NFTs In Real Estate
Cryptocurrency is exploding into many industries; our lives are moving into the digital arena. The way consumers are buying and selling products is constantly changing and evolving. Real Estate is slowly being incorporated into the blockchain of NFTs. The NFT technology is beginning to have a shift in the future of real estate. If you have not heard of what an NFT is, please read below.
What is an NFT
You might have heard of this term in passing or you are already fully educating on the topic. An NFT is a nonfungible token on the blockchain. A blockchain is a system of recording information that is impossible to hack, change, or cheat the system. Therefore, NFTs unique tokens issued on a blockchain represent something that is one of a kind. They are mostly seen in the digital art or music industry. NFTs are the new technology. It’s a technology that is being incorporated into a variety of different industries “crypto enthusiasts are still eager to find a way to make NFT home sales a workable reality, and see blockchain as a potentially safer, more efficient avenue for sensitive transactions like title transfers” (Virginia K. Smith).
What is so unique about NFTs is that the blockchain is completely transparent, so you can see who created, sold, or purchased the digital item. Benjamin Goldburd, partner at NYC Goldburd McCone LLP states “An NFT is essentially a digital right to anything….An NFT to a property is essentially worthless unless it conveys that sort of ownership” What we need to watch out for is that NFTs are SLOWLY making their way to representing physical products in the real world. Making them become an option in the way we buy and sell real property.
NFTs Use In Real Estate
If you have bought, sold, rented, or leased a home in the real estate industry you know there is a copious amount of paperwork to do. With the NFT market, you can purchase a product within a few minutes with a single click. Using Blockchain and NFT technology it is even more secure and has transparent data entry. This allows buyers and sellers to transfer assets with out any problems. Buyers use either traditional finance (Tradfi) or can borrow against the NFT using decentralized finance (DeFi), which are products on the blockchain. Thus allowing “skipping the arduous due diligence required by the big banks when taking out a mortgage” (Amy Danise).
Purchasing Real Estate Via NFT
The first step of the entire process is to undergo the important steps for legal preparations to ensure it meets the regulations of the law. This requires involving legal counsels with experience in blockchain technology. Staying in line with the confines of the law is always an important priority.
Minting an NFT is the next step, this is where the description and legal data entry about the property comes into play. It is the process where you upload a JPEG or smart contract to the marketplace. The NFT market place allows creators and buyers a safe environment to buy and sell products. It allows the community to be provided with the necessary paperwork, disclosures, and reports. This provides the legal authority to represent proof of ownership.
Once Minted you can put the NFT on the market for buyers to bid on the property. The winner will then pay via fiat money or cryptocurrency. Once you received the funds the NFT will be transferred to the buyers wallet, they buyer will then complete the final paperwork for the transfer. Once the buyer owns the NFT they own the property.
Challenges of NFTS
Every new technology comes with the good and the bad. A challenge in this market is that not everyone will be able to understand how to use the platforms that have been created for this industry. The younger generation is much more advanced to adapting to new technology in contrast to the elder generation. The younger generation is more accepting to new things in comparison to the older generation who prefer to do things in the “old school way”. Another challenge is because blockchain is such a powerful transparent new technology. It will eliminate many of the intermediaries in the process of buying and selling real estate. An example being title companies.
Considering we have seen new technologies incorporate their way into society, NFTs will also be another space that will affect the human lifestyle. You will slowly see a change in real estate in the future. Jason Haber from Compass Agent says, “what’s interesting right now is it’s a case where laws haven’t caught up with technology”, therefore it is SLOWLY coming to be a real-life tangible possibility. It is a fact that people love being able to click something on the internet and own it, just look at how amazon changed our world. With the human desire to have access to the” one-click” space, they will want it for the real estate industry.