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By now, you’ve probably heard about (or read about in one of my Tal’s Takes Series) Non-Fungible Tokens (NFTs) – the “Little engine that could.” From art sales to supply chain hiccups, NFTs are proving they are versatile and effective. Therefore, why not put them to use in an industry that needs less middlemen, more efficiency – the completely illiquid real estate market.

Real estate transactions are mired in a sea of bureaucracy involving layers of intermediaries from real estate agents and banks to notaries and lawyers, all inflating the cost and complexity of what should be a simple transaction between two parties. And, just think about all of that paperwork!

NFTs can significantly impact the way the real estate business is transacted. Since NFTs create digital footprints or a “token ID” that attaches to a particular item throughout its lifespan, each NFT is specifically defined by the information stored within its metadata – pointing to valuable digital resources that are updated in real-time on the blockchain. This immutable record on the ledger can revolutionize how real estate is bought, sold and everything in between.

Just by replacing intermediaries with smart contracts that allow for the safe and simple transfer of ownership, NFTs could greatly expedite the property-buying process. A real estate NFT can include all history of ownership of the property, and rights can be recorded and committed to the blockchain and instantly and easily verifiable. It can also include all relevant documents like title and ownership deeds, neighborhood association rules and membership, land surveyance documents, floor plans, history of modifications, etc. And, because all of this relevant data is updated in real-time, buyers and sellers can trust the single source of truth that NFTs offer.

Take title insurance for example. When you buy real estate in the U.S., a title search is required to understand the property’s history of ownership. This can be the most time-consuming aspect of a closing. A clean title means that you can get title insurance to safeguard from future disputes and related issues. This is exactly where NFTs on the blockchain can help. They have the ability to provide an indestructible chain of ownership for the buyer and seller that remain intact and updated in real-time – eliminating discrepancies, disputes, and increasing security and ease-of-use.

From Residential to Corporate

For corporate real-estate, the same holds true. NFTs have the opportunity to address many of the barriers that have long plagued investing in assets like commercial real estate. Tokenizing private and non-listed REITs allows for fractional ownership – widening the base of potential investors and improving liquidity in the secondary market. The NFT format also harnesses distributed ledger technology to eliminate manual, redundant trading processes, reducing settlement times and capital costs while automatically enforcing relevant regulations.

NFT Use Cases in Real Estate Already Exist Today

Connecting an NFT with a physical property allows for straightforward usage and easy collateral, an idea Europe-based start-up, Propy, is already exploring. Propy offers a transaction platform with which each NFT comes with access to ownership transferred paperwork. The first Propy-hosted NFT auction sold TechCrunch founder Michael Arrington’s apartment for 36ETH, or $93k at the time of sale.

New digital-first players entering in the real estate market is a good thing for its evolution. It highlights the benefits that NFTs can bring to the real estate sales experience, from beginning to end. As in other vertical markets where NFTs are emerging and making positive change, I’m excited to see what’s next.