NFT is a digital asset that represents ownership of digital items or collectibles on a blockchain. Their popularity allowed them to enter various industries, such as real estate. NFT lands are now a means of buying and selling properties. There are also NFT real estate marketplaces that enable people to trade ownership of a property recorded as an NFT on a blockchain. People can even buy a fraction of an NFT property so that several investors can prove their ownership of an NFT land.
NFTs are making the real estate market easily accessible worldwide. They also provide a faster, more secure, more efficient, and more transparent way to transfer property ownership without the need for a third party.
Real estate NFTs are still in their early stages, and their potential is not fully known. In the following, we describe real estate NFT, how it improves the real estate market, and its possible disadvantages. We also discuss the most influential NFT real estate companies and review how to join the industry and make a profit.
What is NFT Real Estate?
A real estate NFT is a unique digital asset that represents ownership of a real estate property. It is a digital title deed or certificate of ownership that is recorded and stored on a blockchain.
As we mentioned above, real estate NFTs allow the direct transaction between a buyer and a seller and eliminate the need for a third person, like a broker, to confirm transactions. Thus, the process of buying and selling NFT properties will be more efficient, cost-effective, and transparent. NFT real estate has revolutionized the traditional real estate market and provided new opportunities for investors as well as property investors.
Upsides of Real Estate NFTs
Using blockchain technology, NFTs can provide traceable, secure records of ownership for different real estate investments and make the real estate market more accessible to investors worldwide. As the core technology behind NFTs, the blockchain can potentially prevent illegal activities like tax evasion and provide more security to real estate investments.
There are four key benefits that NFTs can potentially bring to real estate investment when powering a comprehensive real estate marketplace. Here is the list:
More secure digital transfers
There are NFT marketplaces that are specifically developed for real estate and can provide improved security and data integrity of digital transactions using the strengths of blockchain technology. Such platforms significantly decrease the risks of cyber fraud and allow providers and investors experience to trade various types of property efficiently. Decentraland and Upland are good examples of real estate transaction platforms.
Property ownership verification
NFTs are minted and recorded on a blockchain, which ensures the immutability and security of all data related to the token. Once title deeds and other property documents are minted as non-fungible tokens, real estate NFT providers and investors:
- Do not need to handle the paperwork and order notarial services to prove ownership of property,
- Save time and money on providing ownership document
- Decrease the risk of fraud and loss of a paper document
Faster process of trading and renting a property
Real estate deals may include lots of paperwork and take a long time to be issued. NFTs make real estate-related deals more convenient and simple for sellers and buyers. We already mentioned that the ownership verification process is quicker and simpler in NFT real estate platforms. There are more advantages like:
- Allow minting NFT lands right on the platform
- Easily put properties for sale or rent
- Reach investors all around the world
- Conveniently look for properties and find the most appropriate ones
- Fast and secure payment in cryptocurrency using crypto wallets
- A quick background check of property sellers and buyers.
Simplify mortgages
Real estate NFTs can play the role of mortgages to guarantee various trades. Real estate agencies can potentially adopt NFTs to digitize property mortgages. Mortgage lending agencies, such as LoanSnap, have taken a step to mint NFTs mortgages. They believe third-party minting attracts more homeowners to have their real estate NFTs, especially if they are unfamiliar with the blockchain or NFTs.
Drawbacks of Real Estate NFTs
There are also some disadvantages to applying NFTs in the real estate market. Here are some:
No legal framework
NFTs have not been fully described within the legal framework in some countries. Thus, there are still doubts if a digital purchase truly assures legal ownership of physical property. Real estate NFT platforms seem to have solutions for the problem. For example, Propy, a real estate NFT platform, has wrapped its NFTs within the US legal framework by switching the ownership of property from an individual to a US-based legal entity.
Admitting tax laws
In the majority of countries, real estate transactions are subject to tax. Using an NFT as a digital property representation can raise many questions on how to deal with taxes in different countries or states. In some countries like the US, the governments must investigate the condition and decide whether to make NFTs subject to sales tax.
Possibility of a sudden value drop
Since NFTs are traded for cryptocurrencies on NFT marketplaces, they can also go through the spikes and drops in the crypto market. Therefore, there is the risk of a decrease in the value of a real estate NFT with no warning. Investors should keep that in mind before purchasing a real estate NFT.
