Illiquidity is the state of an asset that cannot easily be sold or exchanged for cash, without a substantial loss in value. Illiquid assets are difficult to sell quickly, because of a lack of ready and willing buyers to purchase the asset. The lack of potential buyers leads to a larger discrepancy in the bid-ask spread between buyers and sellers, which often forces the purchaser into a “long-term hold” investment strategy for the asset. Real estate is considered one of the most illiquid asset types.
Liquidity is valued. Liquid assets offer protection from risk in the event of a liquidity crisis. During a liquidity crisis, an insolvent investor who owns illiquid assets must sell its assets, no matter the price, in order to come up with enough cash to pay off it's debts. In the event that someone needs access to cash, illiquid investments offer little to no help. The 10%-40% reduction in value of the most illiquid assets cited above can be represented by the potential cost of not having access to cash when needed.
We believe that fractionalizing the real estate units and wrapping them up into NFTs is the solution for liquidity. All signs indicate that the crypto market will rise rapidly and the NFT market will expand with massive speed. Global access to abroad real estate markets, fractionalisation, instant settlement, and peer-to-peer transactions, that’s what we offer in our project!
To own a real estate is burdened with several, unavoidable costs. Once a buyer and seller agree to exchange the property, several third parties are brought into the transaction, such as bankers and real estate agents and the state as well.
Realtors charge an average 3-6% of the sale price, and legal fees and jurisdictional taxes add to this. Organizing and executing the transaction for real estate often is a minimum of 30 days, and often much longer, meanwhile opportunity costs of capital is a small, but constant tax on both parties.