Real Estate, Crypto, and NFT. Is it a Scam?
The recent listing of One Eleven as a NFT on OpenSea by Okada & Company with a tag price of 15,000 ETH (28.7M) raised many eyebrows over the authenticity of the deal. Given the complications in purchasing real estate anywhere and everywhere in the world, many saw this as just another marketing scheme or an absolute scam.
But think about it.
What if you really can securely own or invest in a property in NY by simply buying a NFT from your home in Korea?
Further, buying property is a slow and cumbersome process; it is plagued by way too many documentations, intermediaries, delayed communications, and unnecessary repetitions. Fees begin to add up quick, and everyone starts hating their city officials, agents (buyer/seller, settlement, escrow, etc), and spouse.
What if you can automate the entire process and get rid of the intermediaries and inefficiencies using blockchain and smart contract technology?
How cool would that be?!
INTRODUCING PROPY
You guessed it. It’s already happening.
In order to streamline the process of buying real estate, US-based startup Propy launched in 2016 with a mission to automate the real estate transaction process with blockchain technology. People can now purchase real estate with crypto and NFTs from literally anywhere in the world.
As of today, Propy processed $4bn in transactions. So yes… I guess it’s working?
How Propy uses Blockchain
According to Propy, the record of the purchase is placed on the immutable blockchain and provides access to the legal documents signifying ownership. This reduces costs for the buyers and makes the purchasing process quick, simply by letting them buy a property in a few minutes.Their goal is to scale this offering globally, providing a single framework for purchasing real estate using blockchain technology.
Step 1: Property Choice
The process begins with a buyer finding a property on the listing platform. Just like Zillow, Redfin, and other real estate listings, Propy aggregates data from MLS.
All you have to do is to go on Propy, select your desired property, choose an agent, and make an offer.
Oh, and by the way, this is where it gets kinda cool: You can buy the property as a NFT.
Step 2: Purchase and Sale Agreement Generation
Propy automatically generates the purchase and sale agreement, and it performs ownership verification through a third party. The Offer gets signed electronically by all participants. Once all parties provide their signatures, the purchase agreement gets encrypted, and it is recorded on the blockchain.
Step 3: Additional Documents
- The title agent uploads the title report so that both the buyer and the seller can sign it online.
- In addition to the title report, the seller’s agent uploads disclosure documents so that the participants can sign them.
- The title agent uploads separate estimates, called the Settlement Statements, to the buyer and the seller. After both parties sign them, the title agent provides an escrow bank account, thus avoiding the risk of e-mail and wire fraud.
Step 4: Payment
The buyer has fiat, cryptocurrency, options for payment. After the payment form is automatically generated and the amount is processed, Propy marks the payment as received on the smart contract.
Step 5. Deed
At this final step, the buyer receives the officially recorded deed with the blockchain address on it. The records are kept at the municipality and on the blockchain. Because the deed is recorded on the blockchain, the buyer has an unhackable proof of ownership. (Yes, they worked things out with the government).
Since everything is recorded on the blockchain, there is no opportunity for fraudulent behavior in the transaction process. Additionally, with Propy’s automation features, sellers and buyers save money on fees.
*Content sourced from Propy.com
Okay… so what about NFTs?
You’re probably wondering how the actual documentations and property deed reflects those who purchased the NFT in the ‘real’ world.
Long story short, it doesn’t. But here’s how Propy does it:
NFT buyers become owners to equity of an entity that owns the actual property; simply put, NFT holders don’t actually own the building, but they are granted ownership rights associated with the property with the NFT they purchased. The cool thing is that equity is not fractional ownership, and thus becomes a DeFi asset that can be borrowed against.
So there you have it. This is how we are experiencing a revolution in Real Estate via Blockchain.
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