There’s a rising trend for non-fungible tokens (NFTs) in the digital space. Why? Well, everything is digital nowadays.
So it only makes sense that the data that’s stored online be sold and traded too. Data that’s associated with digital files such as photos, videos and audio files can be transferred, just as any type of property can be. And the same goes for the digital identity of a physical property, like the home that you’re selling or the home you’re looking to purchase.
Let’s walk through what an NFT actually is before we deep dive into why they should be considered as part of a property contract.
NFTs are assets that are generally considered “one of a kind”; designed to show ownership of a certain virtual item. For example, those family photos you have? Those are yours. You have ownership of them – both physically (if printed) and virtually too. Sure, they’re non-tangible assets, but that doesn’t make them any less valuable.
Former Twitter chief executive and now CEO of Square, Jack Dorsey sold the first-ever tweet as an NFT for a whopping $3.8 million. The tweet, which was published on 21 March 2006, simply said: “just setting up my twitter”. The purchaser believed he was purchasing a slice of history, saying, “I think years later people will realise the true value of this tweet, like the Mona Lisa painting”.
If things like tweets can be considered historical, well, then surely there are digital elements of your property that have value too. The belief is that soon, you’ll be able to purchase a building, the air space and the virtual space too.
If you look at properties as part of history, there is a whole world of digital assets that can be classified as historical too. Think about it this way: in 100 years from now, wouldn’t it be cool for the person who’s purchasing your property be able to view it in its current form too?
When a property is sold, the physical title that goes along with the property is transferred at settlement. Generally speaking, the contract stipulates what chattels are included with the sale. This may include fixed floor coverings, electrical light fitting, window finishings and any other fixtures that the vendor wishes to sell with the property. Likewise, it will also include what chattels are not included with the sale. The vendor may wish to take the pendant light above the dining table or the curtains that are in the main bedroom. So, just like these chattels that are included, so too can the digital title be transferred.
The digital title may take the form of a photograph of the property, or lots of photographs, or even an artist impression of the property. For a long time, digital art wasn’t protected and could easily be copied, making it almost impossible to know who owned the authentic original. The same goes for artist impressions of the property. These can either be included as part of the chattels in the contract or could be a separate document. Just like the value of the physical property, the NFT will have the opportunity to experience capital growth as part of the history of Australian real estate.
Historically speaking, Australian real estate doubles in value every 10 years or so. It’s not well-known at the moment how quickly digital assets increase their value, but at the very least, the digital identity of the property will increase in value alongside the physical identity. This means that as the transaction goes from buyer to buyer, the NFT has the opportunity to gain as much, if not more, capital growth than the actual property itself. Remember, the NFT shows the state of the property prior to the purchase – this may have changed as the property changed hands, so it’s the only form of historical data that exists showing the history of the property.
As agents, it’s our job to advise clients on how to get the best possible price for their property. Every real estate agent would be wise to brush up their knowledge on how NFTs can work in the real estate industry and why vendors should embrace NFTs as part of the sales strategy.
After all, it’s a one-of-a-kind digital footprint of the property and its transformation. That sounds pretty valuable to me.
Adam Flynn is the state director of Coronis Group Victoria.