NFTs In Property- Real Estate

NFT in Property-Real Estate – Explained

Cryptocurrency,?blockchain,?NFTs,?decentralised finance, and trustless computing have been some of the prominent tech trends in recently. Today, you can find many?blockchain applications?and cryptocurrency applications in various industries.

Currently it's also important to notice the massive scale of digital transformation, which has changed the basic ways in which we generally buy and sell products.

The?NFT real estate?interplay has been grabbing attention from various circles, particularly for the value?benefits from NFTs. However, it is also important to look for the feasibility of NFTs for representation of property- real estate.?

Will a?property’s NFT?hold the same value as a legal deed of ownership? What will happen when you want to?sell the NFT?of your property to another person? The following information offers you a detailed overview of the basics of NFTs in real estate. In addition, the post would also reflect on the potential challenges for growth of NFTs in the real estate world.?

Are NFT's Suitable for Real Estate?

Non-fungible tokens or NFTs have been in the news on a daily basis. Whether it is the million-dollar NFT art auctions or marketing gimmicks of popular fast-food chains, you can find NFTs everywhere. If you want to know the answer to “Can NFT be used in real estate?” you need to understand NFTs first. NFTs or non-fungible tokens are a new category of digital tokens, which you can purchase with crypto or?fiat currency.?

The distinctive highlight of an NFT refers to the allocation of sole ownership of digital assets through blockchain #technology. With the help of?traceability on blockchain, it is easier to track and sell NFTs in public.

As of now, the primary?applications of NFTs?rest mainly in selling digital music or art, events, even entry to ticketless flights are a Non Fungible token... Non-fungible tokens can help in certification of product ownership with a unique, immutable signature.?

Real estate NFT?connection paints a completely different picture of NFT capabilities. Now, non-fungible tokens are slowly emerging as vital tools for representing ownership of physical items on blockchain networks. As a result, NFTs can serve as an ideal instrument for enabling the sale and purchase of real estate properties.

Why Should You Learn about NFT Real Estate?

Before finding more about?#NFT real estate, look at the opportunities associated with the same. Are there any practical examples of representing real estate as NFTs??

In May 2021, Michael Arrington listed an apartment as an NFT through the real estate platform Propy Inc. . Interestingly, Michael had purchased the same property by using?Ethereum smart contracts?in 2017. Popularly referred to as the first?real estate NFT?in the world, it sold for more than $93,000.?

In another instance, a real estate development firm, Prometheus, completed the sale of two luxury homes in Portugal through cryptocurrency. In addition, the firm also ensured the availability of ownership through NFTs.?

The practical examples of popular property’s NFT sales show the potential hiding in NFTs for real estate management. Now, anyone would obviously seek insights on the possible reasons driving the use of NFTs for representing real estate on the #blockchain .

Reasons to Use NFTs for Real Estate

With a practical impression of “What is NFT in real estate?” through the practical examples, you have a basic idea of some reasons to use NFTs in real estate. Well, there is no way you can ignore the benefits of credible, transparent, and immutable ownership proof with non-fungible tokens. Let us take the example of conventional real estate for assessment.?

One of the biggest setbacks in real estate investments emerges in the form of property ownership transfers. Presently, you would need huge volumes of paperwork for purchasing a property. On the other hand,?NFT real estate?transactions offer better efficiency with improved streamlining.

This speeds up the process, improving 2 other factors that plague property sector- liquidity and transparency. By this I mean that details held on blockchain can be seen by anyone making searches quicker and more efficient. The transfer of ownership in theory could take minutes!

The integration of?NFTs?in the picture empowers buyers to take control of ownership of real estate within minutes.?with organisations like HM Land Registry using blockchain technology now, is it a matter of time for NFTs to be utilised?

Another important highlight for the use of NFTs in real estate arises from the vulnerability of digital transactions to cyber fraud. On the contrary, a?real estate NFT marketplace?provides the assurance of improved security and data integrity.

The?benefits of blockchain?and NFT could provide the confidence buyers, and sellers need for transferring their assets. Buyers could also find opportunities for borrowing against their?real estate NFT?on?DeFi?or traditional finance solutions on blockchain. As a result, NFTs can also simplify the process of taking out loans on your property.

