How Web3 is reinventing real estate
The home buying experience with just a few clicks is something many in the real estate industry have been talking about for years. In a transaction that typically requires a lot of paperwork, people, and legal checkpoints, it just didn’t seem possible.
Thanks to blockchain and the burgeoning world of NFTs (Non-Fungible Tokens), this wave of possibilities is already in sight. It’s as if we are sitting on the shore, we see the wave coming and we grab our boards to surf it.
You see, the faster, easier and more secure transfer of real estate assets with just a few clicks that everyone involved in the transaction – buyer, seller and agent – has been striving for for over a decade, is now available to everyone via Web3 technologies.
What happened on Wednesday, April 13, 2022 in Tampa, Florida – the couple-click experience, made that dream come true.
Until now, the conversation around Web3 innovation has been dominated by the art world and viewed as a way to prove and secure ownership of digital assets.
Reid Hoffman (founder of LinkedIn and venture capital firm Greylock) said in a recent podcast that web2 was for real identities and relationships, and now web3 is the web upgrade for ownership. Because obviously, “once you have a cryptographically secure ledger, it’s not just digital assets that could be there.”
Property is something that does not exist in objective reality, but as a result of human interaction. It exists because humans agree it exists. Some examples of social constructs are countries, money, and private property. Owning a car is just a title, it’s a record in a database, so it’s a digital asset. Thus, it could be governed via the blockchain.
What about real estate? Here I am, sitting in my new house in Miami and going through the process of buying a new house for my in-laws, and going through the same thing so many buyers do – making one blind bid after another on multiple properties, and now 8 -months later, after losing weeks of our lives in this process, a more seamless, smoother, and faster process can’t happen soon enough.
Imagine that brighter future: you find the home you want, connect your wallet or online bank in one place, and with just a few clicks, you participate in a transparent online auction. If you need a loan, you apply and instantly get approved through the bidding process.
So what happened in Tampa
My team said, “We are ready, the smart contract is deployed, the NFT is created and the sale can begin”. I said, “Okay, let’s go”.
This is how a 24-hour sale began and how the world would watch the deals come in.
This sale was the 3d NFT sale of a house to the world. In my previous article, I explained how the first real estate NFT was born. This recent sale was different because it also accepted USDC instead of Ether – our response to our Propy Twitter community vote.
The buyer who made the highest bid was at the open house, but at the time of the sale he was traveling to Texas. On April 13, they became owners via Web3 settlement.
After the sale was closed, the buyer called and asked, “What’s next?” “. When my team shared this with me on zoom, I smiled. It was hard for people to believe that at this point, as happened after the last two NFT sales, buyers immediately became owners. They had all the paperwork in advance for due diligence. All that remained was to receive the code from the smart lock to receive the key.
Hassle-free. Totally secure. Swift like lightning.
Here is the link to this transaction on Etherscan (it is a browser for blockchain records).
This house sale is now immutably recorded on a public blockchain. As long as Ethereum is supported, no one can modify or remove this proof and the NFT can still change hands. And of course, this can be done on any decentralized blockchain.
While there have been over $4 billion in real estate transactions recorded on the blockchain, for the first time in history, this instant blockchain settlement has been achieved for a small number of assets for now. .
Just like streaming on Netflix
This future is already here
In 2021 12% of first time buyers dipped into their crypto funds to secure the installments. This means a new generation of buyers are ready to invest in using a different payment method and transactional experience to buy real estate. The ramifications of this are breathtaking. Instead of the $1.7 trillion turnover, we will likely see the real estate market potentially grow to a $3-5 trillion market. Moving from state to state for a job, family, or opportunity is already part of youth culture, as is owning crypto. Why not buy instead of rent homes while moving and have a property in their portfolio in minutes?
What people can imagine now is that Web3 (which includes NFTs, smart contracts, and blockchain) is poised to completely transform the way homes are bought and sold. They allow the process to be managed entirely online, making transactions more efficient, automated and with fewer intermediaries. The entire sale is managed on a secure platform, creating transparency for all parties.
Another big advantage of web3 is that the concept of “fake it till you make it” is almost impossible – either you have a transaction record on an immutable chain or you don’t.
You might think that this innovation won’t scale due to the mortgage issue, as traditional lenders don’t accept tax returns from crypto holders. Well, major players in the new world of finance are actively developing new products to provide homebuyer mortgages backed by crypto wallets, common among the new generation of homebuyers. And a number of defi protocols are also looking to expand to provide down payment loans and mortgages for crypto holderssuch as XBTO, Milo, Helio.
One can also envision a new global marketplace for buying and selling homes, much like today’s OpenSea NFT marketplace. It could be OpenSea, but buying real estate requires every wallet (it’s almost like your login), with which you “log in” and buy assets, to be identified, but today’s NFT markets are intentionally designed to anonymous users. Thus, use cases requiring identities attached to wallets will require the evolution of new products. A showcase of homes ready for immediate negotiation, all anchored in a solid legal framework governing the secure transmission of property rights.
We are not talking about co-ownership. The concept was already there with crowdfunding platforms and REITs, and will now improve significantly with new companies like SolidBlock, LoftyAI, RealT, Acrew, and will make it more appealing to the crypto community. Rather, it is a complete transfer of ownership of homes via blockchain, much like we buy books on Amazon.
Ultimately, the foundation of Web3 exists as a combination of blockchain, smart contracts, decentralized currency and lending, and data and asset ownership. All of these technologies will work together to deliver the products and services that consumers demand – and will demand.
Today, we see crypto token standards like ERC721 used as a representation of real estate ownership in the real world and virtual ownership in the metaverse. Blockchain and smart contracts are used to help manage transactions, offers, securities, etc. Consumers now trust blockchain technology, they trust smart contracts rather than small tech startups. Consumers have come to understand that no government or company can take over their data or an asset if it is in their crypto wallet. And that’s why other use cases such as real estate are still going to evolve and become the next big things.
As NFT art and music sales slow, – lower volume on OpenSea, and a symbolic Jack Dorsey’s first tweet can no longer sell at the same price, innovation will remain, artists and creators will earn more now. The flow of capital, sparked by the popularity of NFT art, has accelerated the search for new applications for this technology in other industries, including its realization in real estate.
What will be the next great culturally relevant movement that will lead to the evolution of known economic and financial systems remains to be discovered.