Propy CEO: Change is inevitable for 'archaic' real estate transaction process

Natalia Karayaneva—a serial entrepreneur who started her first business at the age of 19—aims to shake up the industry by automating real estate transactions using blockchain technology.

Homebuyers and sellers can use her company Propy to close transactions—and investors can use Propty to NFT their properties.

Given Propy’s fast rise over the past year, ResiClub wanted to chat with Karayaneva. To better understand the firm, and also her view on the residential real estate sector.

Below is ResiClub’s Q&A with Karayaneva.

Q: What's your assessment of the current U.S. housing market? Where do you see the market, which has watched housing affordability dramatically deteriorate over the past few years, head from here?

“I expect there to be some modest Fed interest rate cuts in the second half of 2024, so the market recovers. And if the Fed does not take this path it will cast further headwinds against an already strained real estate market. It will send values down a bit further and it will prevent the revival of investor activity in the real estate market until 2025. There will be more capital required to go into the sector. Even though the latest affordability issues primarily came from expensive financing, the long term cause has been the shortage of supply and the 10% home value fees associated with sales. In the future we’ll see many changes and innovations that will shrink these fees addressing affordability in a positive way. Price drops similar to 2008 are not expected due to the quality of homebuying behavior since, and a high percentage of home equity (~50%). Desirable markets like Miami and Tampa Bay area may see further moderate price increase, as the growing demand will be balanced by ongoing housing constructions and favorable policy environment for builders.”

Q: You've worked in several real estate markets across the globe, including the European Union. What, in your opinion, makes the U.S. real estate market unique compared to its peers around the world?

“The US market has more transparency to available listings, many other countries have fragment portals with varied quality of listings and agents that are not required to be licenced and not responsible. The European market is more affordable due to more straightforward construction processes, and the lack of inflated added value (title insurance and other fees that have been historically added to property years in the past decade). The biggest difference is that 10% of a home price is actually fees paid by the American consumer. Historically, US agent commissions have remained high, ranging from 5% to 6%, with the seller bearing the entire cost, unlike in other countries where buyer agent usage is less common, and hasn’t been a norm of the industry and commissions are lower. Another big differentiator is the existence of title insurance. Only the US & Canada have such sort of insurance, the rest of the world relies on one centralized authority under the Ministry of Justice to be the single source of truth. Both of those systems have their advantages and disadvantages.”

Q: There's a great deal of change happening and looming in real estate right now. Look no further than all the lawsuits, including the commissions' lawsuits. What do you expect the homebuying process and experience to look like in 5 to 10 years from now?

“Compass settles antitrust claims with a $57.5 million payment, following the National Association of Realtors $418 million settlement, and the recent $250 million Berkshire Hathaway HomeServices of America settlement signaling a shift in the real estate landscape. The homebuying process will be much simpler and secure in the upcoming years, leading to instant mortgage approval, almost instant appraisal processes, and a couple click buying process, which we’ve already witnessed thanks to web3 innovations. Smart contracts will be the backbone of these process to make them secure and resilient against hacks, while blockchain will be ledger, preserving privacy of data yet making the maintenance more affordable and transparent.”

Q: Tell us more about Propy. What market needs in real estate do you see Propy addressing?

“When you think of Propy, think of onchain real estate. Onchain real estate is benefiting all buyers and sellers. That’s a novel way where one’s ownership is fully protected, guaranteed, and easy to exchange. Instant web3 wallet-to-wallet real estate sales, RWA, onchain home collateralization & mortgages are just around the corner.”

Q: Why should someone NFT their property with Propy?

“The short answer is: to quickly and securely sell/buy property. When I say quickly, I mean really within minutes. As long as it takes buying any other NFT. The traditional process of transferring property ownership is extremely labor-intensive and expensive. Every step requires a significant amount of paperwork. However, by simply “tokenizing” property rights, it becomes much easier to trade, manage and hold your property. We know that the real estate industry is notoriously slow in adopting new technologies. On the other hand, the nature and ownership of real estate makes it ideal to package as an NFT. It’s much easier and faster to transfer 100% property rights for a real estate asset via blockchain. Our transaction and offer platform already enables agents, buyers, and sellers to handle a traditional purchase more easily. An NFT sale/purchase would be even faster. This is exactly what young people who grew up with smartphones are searching for. Our idea then led to a life-changing collaboration with other innovative individuals, united to build something transformative. We were certain that a real estate property was the perfect candidate for an NFT because it could provide instantaneous settlement and a simplified overall transaction process. Real estate transactions are long, annoying, and archaic. We were determined to show it was possible to change. We have already seen a new generation of home buyers looking for alternative solutions when it comes to buying property. Unaccustomed to the costly and lengthy process of home-buying, with its reliance on outdated methods of transacting business and multiple middlemen, investors, buyers and sellers are demanding a transparent, one-click process that is reflective of the era they live in. In fact, many shared that they’d rather not buy a home than go through such an arduous process.”