Practical Use of NFTs in Real Estate

Till now, you know that NFTs are unique digital assets or tokens for virtual or physical property stored on blockchain networks. A 1 of 1 if you like. As a result, owners of a?property’s NFT?can prove that they own the property. In addition, NFTs can resolve the unwanted concerns of fraud.

However, the?practical uses of non-fungible tokens?in real estate come with some additional complexities. You can find two distinct types of?tokenisation?in the use of NFTs for real estate, such as entire?asset tokenisation?and fractional ownership tokenisations.?

The concept of fractional ownership tokenisation is a common answer for “Can NFT be used in real estate?” for many right reasons. Fractional ownership or FO tokenisation offers a simple approach to the representation of real estate as NFTs. You can think of fractional ownership tokenisation as a #crowdfunding platform, which helps investors in buying shares. The fractional owners have a specific number of tokens representing their share in the asset.????????????

Entire asset or EA tokenisation is a completely different concept and needs conversion of the actual property deed into an NFT. As of now, EA tokenisation encounters some formidable setbacks due to the regulatory concerns pertaining to real estate investments. Therefore, fractional ownership tokenisation presents a better alternative than entire asset tokenisation in terms of simplicity.

Working of NFT Real Estate Interplay

The fundamentals of the?real estate NFT?connection clearly establish why NFTs are probably the future of the real estate. Now, you must be eagerly looking forward to the mechanisms of using NFTs for real estate. In the first step of selling real estate in the form of NFTs, you need to fulfil all the mandatory legal prerequisites for ensuring regulatory compliance. You should consult with a legal expert who has experience in?blockchain technology?and its legal aspects.?

After clearing up the legal formalities, you can move to the next step by?minting an NFT. You can mint an NFT with a description of the property and legal data associated with the same. In this case, you would need a?real estate NFT marketplace, which offers a safe and flexible environment for creating NFTs. The marketplace helps you incorporate all the necessary paperwork, reports, and disclosures for legal authorities to offer proof of ownership.?

Interestingly, you can sell your?property’s NFT?on an NFT marketplace to potential buyers. Interested buyers would place their bids for the NFT, and the winner would pay for the NFT in?crypto?or?fiat currency. Once you receive the funds, you can initiate a transfer of the NFT to the buyer’s wallet. On the other side, buyers would complete the paperwork for finalising the transfer. In the end, the buyer gains complete ownership over the property through the non-fungible token representing it.

Challenges for NFTs in Real Estate

Just like every revolutionary technology, whether it is the mobile phone or the internet, people are wary of NFTs in real estate.?What is NFT in real estate??Many people are asking this question, particularly because the real estate sector is a slow-changing industry. Only recently, virtual tours and technological advancements have been taking over the real estate sector. As professionals and buyers in real estate struggle with new technologies, is it reasonable to introduce NFTs? Well, there are some noticeable challenges with the adoption of NFTs in the real estate sector.?

First of all, you would have the obvious resistance to a new technology playing foul in the adoption of?real estate NFT?alternatives. Most importantly, blockchain and?NFTs challenge?the status quo of many intermediaries, which happen to be title companies. Therefore, we may have to wait for quite some time before we actually witness large-scale applications of NFTs in real estate.

Final Words?

The final impression regarding the?NFT real estate?connection clearly establishes a favorable precedent for the future. Real estate has been plagued with concerns of inefficiency and fraud due to cumbersome procedures and vulnerable proofs of ownership. For example, anyone could forge the property ownership documents of an individual and exercise unauthorised claims.?

In such cases,?non-fungible tokens?bring much-needed change with solid proof of ownership for real estate. You don’t have to worry about proving that you are the owner of your property. A property’s NFT shows who the rightful owner of the property is and tells about the previous owners of the property. Surely a massive leap towards transparency in real estate, isn’t it?

Credit- Researched through sources including Cointelegraph and Blockchain 101.

*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. I shall not be responsible for any loss sustained by any person who relies on this article. Please do your own research!