How NFTs Will Change The Real Estate Industry
When someone mentions the acronym NFT, you are probably associating it with pictures of monkeys, or a range of different zoo animals that look like they are on acid. People tend to view these digital assets as “get rich quick” schemes due to projects they’ve witnessed grow massively in the past few months. Interestingly enough, this is how most new technologies find their place within the market: They enter as high risk speculation assets, but eventually, the market corrects. After this correction, investors focus on assets based on the utility and value they bring to the market. We are still in a time where asset classes are in the high-risk speculation phase. It is important to embrace this phase and not dismiss the major shift that NFTs will have on businesses and society as a whole.
As an example, I’d like to discuss how NFTs will transform the real estate market to become more transparent and genuine. NFTs can be used to represent deeds for residential and commercial real estate. They can offer more utility because owners can sell portions of their property by issuing tokens to buyers. This becomes especially useful in cities where real estate is expensive. Investors with a smaller amount of capital are able to purchase, say 10%, of a home that generates rental income and then collect 10% of the rental proceeds. NFTs that provide opportunities for fractional ownership are revolutionary and will help people build wealth. People will be able to purchase shares in residential and commercial real estate in the same way we are able to buy shares in publicly traded companies on the stock market. All the terms and conditions will be listed on the blockchain (since it is a virtual deed), so it won’t be necessary to hire a lawyer or agent every time you want to buy or sell a percentage of the equity. It will only require you to exchange the amount of tokens that represent the percentage of the home you are purchasing. This makes for a faster and cheaper liquidation process.
The need for real estate agents will be reduced as each home will have a digital deed (the NFT) which outlines all terms and conditions that are written by you or your lawyer. When it comes time to buy a home, for example, you can “shop” in various NFT market places for homes you are interested in buying and read all the terms and conditions right away.
A company by the name Propy is changing the way people handle real estate transactions through NFTs.
Here is a short video explaining how Propy works:
The CEO of Propy, explains that “we have developed all necessary smart contracts and a compatible legal framework that allows tokenizing any real estate property in the United States”.
The NFT represents the piece of real estate, and all contractual agreements are secured on the blockchain. Propy states that “the new owner of the NFT becomes the owner of the entity and thus the property itself. This process is repeated every time the NFT attached to the property is resold. Essentially, once the home sells, the new owner also receives the NFT, which acts as full ownership rights of that new property.
I hope this helps you understand why NFTs are more than just pieces of art on people’s profile pictures. They are tokens that are backed by real assets.They will grant access to smaller investors on assets that are very expensive, like sports teams and real estate for example. Thank you for reading! Let me know in the comments what you think and what you would like me to write on next!