Real-world assets will soon represent a significant portion of NFT sales and real estate is leading the charge. The real estate future is on-chain and the reasons are not far fetched Problems with the traditional system for buying a home The process is arduous as home sale requires plenty of documentation, inspection, and title searches that add to the closing cost. Which falls between 5 to 10% of the value of the home The traditional real estate closing process has a number of different intermediaries involved, which stretches the time it takes to close a deal and the closing process typically takes 4 to 6 weeks on average Advantages of using NFTs It is agile - in that you can see everything about a house before buying it or making an offer. If your order gets approved, you pay via wallet-to-wallet transfer. Having the processes of purchasing a home onchain means bypassing trusted intermediaries, making blockchain the avenue to verify ownership, identify title encumbrances, and settle transactions. By minting the home’s property rights as NFTs, closing takes less than the usual 4 to 6 weeks window period. It goes without saying that NFTs have found real purpose in Fixing the cost and headache associated with real estate transaction Homes that have sold as NFTs The first real estate sold as an NFT in the U.S The first NFT-backed property in the US was a 4-bedroom house in Gulfport, Florida and it sold for $653,000. The sale was facilitated by the web3 real estate platform he winning bidder was awarded an NFT as proof of the home’s ownership the NFT is linked to an LLC that owns the physical asset itself. proppy. T The first ever real estate sold as an NFT Michael Arrington founder of TechCrunch sold his studio apartment in Kiev Ukraine for $113,176 in May 2021. The sale was facilitated by proppy and the buyer paid using Ethereum. First and most expensive luxury real estate NFT purchase in Portugal Prometheus, a luxury real estate development firm, sold the most expensive luxury villa ever; it was paid for using the cryptocurrency for an equivalent of 4.1 million Euros. The property is located in aurora and saudale Portugal. After the sale, the property ownership was made available as an NFT allowing future owners to resell the property via the sale of the nft. Cardano Roofstock's first on-chain house Roofstock, a digital real estate platform, facilitated the sale of a home in South Carolina through its NFT marketplace. The home was put into an individual single-purpose LLC and the NFT sold is associated with the sole ownership of the LLC. What does it take to sell your home as an NFT? The seller does an appraisal, inspection, paperwork for title and escrow. The seller puts all of this into the LLC, upfront. Ownership of the property is held and recorded as an LLC which gets tokenized(made into an NFT) and ownership of the NFT gives right to the property. You can directly list it on the open sea for those who are more web 3 savvy or go through one of the dedicated web3 real estate platforms like proppy, roof stock on chain, etc Problems facing the rapid spread of NFT home sales Nft home sales can become a working reality, all it takes is for the traditional system to catch up to the technology. However, home sales via NFTs still face a few glitches. The sale of the NFT does not warrant the completion of the real estate transaction nor does it reflect the transfer of title deeds. For now, the traditional real estate process of registering transactions on the local registry must be complete. Because of this problem, most platforms carry out the traditional title… as well as wallet-to-wallet transfer of money. Some platforms mirror the traditional title record on the blockchain but the blockchain version is yet to be officially recognized. The solution is that More local land registries need to adopt blockchain technology and NFTs into their processes. the way forward Solving this problem would not only be a win for the real estate industry but for crypto, NFTs, and web3; people are more likely to adopt technology when they see the value it offers. Because of the benefits blockchain offers, as a more efficiently simplified and secure way of transferring ownership of the real estate, all elements involved in real estate transactions could exist on-chain. The future is really bright for NFT-backed real estate transaction
