The latest buzz in the world of technology is something called “non-fungible tokens” or NFTs. Even though the current trend has NFTs operating within the parameters of selling digital artwork, it won’t be long before the technology enters the real estate industry and alters the way we carry out parts of a real estate transaction. There has already been an initial foray into real estate with a San Francisco landlord putting a 75-year lease up for auction on an NFT site, but this is just the beginning when it comes to how non-fungibles will integrate with our industry.
For a brief overview of the technology, an NFT is a digital certificate that indicates who the owner of an object is—and is stored in such a way that the record of ownership cannot be altered, while also allowing the chain of ownership to be tracked during the entire time the object exists. The type of technology that stores all this information is called blockchain, which simply refers to a digital platform where records and documents are saved simultaneously in many locations (nodes), making it impossible to change anything without it being noticed. An NFT can also come with the option for the original owner of the object to receive a predetermined commission each time the object is sold to a new owner. The landlord in San Francisco, for example, has built into his NFT a 1% royalty each time the property transfers ownership.
For the rest of us, we can look to the entire package of documents and contracts that accompany a real estate transaction as the place where NFTs will become something we use frequently. Title/ownership documents, property surveys, land plats—these are all ripe for being preserved as an NFT since they are the backbone of a secure property transaction. From there, it will become commonplace to save the sales contracts and mortgage paperwork in a similar fashion…and then the rest will follow suit.
We don’t have to worry about this creating more work for real estate professionals since the software platforms where it all takes place don’t require any more tech know-how than the saving and uploading of documents we already do on a daily basis. If anything, it will save time overall since it will make transactions go more smoothly.
While many real estate agents are skeptical of yet another new technology that promises them the world, we should welcome non-fungibles without too much worry. They will make it easier for agents to ensure that the correct paperwork is in place and help clients feel reassured about the dozens of details they need to verify before closing, all without creating excessive work for agents. Once NFTs take hold, they will be here to stay.
Allen Alishahi is president of ShelterZoom, the technology company behind DocuWalk. For more information, please visit www.docuwalk.com.
Once NFT’s are in place, it sounds like agents commissions might be reduced as part if the transaction may be on auto pilot. Any thoughts…..?