NFT Real Estate Companies
Although real estate NFT companies have been around for a couple of years, they have widely influenced the real estate industry. Let’s take a look at some of the best real estate companies in the market:
1. Decentraland
The virtual world of Decentraland was created in 2015. This metaverse game focuses on building and owning an NFT virtual space or land, which can be divided into parcels. Players can buy land using the native cryptocurrency of the game Mana.
To join Decentraland, you need to sign up, connect your digital wallet, and purchase a parcel of land. You will permanently own the parcel of land and are free to create your own digital world on it. You can build structures, develop metaverse games, or create your NFT art. The game also has a marketplace in it where you can sell or buy your land or your NFTs to other players.
2. The Sandbox
The Sandbox is a metaverse world living on the Ethereum blockchain. Like other metaverse games, players can build their own games if they own a readily available or pre-built building block. The native cryptocurrency of The Sandbox is $SAND, a utility token and currency which can be used to buy land and assets from their marketplace.
Investing in the land on Sandbox allows users to build their virtual world, including dioramas and games, and create their NFT assets, such as buildings, vehicles, or furniture. Players can also combine their NFT assets to make Estates.
3. Upland
Upland is another virtual land marketplace. It is unique in that it uses real-world addresses to map the property market. Players can trade their earned lands for real US dollars. Upland also allows players to interact with other players on the platform, earn profit and make new friends through its in-game activities, like Treasure Hunt.
The virtual economy is driven by UPX, the native cryptocurrency of Upland. Landowners receive returns on their properties, collect fees if there are visitors, or rent land to make a profit. Once a player becomes a business owner, she generates more UPX.
4. Somnium Space
Somnium Space was founded in 2017 and launched in 2018. This revolutionary metaverse aims to change the world of gaming and virtual reality (VR). Somnium Space is an open-source software platform built on the Ethereum Blockchain, which allows players to buy and customize virtual properties such as bare land, parks, and buildings.
Besides, Somnium Space users can own digital goods, avatars, and other NFT items. Using blockchain technology and VR creates a new economy that allows players to use programmatic advertising plugins to track engagement rates as well as conversion rates and immediately monetize their digital assets in the VR game.
5. CryptoVoxels
Cryptovoxels was founded in 2018. This NFT platform is a virtual place where you can buy land and build your own desired digital world. Players can buy blocks of land or voxels, build a game, create NFT art, or run a business. The game allows players to sell their NFT properties or assets to other players in the marketplace provided on the platform.
To your surprise, Cryptovoxels does not require its users to own an Ethereum wallet to explore the platform. The game provides day and night cycles, weather, and avatar customizations. Players can buy voxels on OpenSea, the largest NFT marketplace.
6. Fraction
Fraction is a new Thailand-based real estate firm on the Ethereum blockchain. Fraction is developed to make investing in property more accessible for everyone worldwide. The least investment price in this real estate project is $150.
On the Fraction platform, players can invest in lands as well as a variety of other digital assets, ranging from small stakes to private funds. The platform has been designed to fully respond to all needs and goals of its users.
7. Propy
Propy is a Web 3.0-based shop to answer all of your real estate needs. The platform covers all activities regarding real estate, from finding homes on their comprehensive list to owning them and even negotiating deals with sellers.
Propy took a step forward and launched its NFT platform in the United States in January 2022. The project allowed turning real-world properties into NFTs that can be bought and sold in the NFT market. Based on their records of real estate transactions on the blockchain, NFT land buyers can receive property’s legal ownership documents in a few minutes. Such ownership of a real-world property is not fractional, and they can get a property both in the US and a US-based entity that owns the very same land.
8. SuperWorld
SuperWorld is a digital asset marketplace. It includes a Real Estate platform where you can buy NFT lands, create your own world and trade your different NFT pieces of land. These lands usually measure around 100m of space in the real world. The size is enough for building a stadium or a concert hall where fans can get together and watch live games or concerts.
SuperWorld is easy to use. All you need is to create a world, apply your unique ideas and run your world. You can make use of analytics, gaming, digital commerce, and e-commerce to monetize your digital land.
9. Axie Infinity
Axie Infinity is a decentralized game platform living on the Ethereum blockchain that enables the purchase and exchange of virtual real estate assets. Axie Infinity is home to many unusual species. Players need to buy Axies and engage in combat, raise armies, gather resources, and create kingdoms.
Axie Infinity allows players to own, buy, sell, or exchange NFT resources in the NFT marketplace and earn recurrent income. Thus, NFT Lands are valued in this NFT game. Besides, Axie Infinity is one of the top NFT real estate projects available. Its economy enables people to take part in the metaverse and earn money and high-value financial assets in an enjoyable environment.
