In early February of this year, Leslie Alessandra sold a home in Gulfport, Florida for $654,310. That sale made real estate history as the first home sold as an NFT (Non-Fungible Token) on a blockchain in the United States.
The home and other properties that have since been sold as NFTs and paid for in cryptocurrency all herald a sea change coming to the real estate industry. Like other assets that have been tokenized as NFTs on the blockchain—digital art, season tickets, carbon credits and more—real estate NFTs are gaining traction because they solve real-world challenges like process efficiency and transparency of ownership confirmation.
Streamlining Property Transactions Using NFTs
Selling a home in the traditional real estate market is a long, cumbersome and expensive process. From the initial listing of a home to the final close, offline real estate transactions can take weeks or months. Soliciting and negotiating offers, confirming title and ownership and completing the required contracts and paperwork all add extra time and cost. NFTs in real estate help make the process much smoother.
Tokenizing a home as an NFT confers powerful advantages for both businesses and consumers, including clear digital ownership that is irrefutably and permanently embedded on a blockchain for all to see. Interested buyers should be able to quickly and easily view prior owners, tax records, pricing history and any legal disputes involving the property. For real estate agencies and property management companies, an NFT can also be more easily and widely marketed. In the case of Alessandra’s Gulfport home, the auction drew nearly 3,000 bidders.
Additionally, NFTs in real estate help streamline or replace slow and expensive third-party processes like title insurance and escrow. And as with other NFTs, the actual transfer of the property and funds can be completed securely and near instantaneously, absent all the paperwork and back and forth nature of the traditional real estate closing process.
Real estate industry NFTs also present intriguing opportunities beyond traditional one-to-one residential sales. For example, the NFT could represent the homeowner’s contractual obligation to pay a title or HOA fee/contract. Ownership through an NFT could even make for simpler and faster borrowing against a home by sidestepping much of the extensive due diligence and paperwork required by traditional financial institutions for a mortgage or line of credit.
Real Estate NFTs on the XRP Ledger
The real estate market can be complex, and anyone who has bought, sold and/or rented a home knows that it can be an extremely tedious process, especially for those of us that aren’t well-versed in the jargon and other ins-and-outs of the industry.
In an effort to simplify the home buying, selling and renting experience, Ripple partner ProprHome will leverage the XPR Ledger to create and distribute NFTs that will represent property ownership. The company is leveraging the speed and reliability of the XRPL to bring greater trust and efficiency to the Portuguese real estate market. ProprHome is also debuting a robust NFT and real estate literacy program to help new users understand and maximize their experience.
And because Portugal has Europe’s highest concentration of real estate agents, ProprHome will help market participants find the best ones by issuing a reputation currency that can be earned for good practices then redeemed or traded for advertising and additional exposure.
XRPL: Purpose-Built for NFTs
Companies like ProprHome are turning to the XRPL as a fast, low-cost and secure public blockchain technology because it has proven itself ideally suited to the settlement of NFTs and other tokenized assets at scale.
NFT transactions on the XRPL close in less than five seconds, cost only a fraction of a penny and eliminate the need for complex smart contracts. The XRPL can also handle high transaction volumes, and key NFT functionalities like minting, burning and trading are pre-programmed as native features on the ledger, making it user-friendly and well-suited to benefit large real estate firms or governments.
The inherent advantages of the XRPL are enhanced by Ripple’s ongoing support for utility-based NFTs. Via our $250 million Creator Fund to foster new NFT use cases, we’re excited to see what the future holds for functional NFTs – from real estate and carbon markets, to media and entertainment, and beyond.
To learn more about blockchain technology and NFT support on the XRP Ledger, visit XRPL.org.
Want to get started minting your own NFTs on the XRPL? Wave 3 applications are now being accepted for Ripple’s Creator Fund. Learn more and apply today.