digital file cabinet that no one can control. Anything recorded on the blockchain cannot be changed. “This technology allows us to record deeds and transactions, but it is impossible to change this data,” Karayaneva said. “This allows for a fraud-free system.” Propy has now acquired four established title companies, but the transition hasn’t been easy. These title companies “have such a huge fear of AI that when we make acquisitions, we go through in-person training on both AI and blockchain and cryptocurrencies. We have established courses and training for escrow personnel on how to do transactions, and once they understand, transactions happen naturally,” Karayaneva said. Closings that once took weeks now take just hours, she noted. When Propy receives a signed real estate purchase agreement from a REIT, real estate developer, or real estate agent, its AI extracts data such as the purchase agreement, address, all contingencies, and all conditions, and a smart contract on the blockchain is initiated. “We do it through fintech solutions, but the blockchain immediately gets this data onto the public blockchain,” Karayaneva said. Meet Avery Propy is also using the new funding to develop an AI agent to facilitate transactions. An agent named Avery is always available to answer clients directly and explain how Propy works and how the AI works. Avery also has an Instagram account. Avery constantly checks emails and transactions, extracts all data points, and feeds it all into a smart contract platform. Agents can also make phone calls. “She’s an escrow officer who never sleeps,” Karayaneva said, noting that some customers don’t even realize they’re not human. “This is omnichannel communication, and she can communicate with our buyers, sellers, REITs, institutional investors, and vendors, including ordering mortgage payments from vendors.” GENIUS Law A major milestone for blockchain technology came last year with the passage of the GENIUS Law, which gives what Karayaneva calls “legitimacy.” Created rules for stablecoin, a cryptocurrency linked to the US dollar. It mandated that the companies issuing these coins, which are transferred on the blockchain, must actually hold real dollars or safe assets behind them. “Real estate developers and REITs started reaching out to Propy because we have built this brand over the years with a strong belief that there is a way to legally accept cryptocurrencies in real estate and record them legally on the blockchain and within the county,” Karayaneva said. “This has unleashed all this huge interest from real estate developers.” Miami, in particular, where Propy is based, is seeing huge demand from international buyers, many of whom prefer to use cryptocurrencies. Karayaneva, who said she grew up in the former Soviet Union and saw her property confiscated by the central government, said she deeply believes in the technology’s potential to protect consumers, especially in developing countries. The decentralized nature of blockchain provides an immutable record of ownership. “Real estate is the most important and largest asset class in the world. It is the basis of democracy and capitalism,” Karayaneva said. “It makes sense to move this asset class on-chain. People need to own this record, and they need to do it in a decentralized way.”
