NFT's and the changing face of real estate
Are you ready to have real estate done in a whole new way, tune in on Feb 8th when the first house in the US ( Florida) will be offered for sale as an NFT ( non fungible token) This will be absolutely groundbreaking and represent the dawn of a new digital era. The future is here as companies like Propy use block chain technology to start selling real estate. Companies like Propy & RealT are introducing the concept of smart contracts to smooth out the real estate buying process digitally. How does it work? These companies turn actual tangible properties into NFTs otherwise known as real estate-backed NFTs. Real Estate can now be “tokenized”. Although generally used as a method of buying and selling digital items and tracking them on the blockchain, the potential that NFTs have in the real world is clearly not being lost on people in the real estate industry.NFT sales reached $4 billion in December 2021.
Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They typically are used to automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary's involvement or time loss.
Per TechCrunch 1/27/22 “Here’s how it works: Propy says the record of the purchase is placed on the immutable blockchain and provides access to the legal documents signifying ownership. This reduces costs for the buyers and makes the purchasing process quick, simply by letting them buy a property in a few minutes.If successful, the buyers will get a Florida-based investment property, owning a U.S.-based entity that owns the property, the ownership rights of which are associated with an NFT. It is not fractional ownership, and becomes a DeFi asset that can be borrowed against.”
Decentralized finance (DeFi) offers financial instruments without relying on intermediaries such as brokerages, exchanges, or banks. Instead, it uses smart contracts on a blockchain.
Generating an NFT only requires that you have an item that you’d like to individually identify forever. It can be a unique item, like a piece of real estate.Each NFT is then recorded on the blockchain. This record follows the item (digital or real) throughout its life, providing an easy way to track ownership and other information. In theory, this is actually pretty handy for real estate transactions.
When you buy real estate you have to have a clear title search. This tells you who has owned the property over time or their descendants might have a legal claim to it. This is a big part of what takes so long even when you’re closing on a cash deal -- you still have to check the chain of title.
A presumably clean chain of title means you can get title insurance, which is handy should the title search miss something or there’s some other sort of property dispute that would risk your purchase or ownership status that might not have been properly documented, like an unrecorded lien. And that’s where the blockchain can be handy for real estate transactions: establishing a lock-tight chain of ownership for both buyer and seller.For example, new construction properties being registered on the blockchain to establish their ownership records would experience a much simpler process.
This may seem seem gimmicky but ultimately block chain will be a useful tool for the real estate industry when it comes to chain of title but if you have a great looking house, in a great location and you price it right you are better off staying in the real world to market it and have a successful tangible sale. Real estate has always been a sensory process. That is something that you can’t replace in a digital world.
