As blockchain technology infiltrates more industries, digital assets as proof of ownership are growing in demand. The use of nonfungible tokens (NFTs) to represent physical properties in the real world has begun to take off.
Many people today are being priced out of the current housing market. Although demand remains high, supply has slowed down as access to appropriate levels of finance becomes unattainable for younger generations. Exacerbating the situation is the complex buying process, often involving several different parties; the renter, the owner, the management company, the conveyor, the valuer, and the solicitor, to name a few. And it isn’t only the buyer who is left wondering what costs go where.
Large real estate companies and property management firms are often leaking revenue due to poor oversight or lack of insights into where the money is being spent.
In the current landscape, NFTs are widely used across a range of creative industries: music, art, writing, film, and more. As they were adopted by physical representations of art in the real world, the use cases for NFTs expanded.
Why real estate agents are considering NFTs?
Future thinking estate agents are fully aware of buyer behavior and trends in online buying today. Consumers are used to buy-in-a-click processes and websites offering the easiest transactions outperform those that try to replicate the longer form of buying we are familiar with in the real world.
Transferring property ownership between landlords is cumbersome with endless paperwork, often involving many middlemen that overcomplicate the transaction. The seamless nature of digital transactions cuts down on the time, manpower, and resources needed to manage this process.
Buyers are impatient when they find the thing that they want to buy. With this in mind, could NFTs offer a quicker way to navigate the house purchase process? A digital proof of purchase stored on the blockchain.
Why home buyers are curious about NFTs?
For younger buyers, houses are too expensive. According to a recent Bankrate survey affordability is the number one reason why adults don't own a home.
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With prices rising and the number of homes available shrinking, we need to adopt a new approach. Blockchain technology combined with large-scale state investment in public housing could help to alleviate our overreliance on private developers to deliver the right supply of properties.
Buyers' preferences are changing. As the Gen Z population makes up the vast majority of the rental population and has grown up around cryptocurrencies many of them will prefer the ease of transactions, increased transparency and control over their finances. The real estate industry will need to adapt to this new demand and include all advancements in technology.
In addition, the bidding process when seeking out a new home is often cumbersome, involving multiple parties, including agents and lawyers.
Using NFT technology can offer alternative ownership models and advanced levels of trust between the buyer and the seller.
Fractionalized Property NFTs
Does our global workforce now require a global approach to property management and investments? What if a digital nomad could own a piece of several homes? Fractionalized NFTs may hold the key.
Unique Network is working on advanced NFT technology that will enable fractional ownership models in the near future. Real Estate firms like Propy and Web3 firms like Balcony DAO are harnessing NFTs for real asset ownership in the future. However, allowing a property to have multiple buyers with easy access to proof of ownership via blockchain records could be a way to open the property market to new participants.
Fractionalized NFTs seem like an interesting area of application for re-imagining our approach to buying property. Taking the timeshare model into the 21st century with fractional ownership options could be the next big wave in innovation. The Time Share model for property ownership has been tainted by high fees and locked-in conditions associated with the ownership. If fractional NFTs can solve both of these issues then the timeshare model might be worth a second glance in our ever-evolving global economy.
Rather than blockchain disruption, we need to start speaking about blockchain adoption. With this adoption comes real benefits for both the industry and the buyers. Integration of traditional real estate knowledge with future-led NFT technology could transform the real estate landscape of the future.
NFTs could help to increase transparency and manage some of the functions currently managed by costly intermediaries, making the selling and buying process quicker and also offering new ways to imagine property ownership.