Imagine if life was like a video game. You, in the form of an avatar (digital self), could visit a series of 3D digital worlds, shopping, meeting friends, and even buying pillows for your home. Although that might sound fantastical or even kind of silly, this concept is beginning to revolutionize the real estate industry. Read on to learn how.
What is the metaverse?
The metaverse is the next generation of the Internet. Instead of websites, people (as avatars) visit different virtual platforms. Thanks to virtual reality (VR) headgear and full-body haptic suits, these virtual experiences feel almost real.
Right now, several companies have created their own metaverses, with The Sandbox, Decentraland, Cryptovoxels, and Somnium among the most popular. These various metaverses have begun selling virtual land, giving rise to a whole new breed of real estate: virtual real estate.
As with traditional real estate, sales are residential or commercial. Residential properties are sold to individuals, as homes for their avatars. In one interesting example, ONE Sotheby’s International Realty is planning to sell a mansion in the metaverse that comes with an actual 11,000-square-foot mansion in Miami.
Meanwhile, commercial properties are being sold to companies, including developers. Several brands, such as Nike and Adidas, are opening storefronts in the metaverse. At this point, they’re mostly making these investments as a form of advertising.
What’s the potential of the metaverse in real estate?
Sales of real estate in the metaverse exceeded $500 million last year and could double this year, says CNBC, meaning there’s the potential for serious profits for agents and brokers. Since the number of properties in each metaverse is limited, virtual property values can increase. Case in point: a set of residential islands that initially sold for $15,000 are now hitting the resale market at $100,000-plus. Surprisingly, considering these plots or homes are virtual, they’re sometimes fetching astronomically high prices. One buyer, Republic Realm, shelled out a whopping $4.3 million for land in The Sandbox.
How will agents interact with the metaverse?
Technically, virtual properties can be bought and sold without real estate brokers and agents. That said, this brave new world of real estate is complex, providing an opportunity for agents to help their clients navigate it whether they’re buying or selling.
On the buy side, agents can provide advice on which metaverses will more likely increase in value. They can also pinpoint the choicest property locations—as with brick-and-mortar real estate, location is key. For instance, in Decentraland’s Genesis City, centrally located plots are priced higher than those on the outskirts, says Eva Martin, CEO, Tiendeo. On the sell side, agents can create comps by analyzing similar properties in one metaverse or across multiple comparable metaverses.
Whether a client is buying or selling, they’ll likely also need help dealing with the financial piece. That’s because, on the metaverse, properties are often sold as non-fungible tokens (NFTs), or unique assets secured by a digital certificate of ownership. To make matters even more confusing, virtual properties and NFTs are sold in cryptocurrencies (digital currencies), like Bitcoin, Ethereum, or Dogecoin.
Even if an agent doesn’t want to deal in virtual real estate, there’s a very good chance they’ll still be working in the metaverse. The cloud-based brokerage, eXp World Holdings, created a metaverse called eXp World on its Virbela platform specifically to house its headquarters. This virtual campus includes meeting rooms, an auditorium, and offices (such as accounting, HR, brokerage operations, and legal), along with a beach and soccer fields.
Of eXp World, Florida-based eXp agent, John Scalia, told the company that it facilitates the process of meeting with the back office to sort out issues. Southern California-based eXp agent, Dave Caskey, has also been impressed with the platform, saying, “[eXp World] empowers us agents to spend more time focused on real estate. Anyone on my team who needs an answer from a broker can get one in less than five minutes through eXp World.”
Similarly, the brokerage, SERHANT., is expected to beta-test its metaverse, UNIVERS., this spring and to launch it by year-end. To complement this virtual space, the company plans to open brick-and-mortar flagship locations in major markets.
Both metaverses will enable agents to work from remote locations, visiting these worlds to glean resources, attend meetings, socialize informally with coworkers, and more. Thanks to their virtual strategies, these brokerages hope to be able to expand more quickly and cost-effectively.
Eventually, along with opening virtual campuses or offices, brokerages will place properties they’re selling on the metaverse and offer remote showings and virtual tours, predicts Erin Sykes, Nest Seekers International’s Chief Economist and Real Estate Wealth Advisor.
Realtors should view the metaverse as an opportunity to boost earnings and facilitate their work. By staying up to date on trends, they can also help future-proof their career.