Real Estate NFTs: How It Began

The WiFi seems to be good and working, which is a common issue in hotels. In just one hour, an online auction that is irrevocable will begin. I’m not sure—idea what’s happening.

The story began in April of this year when I published an article that outlined the notion that property is the ideal asset that can be converted into a Non-Fungible Coin (NFT). It led to an exciting collaboration with other agile people, who came together to create something that would be transformative.

I was arguing back then that real property is the ideal opportunity for an NFT because it behaves as digital property to a degree in numerous ways. NFTing a property can provide many advantages, including instant settlement and a streamlined general transaction procedure – exactly what users of smartphones want. Real estate transactions can be long boring, and tedious. I wanted to demonstrate that how it is possible to make changes.

We’ve already witnessed an influx of new homeowners looking for options that go beyond the norm. They are not used to the expensive and time-consuming buying a home and the reliance on outdated business methods and the numerous middlemen. They’re looking for an open, “one-click” process that is fast, efficient, and representative of the current era. They’d instead not invest in homes than be involved in an unsanitary procedure.

When the article was first published, I received numerous inquiries from real estate agents, investors and homeowners, venture capitalists, and even coders, seeking to know how they could be involved. I was confident that the public was eager to experience this new technology and purchase art with blockchain. Therefore, I thought it was time to figure out how to make a property NFT.

We’ve been working on this for a long time, but there were still issues that we had to address:

  • The actual NFT
  • The wrapping of around the NFT in legal frameworks in the U.S. legal framework
  • Inventing the “know your customer” process because the majority of NFT transactions are anonymous. NFT transactions are conducted anonymously

We solved the NFT issue of its creation by shifting property ownership from individual ownership to a legal entity. This allowed us to shift ownership of the entity through NFT, which immediately transfers ownership of the asset. Additionally, as an added benefit, as the entity was the owner of the title to the property the title was transferred to, there was no need to register the title in the county, thereby making it significant savings in time and money.

Then, we devised a system that allowed the transfer of an asset from one account to the following, collected personal information, and conducted simple background checks, all of which helped ensure the transaction’s authenticity.

After resolving all issues after all issues resolved, we found the perfect property for NFT -A studio apartment that a legal company held. It was the first property in cryptocurrency bought through intelligent contracts in the year 2017. It was purchased through Michael Arrington, founder of TechCrunch and Arrington Capital. The NFT comprised the apartment and the work of art created by the renowned local street art artist Chizz.

After the NFT was established, we planned an auction lasting 24 hours on June 9th, 2021. Though I was initially concerned that we would not have bidders, more than 40 bids were made into Ethereum cryptocurrency. One of the winners was a first-time homebuyer who was a millennial living in Silicon Valley. After a long and stressful 24 hours plus six 15-minute extensions, seated at the same place making room service reservations and not having to miss a second of the web-based miracle, I was happy – it was all a success. The technology worked. People wanted to use this asset.

A new NFT owner was delighted by the process. It took just 22 minutes to change ownership which is a vast improvement from his previous experience of trying to purchase an apartment located in the Bay Area, a process which he found to be a lot of work which is why he did not do. I heard about the experiences after he agreed to a zoom phone call following the sale. He explained his plans to let the house as a historical one. He also told me that he was willing to pay twice the cost for the asset.

If you’re not sure about NFT, Millenials and Gen Z are already buying high-value assets like expensive avatars or vehicles on the internet. They are expecting the same level of ease and transparency when purchasing real property. However, greater levels of security, as well as greater data integrity, are needed to avoid wires, and other types of cyber-based fraud that are common to transactions like these. Real estate settlements on immutable blockchains made possible by NFT technology might be the solution the young generations are seeking.

Brad Garlinghouse, CEO of Ripple, who spoke during the Milken Institute’s 2021 Global Conference, said that blockchain settlement is helpful in many fields, such as real estate, “any transaction that requires someone to commute the trust between the transaction” [ the participants.

Consumers who help NFT their residences may be eligible to receive royalty payments directly to their digital wallets. They are “NFT Miners” (similar to cryptocurrency miners). They could receive small fees for each future purchase in exchange for placing the information and property in a way that makes it transferable (title report and inspection reports, disclosures, etc.).

Could this NFT transform the industry of real estate? Absolutely! We’re seeing the interest of young buyers and techno-savvy crypto enthusiasts looking to increase their diversification of portfolios.

Agents and brokers interested in setting themselves apart from the competition are actively learning and engaging in the crypto/NFT/blockchain space. Below is the information Mauricio Umansky, the CEO of The Agency, shared with me when I asked his opinions regarding the real estate industry and NFTs in the last Inman Real Estate Connect Conference, “As clients become more informed about NFTs, There is increasing desire to create NFT real estate that is based on real estate. Technology changes always coincide with the changes happening in the market. At a minimum, this is an innovative marketing technique to connect with an audience interested in the world of metaphysics. However, it could revolutionize the concept of real estate as a commodity and what customers will be expecting from the course of a transaction. I believe that NFTs can bring about significant changes to our business.”

When it becomes possible to NFT an asset, then the NFT becomes collateral within the crypto-world, which will allow crypto-enabled mortgages to be created where crypto-backed holders will be able to participate in liquidity pools that will secure peer-to-peer decentralized lending markets for real estate, similar to the popular defi lending protocols that are used for cryptocurrency. NFT, Defi, crypto title insurance protocols and crypto appraisal systems can create a complete cycle to meet the needs of the modern age of the liquid real property. The notion of homeownership is part of a community consensus, just as it is with NFT art.

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Robert Scoble
Robert is the assistant managing editor for HC News, overseeing coverage of markets, companies, strategy and business leaders. Originally from Boston, Scoble began his journalism career in 1997 & now resides outside New York.

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