Selling or buying a home often involves a tedious closing process involving antiquated paperwork that requires multiple signatures from the parties involved, various disclosures, and a pile of compliance forms.
While some of that process is digitized, most is not, CNBC reported. And that leads us to blockchain as a possible solution.
Miami-based blockchain tech company Propy, which was launched in 2017, has been trying to modernize the closing process and recently got a big financial boost to do it, CNBC said. In late January, Propy announced it had secured a $100 million credit facility from Metropolitan Partners Group, a private investment firm.
Propy said the money would be used to consolidate title and escrow companies into an artificial intelligence-powered, end-to-end closing platform.
Blockchain is Next Internet Phenomenon
“We have this conviction that blockchain is the next phenomenon after the internet,” said Natalia Karayaneva, founder and CEO of Propy. “The internet moved information, blockchain will move value. It already is moving money. It’s moving Treasurys. However, the real estate industry is still behind.”
That’s mostly because the industry doesn’t exactly understand blockchain, Karayaneva said.
So, what is blockchain? According to CNBC, it is like a massive, shared, digital filing cabinet that no one person can control. And, things that are recorded on the blockchain cannot be altered.
“This technology allows us to record deeds and transactions, and it’s impossible to change this data,” Karayaneva said. “It allows us to be a fraudless system.”
Researchers and industry analysts believe blockchain could reduce fraud, improve transparency, and lower transaction costs in real estate, though adoption is still relatively early and regulatory issues remain important.
Propy is not alone in using blockchain.
Others included RealT, which tokenizes residential rental properties so investors can buy fractional ownership through blockchain tokens and receive rental income digitally; ShelterZoom, which used blockchain to track offers, contracts, negotiations, and transaction documents in residential real estate; and Ubitquity, which focuses on blockchain-based title and deed recordkeeping to reduce fraud and speed up title searches.
Also, RealBlocks provides blockchain infrastructure for private real estate funds and alternative asset managers; Vairt offers tokenized real estate investing platforms and digital securities tied to real estate assets; RedSwan CRE specializes in tokenizing commercial real estate assets for fractional investing; Blocksquare helps real estate companies create tokenized property investment marketplaces; Republic uses blockchain infrastructure for alternative investments including real estate crowdfunding and tokenized assets; and Figure Technology Solutions, which applies blockchain to mortgages, HELOCs, and lending products tied to real estate.
Propy has bought four established title companies.
Fear of AI
Those title companies “have a very big fear of AI, and when we acquire them, we have this in-person training both on AI and blockchain and cryptocurrency. We have established courses and training for those escrow officers on how to do transactions, but once they understand, the transaction happens on its own,” Karayaneva said.
She said that closings that once took weeks now can take just a few hours.
Here’s how it works.
When Propy receives a signed purchase agreement for a property, whether it’s from REITs, a real estate developer or a Realtor, Propy’s AI extracts the data – purchase agreement, address, all the contingencies, all the conditions – and then a smart contract on blockchain starts.
“We do it through our fintech solutions, but then the blockchain immediately gets this data on the public blockchain,” Karayaneva said.
Propy said it also is using its new funding to develop an AI agent to help facilitate deals. The agent, called Avery, responds directly to clients at any time, explaining how Propy works and what the AI does. CNBC noted that Avery even has an Instagram account.
According to CNBC, Avery checks emails and transactions constantly, extracts all the data points, and then feeds it all into a smart contract platform. Avery can also make calls.
‘Escrow Officer That Never Sleeps’
“She is an escrow officer that never sleeps,” said Karayaneva, noting that some clients don’t even realize it’s not a human. “It’s an omnichannel communication where she can communicate with our buyers, sellers, with REITs, institutional clients, and with vendors, such as ordering mortgage payouts from vendors.”
CNBC noted that a major milestone for blockchain technology occurred last year with the passage of the GENIUS Act, which gave it what Karayaneva calls, “legitimacy.” The act created rules for stablecoins, which are cryptocurrencies tied to the U.S. dollar. It mandated that companies issuing these coins, which are transferred on the blockchain, actually must hold real dollars or safe assets behind them.
