Recently New York City real estate firm Okada & Company listed its first property as a Non Fungible Token (NFT). The owner of the single token will acquire the rights to the deed and all of the uses of the building, but since the current real estate laws still apply, it does not complete the transaction. The traditional way of transferring real property must still be completed.
Okada & Company is selling the 46,299 square feet property in New York City’s prestigious Chelsea neighborhood, located on the west side of Manhattan. The seven storey office and retail building is in close proximity to Madison Square Park and other NYC landmarks, making it one of the hottest properties in New York.
The transaction will take place on the OpenSea marketplace for a price tag of 15,000 Ether. While real estate laws have yet to change to allow a transaction to be completed entirely on a block chain, the sale is seen as at least partly a clever marketing tactic on the part of Okada, but it still opens up the doors to what is possible in the future.
Since the traditional real estate transaction process must be followed after the sale of the NFT, there is not much of an advantage to holding the sale on the Ethereum network, but SEC’s regulations and other laws can be changed, the firm is hoping to fully tokenize the procedure soon.
Advantages of NFTs in Real Estate
Looking forward to what is possible in the future, documents associated with a real estate transaction could all be placed on the block chain. Profit and Loss Statements, Deeds, and tax documents can all be listed, drastically cutting down on friction and other inefficiencies that can slow down the real estate transaction process.
Due to the trustless nature of NFTs, third parties such as title insurance companies and escrow providers may also become obsolete as well. The concept of trustlessness is a core element of blockchain, crypto payments, and smart contracts. “Trustless” means there is no need to trust a third party, such as a bank, a person, or any other intermediary that could operate between the two parties involved in the transaction.
Looking to the Future
While we are still a long way from being able to conduct a real estate transaction entirely on a blockchain, it does appear that more and more firms are embracing the possibility.
It is easy to imagine a system where all relevant information regarding a property is easily available and verifiably accurate on a twenty-four hour basis, and when a transaction does occur, all relevant parties are instantly paid, such as brokers, agents, and attorneys.
While there are still many hurdles to leap to make block chain transactions standard operating procedure, it does appear that many are embracing the possibility. As with all new technologies, there will always be some to resist change, but it’s likely we will soon see many firms follow Okada’s lead and turn towards the blockchain.
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Authored by: Stanley Montfort
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