Blockchain technology has a variety of use cases, and so do NFTs. Recently, Roofstock has proved that NFTs are a viable way to buy and sell property, slashing fees for the seller. Learn all about this landmark real estate deal here.
You can buy a profile picture NFT, you can (obviously) get your hands on music NFTs. But, did you know that you could now get your hands on a real estate NFT?
When a lot of people hear about blockchain, their first thought is cryptocurrency. Not dissimilarly, many people immediately think of digital images of bored apes when they hear about NFTs. Without doing some extra reading, it’s fair that people’s understanding of these technologies is limited to these ideas. It’s what the mainstream media offers up most.
It’s interesting, when you do a little research, to see just how many different uses of blockchain technology and NFTs there are. Blockchain, for instance, can be used to streamline logistics, keep track of supply chain, and deal with customer enquiries within retail. And then we get to NFTs…
What Is an NFT?
An NFT is a “non-fungible” token that exists on the blockchain. It is essentially a certificate of ownership, usually linked to an asset like digital art, recorded musical works, or digital collectibles. The non-fungible part means that an NFT can’t simply be swapped, like regular money can. That’s because each token is unique.
Tokens that sit on the blockchain are a string of code, made up of letters and numbers. No two NFTs are the same, at their core, which is how they authenticate ownership.
When you buy an NFT, the token itself will live in your wallet. Often, the asset attached to the NFT (the thing that enticed you into purchasing) is digital, and can be downloaded for you to enjoy. However, this isn’t always the case.
Real Estate NFT Sale
Roofstock, a leading digital real estate company based in San Francisco, has sold a house via its web3 subsidiary, Roofstock onChain. The house was tokenized, and sold on OpenSea for $175,000 (around 134 ETH).
Although experiments with NFTs of digital versions of houses have been put up for auction in order to drum up interest in properties, this is among the first actual houses sold via the technology. It makes sense to see these two industries – real estate and NFTs – merging together. Property, for some time, has been viewed as a more stable investment, compared to volatile cryptocurrencies.
Beyond investment opportunities, what are the benefits of buying a house as an NFT?
Benefits of Real Estate NFTs
Anyone who is a crypto sceptic might wonder why on earth you would buy something as important and expensive as a house as an NFT. The value of digital collectibles has shrunk by more than 60% in recent months. Surely that’s a bit too risky?
In terms of value, real estate NFTs differ to profile picture NFTs, which don’t really provide value in and of themselves. Value fluctuates depending on supply and demand, and how trendy or desirable something is. Since property is an established market on its own, the value is linked more to the house itself than buying the NFT just for the sake of owning an NFT.
Actually, the fact a house is so important, significant, and expensive means it’s the perfect kind of thing to buy using blockchain technology.
There are a few key benefits to buying your house as a real estate NFT.
Classically, the house is the most expensive part of, well, buying a house. But damn, those estate agent and solicitors fees…
Real estate NFTs slash these fees by more than 50% compared to the standard method of purchasing property. For $175,000, the price of the house wasn’t inflated due to the potentially gimmicky nature of it being an NFT. Realstock confirmed that these types of NFTs get their value from the property, and not the token aspect.
Furthermore, thanks to smart contracts, a lot of the process was automated, meaning no need to fork out huge amounts to agents and lawyers.
When you buy a house the more traditional way, there are a lot of middle men. There’s also a lot of paperwork and waiting around. It can take a frustratingly long time to just get one signature for a minor thing, which can hold the entire process up for everyone.
Again, it’s all down to smart contracts. These if/then agreements that are built into these tokens enable steps within the process to be triggered without the help of human input. Just sit back, relax, and let the house come to you. Sort of.
Info on Hand
When you’re buying a property, you want to know as much about it as you can. It also helps if this information is readily on hand, should you need to share it with someone or reference it somewhere. With a real estate NFT, this kind of information is easily available.
149 Cottage Lake Way, the house sold by Roofstock, is displayed alongside key stats about the property, as well as a video tour, illustration, and all the legal documents you could imagine.
Secure & Reliable
We’re not pretending to have an intimate knowledge of property and real estate law here. But, we can talk about blockchain technology. One of its big benefits comes from a security perspective.
Most blockchains are immutable, and once a transaction has taken place it can’t be removed or altered. This mean that, in terms of real estate, it’s clear to see who owns what, and when the transaction took place. There’s no chance of documents going missing, or mess-ups in the post meaning someone misses out on buying their dream home.
Who Can Buy a Real Estate NFT?
A cool thing about buying real estate NFTs is that anyone can get involved – you don’t need to be some crypto expert.
In the case of Roofstock’s recent sale, Adam Slipakoff, a pro real estate investor, bought 149 Cottage Lake Way on Etherscan with virtually no crypto or blockchain experience.
“I never imagined I could buy and finance a house with a simple click, rather than going through the time-consuming and cumbersome traditional settlement and mortgage process. I’m grateful Roofstock paved the way for the rest of the market. Instead of waiting months for underwriting, appraisals, title searches and preparing deeds, I was able to buy a fully title-insured, rent-ready property with one click. Best of all, I am no web3 expert – the Roofstock onChain platform made it simple and easy.”Adam Slipakoff
You don’t have to know how to code, or have a great understanding of the intricacies of blockchain technology. All it takes is a simple click, and you can buy a house as a real estate NFT.
The idea that you can buy as property as easily as that is the stuff of dreams. Certainly, Roofstock has shown that this way of doing things works. But, as with many uses for blockchain, it’s the adoption of it that we’ll have to wait on.
Thanks to the bad press and often dubious approach blockchain is faced with, it undoubtedly will be a while before we see real estate NFTs “go mainstream”. Nevertheless, we can sit, wait, and remain hopeful.
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