Understanding NFTs in Real Estate
NFTs are perfectly designed for physical real estate – both are unique and transactions involve only changing records. When you buy a house or rent an office, you don’t physically hand over the property as you would with other assets like a car or jewelry. Real estate ownership and rights are transacted by changing records at the appropriate authorities.
Real estate is transacted through a listing, a contract, and payment. These three things are exactly what an NFT combines! An NFT is a listing with a contract and a way to pay for that contract.
Real estate = done with a listing + contract + payment = NFT
The real estate listing, rather than residing in different databases (like MLS, Zillow and your town clerk’s office), sits on a blockchain, a publicly searchable database.
The contract, rather than being on pieces of paper, is electronic so anyone can see the transaction history and know who currently holds the contract.
Signing that contract uses a crypto wallet instead of a pen. And payment is made using cryptocurrency instead of fiat money.
NFTs could not be a more perfectly designed tool to modernize real estate!
HOW TO CREATE AN NFT?
If you control or own real estate, it makes sense to create or “mint” an NFT for it. The process is very simple and the same as creating any real estate listing: you describe the property, what you’re selling (rental or ownership), and add some pictures. Step by step details here.
There is almost no cost and zero downside. As soon as you mint the NFT, it can be found on all the NFT marketplaces and anyone browsing could buy/rent your property instantly with cryptocurrency.
HOW IT WORKS?
At first, NFTs simply complement traditional real estate processes and serve niches. NFTs don’t replace everything currently required for real estate transactions (e.g. taxes, deed transfers, etc.). Think of them as an added layer that can make certain processes more efficient.
Authenticity & Scarcity: It’s worth noting the value of NFTs in real estate is not the same as they are in digital assets, where authenticity and scarcity are valued. In real estate, NFTs have value in utility and improving existing processes. See our separate page for details.
There are use cases for just about every person who’s involved in real estate.
Real Estate Professionals
Brokers and agents can use NFTs for marketing and adding value to clients. Niche investment firms can use NFTs to fractionalize properties and market their products. Real estate marketplaces can use NFTs to modernize their existing technology platform and be a part of the future ecosystem that will be blockchain-based.
Individuals can use NFTs to gain more control over the buying and selling process. It also opens up option for monetizing your existing property (e.g. putting it on the rental and sale market at the same time or selling rights to appreciation) and buying property (e.g. crowdfunding, timeshares).
Ask yourself, why isn’t your home both currently listed for sale and on Airbnb? Surely for the right price, you would sell or rent your home. By creating an NFT for your home, you can put it concurrently on the market for selling and renting.
Once created, the NFT acts as a property listing that can automatically found by existing marketplaces (like ours) and future marketplaces (e.g. a blockchain-based Airbnb). Worst case, you simply made a listing that isn’t discovered. Best case, you find yourself a buyer at a higher value than you would find elsewhere because you’ve opened up the market around your property.
On the flip side, individuals looking to buy properties can use NFTs to crowdfund a property with friends or create a listing to find other potential buyers.
As marketplaces and platforms adopt NFT technology, the speed and efficiency of real estate transactions will improve. We may not be too far away from a day when you could walk by a house you like and own it as you walk away.