Real estate, as opposed to movable personal property, does not need a physical transfer because it is immovable and therefore impossible to steal. Future real estate transactions will increasingly be conducted digitally with the use of new technology. Due to the coronavirus, there have been many shifts in the way we live our lives. One of these shifts has been the process of doing everything virtually. Real estate is being influenced by this shift which is making it possible to own an asset digitally instead of just physically.
The world of digital assets is growing, and we’re seeing more and more of our daily lives turned into computer-readable formats. NFTs are being used to generate art and new digital commodities in the metaverse. Most of the world’s currency is already digital, just 8% of it is physical. The stock market is also now digital and easier than ever to trade in. With the help of e-commerce marketplaces like Amazon, eBay, and Alibaba, real physical things of generally low value, like books and clothes, are sold online. In contrast, high-value assets such as real estate, vehicles, pricey collectibles, yachts, and startup investments are increasingly functioning digitally as a result of their digital ownership representations.
A person’s future potential to resale a property or automobile is heavily influenced by their digital record. It makes no difference who really uses the property; the legal owner is the one who is registered in the digital record. Authorities now keep these records in digital format in the context of ownership. The process of establishing automobile ownership, which was formerly regulated by the government, is now managed by private firms that keep track of the data. Not only has the process of online ownership transfer been viable as a result of greater trust in negotiations, but the reliance on governments to keep this data has lessened, allowing for further innovation. Because the asset’s ownership is already digitized, and the paperwork for the ownership transfer is essentially almost entirely digital, the real estate asset behaves like a digital asset. There will be further revolutions and innovations in the future decade, in addition to these enormous shifts in real estate and how it is exchanged.
NFT-ing a property means that ownership may be transferred in a safe way from one wallet to another due to an auction on smart contracts. The NFT is used to link documentation, disclosures, and title insurance. If NFT-ing homes becomes popularized in the US, people who do the initial NFTs for properties may be eligible to obtain royalty payments from any subsequent secondary sales. Based on the type of asset (land, housing, commercial), a management firm may be required to handle upkeep, payments, and rent collection following the acquisition. However, these are only connected to managing the property as a source of income and do not safeguard ownership rights in any manner. When it comes to real estate, the concept of “custody” is more akin to abstract tasks like legal processes and money transfers than to the practical handling and storage required by moveable personal property or commodities. As a result, there’s a resemblance to the digital collectable NFTs that are currently becoming popular for digital art. In fact, soon we will likely see billionaires and celebrities selling off a percentage of their properties as NFTs. Buyers of these NFTs could freely trade them, but the owner would still own the majority of the property. The long-term vision for NFTs is for most real estate assets to be transferred to legal entities that are tied to NFTs. Since the properties are tied to NFTs the records of change will be stored on the blockchain.
To learn more about “Why real estate NFTs are the future of the NFT market”…. and its applications to real estate in the real world, reach out to us and let’s have a Crypto-talk.
Alejandro E. Jordan, Esq. is the Chair of the ESQ.title | Real Estate Law’s Residential and Commercial Real Estate Closing/Title Insurance Group, with nearly two decades of experience in the business of real estate closings, finance, and development. His broad base of knowledge allows him to stay ahead of the game and keep abreast of the latest market trends. If you have any questions on whether or not a particular real estate investment is right for you or your buyers or sellers, need assistance in drafting offers, contracts, LOIs, or in analyzing due diligence on a particular opportunity, or just have a question on your next real estate closing or potential transaction, contact us at 305-501-2836 or visit us at www.esqtitle.law for immediate assistance.
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