You are in a good company
There are many reasons why this will happen. We will cover them and give some samples as well. So, let’s have a look at what tokenizing real estate is about.
Tokenization is still in its early stages. Tokenization is when you turn a real-world asset into a digital asset. In our case, a house or other real estate asset. Real estate and NFTs have one thing in common – they are both unique. This gives NFTs already a head start to represent real estate.
Tokenization is when you turn a real-world asset into a digital asset. In our case, a house or other real estate asset. Real estate and NFTs have one thing in common – they are both unique. This gives NFTs already a head start to represent real estate.
Reasons to tokenize real estate include the following;
You can plug the NFTs now into smart contracts. This opens up a whole new can of opportunities. So, we are going to have a look at them.
There are various ways you can use your tokenized real estate NFT.
We will show you a few options.
If you need a mortgage or want to refinance your asset in real life, there are a few hoops to jump through. Your average mortgage takes months to get cleared. You also need a lot of documentation. To top this off, you need a good credit score. This is a biased and unfair system.
On the other hand, in DeFi, you can secure a loan in no time. The only thing you need is collateral to back it up. In this case, your house is the collateral for your mortgage. In other words, your NFT that represents your house.
This may need to be some kind of conditional transaction with a few steps in it for it to succeed. The reason is that, in this case, you don’t own the token.
This has a few limitations in TradFi. In general, it boils down to two options.
However, if we compare this with DeFi, we see a different story. For example, you can invest:
There are many other options available in this field. As a result, we already see many companies that offer tokenized real estate.
Let’s say you have real estate tokens worth $500,000. However, you need $100,000 quickly. DeFi gives you two options for this.
So, this showed us a few use cases for tokenized real estate NFTs. This leads, however, to another question. What if 1,000 different people own a property? Who owns it and who can live there? Let’s have a look at this. Because this files under the legal aspects. That’s the biggest issue at the moment with tokenized real estate.
It’s just an idea by Shivsak, but it might just work. Likewise, it would take for granted that we are already a few years down the line. By that time, standardized smart contracts for lease agreements should be common. Developers can add a variety of details into them. However, it may take a few years before the legal system allows this kind of contract.
As a result, Shivsak sees some form of hybrid contract first that tie to a title. Once the legal system recognizes tokens as property, a new set of smart contracts is due.
We saw that tokenizing of assets is in the making. Especially the real estate market is of interest. It’s a big market with over a $300 trillion share. You learned what tokenization is, and we showed you some good use cases. We also discussed why tokenizing real estate matters. For example, more people can take part at lower entry prices. Fractionalization offers this.
On top of this, there are plenty of ways how DeFi can give a helping hand with securing loans or making tokens liquid. Currently, the biggest issue seems to be the legal aspect. It may well take a few years before tokenizing real estate can hold up in a court of law. That didn’t stop plenty of firms that already offer tokenized real estate.
Get up to date with the latest Greek property news.
You are in a good company