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Can NFTs Be Utilized In Real Estate?

Ever since an NFT collage of images by Beeple were sold for close to $70 million; LeBron James’s small dunk going for $200,000 and the ten-year-old Nyan Cat GIF was disposed for $600,000; NFT craze has hit the world and is rising fast. It has also hit the real estate market where a two-unit home in California in the Thousand Oaks area was put up for auction as an NFT along with its digital artwork.

The real estate agent behind the deal was excited by this, declaring it as an event that will go down in history. Although the auction was not successful, this sale opened some avenue for the real estate industry. The real estate behind this auction, Dulgeroff, was hopeful that the auction would open ways for people to sell their real estate. If this auction succeeded, it would have been the first home to be sold as an NFT. The figures Dulgeroff was quoting were pretty good. He was thinking of figures close to $20 million and going by the recent rate where the NFT of a digital rendering of a home went for half a million dollars. The real estate broker thought he would sell for more with the minimum bid he would accept being $2 million. He was not successful, as two weeks later the auction closed without even a single bid.

What could have gone wrong given that we are on an NFT wave?

One reason that has been quoted by experts that led to failure of the property auction in the NFT market was applying a premium to an item that was already well valued. It was difficult for the bidders to see the value.

Dulgeroff was seeking to tie an NFT to a real estate property, a real-world asset that is highly valued and market does not have a memory of such. Therefore, the response was not forthcoming. The real estate broker has learnt a lesson out of this experience—there is a feeling that this can still be done, but people need to have been exposed to this kind of sale. The auction will be an eye opener as more will have learnt.

He thought that he would create a frenzy with this sale being the first. Although the sale was not successful, people are now talking about it. So, in future, similar attempts may yield different results. For a real estate agent, one should not just rely on NFT sales, but explore the traditional means too. NFT is only limited to crypto users and shuts off a big segment of the market that is not part this new digital technology.

An NFT investment expert is of the opinion that using NFT as a way to sell valuables is a viable venture; however, he is of the opinion that this should be restricted to some items such as fine wine, collectible toys, and the likes. The excitement around block chain technology and what it can do will see even the real estate industry delve in, as they try to leverage on the benefits to make a sale. Experts feel that although selling the property as an NFT failed, there are lot of benefits that can be derived through adopting blockchain technology in the real estate industry. One of the adoptions can be streamlining transactions to give greater transparency and also allow a growing trend of fractional ownership.

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