Non-fungible tokens (NFTs) are diversifying their presence in the market. Now, they are not just digitalized versions of artworks but also cover a variety of other sectors. Real estate is one such sector where NFT development can bridge the gap between NFTs and real estate. This collaboration, often known as real estate NFTs, can positively impact the real estate industry. It can simplify the complicated ownership transfer process and increase trust, security, and more. From their functioning to various benefits, understand everything about real estate NFTs in this blog.
Real estate NFTs are digital titles or tokens that prove ownership of a real estate property. Blockchain stores the metadata of these NFTs and acts as verifiable ownership proof. This aspect of real estate NFTs enables them to serve as unforgeable signatures. As a result, they become a suitable choice for buying and selling real estate. Apart from real estate properties, NFTs also cover virtual properties. They include the ownership rights of properties built in the metaverse, a digital replica of the real world.
Now let us understand how you can convert real estate properties into tokens to make real estate NFTs.
Also, Read | Collaboration of NFT with Real Estate
Real estate NFT tokenization is a conversion process of a real estate value into a token. Blockchain securely stores this token after validation. This decentralized ledger is accessible to network participants. Thus, it increases the transparency of the data. Tokenization enables digital ownership and transfer of the converted token.
Before the tokenization of real estate, you need to complete legal formalities regarding selling properties as NFTs. Then, miners mint the property as NFTs that covers all information regarding properties like reports, images, videos, disclosure, and more. Then, these NFTs become proof of ownership. An individual owning a real estate NFT will technically own the property. Owners can sell their real estate NFTs in NFT marketplaces such as OpenSea, Axie Marketplace, Rarible, and more.
Also, Read | Real Estate Tokenization and Blockchain | An In-depth Guide
There are the following types of tokenization in real estate:
An EA includes the entire property deed that developers convert into an NFT. It enables individuals to purchase a house. However, creating such real estate NFT is difficult due to the real estate regulations involving investments. Moreover, the regulating authority needs to take several steps to enable the use of EA tokens.
Fractional ownership is another way you can utilize a real estate NFT. The concept revolves around shared ownership that gives partial ownership rights of a property to consumers.
FO gives investors or buyers the perks of asset value, rental income, capital appreciation upon sale, and more. It allows real estate owners to sell their property directly to buyers without middlemen or real estate agents.
Also, Read | Fractional Real Estate NFTs: The Next Wave of NFTs
From co-ownership to simplified loans, NFTs can positively impact the real estate sector in the following ways:
Fractional NFTs can let individuals own real estate property in shares. Individuals own a fraction of a real estate NFT and become co-owners. Since sharing a property needs time and effort. Fractional NFTs are great for families who want to co-own properties.
NFTs help streamline the lending and leasing processes for real estate. People can obtain mortgages through NFTs' shared ownership function.
Owners can use these NFTs to submit a loan application to an NFT lending platform. Then, they can borrow money by mortgaging their NFT.
Real estate is ideal for becoming a tokenized digital asset due to its very nature. It is immutable and is simple for third parties to validate as collateral using blockchain-based claims.
Real estate NFTs offer the following benefits to companies:
Real estate NFT tokenization facilitates quicker real estate sales. Additionally, it makes it simpler to determine the number of shares for a real estate asset. NFT real estate on a blockchain lets regular property investors trade similar to a stock exchange. Thus, the barriers to foreign investment become more feasible. Additionally, it will boost the market liquidity for commercial real estate.
Blockchain technology stores all the data regarding any real estate property. It regularly updates the data on a real-time basis. Anyone can access the transaction history or ownership rights of NFT-based real estate NFTs. This precise data tracking can help in better decision-making.
Today, the real estate investment world is witnessing trust issues with a lack of transparency and speed. Traditional technology is often time-consuming in analyzing real estate deals. Here, real-state NFTs, backed by blockchain technology, can bring transparency to this industry. Ultimately, they will increase trust between individuals during payments.
Smart contract development can substitute paper files using blockchain technology and NFTs that represent real estate properties. E-signatures and other aspects make it even more simple and more affordable. This method is equally trustworthy to all parties involved in the transaction.
Real estate NFTs can change the way the real estate industry works. Soon, the process of transforming real estate into a property NFT platform will become a lot easier. Moreover, finding the right partner for developing such NFTs is crucial. Oodles Blockchain can become your suitable partner for developing NFTs based on real estate. Our NFT developers have years of experience in creating blockchain solutions. Contact us today to avail yourself of our services.