10. Polka City
Polka City is a revolution in real estate platforms. Investing in Polka City is significantly easier than other markets and allows users to own virtual real estate and earn profit. All NFT assets in this platform are contract-based, and all payments are in POLC tokens, the native cryptocurrency of the platform.
With Polka City, you can sign up for its real estate marketplace and make money anywhere. It is much like creating an actual city. The number of visitors to your city directly influences your earning. It is worth noting that you do not need a new blockchain wallet to participate in the game. An Ethereum wallet works well.
NFT Mortgages
NFT lending is a type of financial loan that uses NFTs as collateral for a business. NFT mortgages allow NFT owners, creators, and collectors to monetize their digital assets without having to sell their digital assets and lose their potential long-term value.
Since NFTs live on a blockchain, using them as loan collateral work also uses blockchain technology to record everything related to NFT mortgages in a smart contract. It allows secure storage and tracking of NFT ownership. Based on the smart contract, an NFT can be held as collateral and the loan process is controlled. The terms of the loan, including the loan amount, interest rate, and repayment period, are specified in the smart contract.
Using NFTs as collateral for loans provides several advantages, including accessibility, flexibility, and security of the digital asset. NFT loan platforms are decentralized, which eliminates the need for intermediaries, reducing the risk of fraud and ensuring secure transactions.
How to Become a Metaverse Real Estate Agent?
The real estate industry has always been an attractive market to make a profit. Now that NFTs have revolutionized real estate investment, many wonder about becoming a metaverse real estate agent. Well, the whole process is much similar to trading lands in the physical world. However, real estate agents in the metaverse have more to do. Here are some steps to take to become a successful Metaverse real estate agent.
1. Get an education about metaverse
To be successful in metaverse real estate, agents must extensively know about metaverse and how it works. They need to be familiar with various virtual reality platforms, such as Sandbox and Decentraland, as well as how to buy and sell virtual real estate on these platforms.
2. Understand metaverse transactions
Working in the metaverse requires information on complex transactions and crypto markets. A metaverse real estate agent needs to know about different cryptocurrencies, crypto buying, digital wallets, and related blockchains, such as Ethereum.
3. Join a metaverse real estate community
Metaverse real estate agents can get training in associations related to metaverse real estate. Such communities provide access to resources and important information an agent may need to run a successful business in virtual real estate.
It is also a great place to meet other agents, brokers, and professionals and build a strong network. It also gives agents a chance to learn about real estate events and meetings and relate to more professionals in the field.
4. Create a portfolio
A metaverse real estate agent needs to have an acceptable portfolio to be accepted in the market. A portfolio is a collection of virtual properties in different virtual worlds that are owned and managed by someone.
Virtual properties can be bought, rented from other real estate agents, or even developed by them. The bigger and more diverse the portfolio is, the more income it may generate.
5. List your metaverse properties on real estate marketplaces
Real estate marketplaces, such as Decentraland and OpenSea, are the best place for buyers and sellers to meet and trade their virtual properties. Listing metaverse properties on these marketplaces let buyers easily find, evaluate and purchase your virtual real estate. It also eliminates the need for a third party so that the buyer and seller can directly interact and discuss all aspects of a trade. It saves time as well as money.
Conclusion
Non-fungible tokens are revolutionizing our concept of the Internet. During the last couple of years, NFTs widely influenced the real estate industry and invited it to the digital world. Virtual lands are available now in various metaverses, and NFT marketplaces are loaded with transactions made by trading real estate NFTs.
Despite legal and technical challenges addressing real estate NFTs, some real estate companies are already working on minting real estate tokens, developing smart contracts for mortgages, and providing their customers with blockchain-based opportunities to buy, sell, and rent properties. These allow them to gain a competitive advantage and increase their chances of becoming industry leaders once legal frameworks are finalized.
FAQs
- Can a physical property be an NFT?
An NFT is a unique blockchain token that is designed to prove the ownership of a digital or physical asset. NFTs are also used to manage digital versions of a physical asset, like a painting or any other precious art.
- Where can you buy NFT lands?
Metaverses that provide NFT lands usually have an in-game marketplace where players can trade their digital lands. Other NFT marketplaces, such as OpenSea, Foundation, and SuperRare, also allow the trading of virtual real estate.
