Why are NFT houses all the rage and why should agents care?
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A luxury property is a unique, high-value asset that functions as a home, a status symbol, and a lucrative investment all at once. Seen in those terms, it’s really not that different from a non-fungible token (NFT). It’s perhaps no surprise that these two spaces – ultra-luxury homes and unique digital objects – are starting to overlap.
As a top production agent and vice president at ONE Sotheby’s International Realty, I have cultivated a diverse portfolio over the past two decades, from pre-construction and new construction sales, to commercial transactions and acquisitions, to property management and redevelopment projects. But soon, for the first time, I will participate in the sale of an NFT house.
When I tell my clients and colleagues about it, some of them don’t know what to think. For many, NFTs are still a new concept, but interest in the space is growing among buyers, sellers, and investors. It is important that agents are ready to meet their demands and prepare for what could be part of the future of luxury real estate.
The fundamentals of non-fungible tokens
Simply put, an NFT is an inimitable, non-interchangeable unit of data. This differs from a fungible asset, such as a banknote. For example, a $100 bill can be exchanged for another $100 bill, or two $50 bills, or a $100 internet transfer, without losing value. Non-fungible items are designed to be inherently unique.
How is this possible for a digital file that can generally be copied and saved by anyone at any time? With an NFT, proof of its authenticity and ownership is recorded publicly – and indelibly – on a blockchain, so there is no ambiguity as to its validity or who owns it.
If you’ve been following the news, you might know that many of the most prolific NFTs have come in the form of artwork and other types of digital collectibles. So where are luxury homes factored in?
A mansion in Miami and in the sandbox
With its permanent storage in a digital ledger, an NFT could easily serve as a deed of ownership – and that’s exactly what Meta Residence is doing thanks to a pioneering collaboration with a team of digital and real estate innovators, including ONE Sotheby’s International Realty and Voxel Architects.
By the end of 2022, an 11,000 square foot mansion will be built in one of Miami’s most affluent and coveted neighborhoods. Ownership rights to this property will be sold exclusively on the Ethereum blockchain, which is currently home to most NFTs. And because the deed is attached to the blockchain, the property can be resold there later. It’s sleek, logical and forward-thinking, and it also comes with a unique twist.
“As luxury agents, we specialize in helping buyers and sellers find the perfect place where they can live out their dreams, fantasies and aspirations. Why shouldn’t these places be as both virtual and physical?
Voxel Architects will replicate the residence top to bottom, from structural design and fine detailing to its seven bedrooms and nine bathrooms, as a fully virtual counterpart. While a house occupies a prestigious one-acre lot in Miami, its digital mirror will be located in a metaverse known as The Sandbox, and whoever owns the NFT will own both the physical and digital properties.
Metaverses are virtual worlds built with virtual reality (VR) technologies, which allow communities to explore, engage and interact with each other in immersive virtual environments. In a metaverse, individuals can own collectable data assets such as NFTs, and now we are entering a world where they can also own digital homes. For agents, this is worth paying attention to.
Why Metaverse Real Estate Matters
We are accelerating VR experiences and virtual worlds faster than ever as they evolve in their accessibility and sophistication. Here are three reasons Agents should keep an eye out for NFT Houses and the Metaverses where they will partially exist.
1. It’s a new frontier for luxury living and lifestyle: Home is where people enjoy their free time and have fun – and if they are doing these things on virtual platforms, then it is only natural to embrace the concept of virtual home.
2. It is a means for individuals to interact and transact: Today, the NFT space is dominated by collectibles such as digital art and artifacts, which could potentially be displayed in an NFT home, stimulating new opportunities for creation, curation and sale.
3. It’s a connection point for a new generation: There’s a new cohort of digital natives reaching the age where they’re preparing to buy their own properties, and NFT homes might have a unique appeal for them.
As luxury agents, we specialize in helping buyers and sellers find the perfect place where they can live out their dreams, fantasies and aspirations. Why shouldn’t these places be both virtual and physical? For those willing to break with tradition, the rise of NFT homes represents a potential business opportunity that can expand and enrich real estate as we know it.
Recognized as a visionary in his field, Michael Martinez is Vice President of ONE Sotheby’s International Realty and has been recognized as a Top Producer for the past 8 consecutive years. Michael is ranked #1 Top Producer at ONE Sotheby’s International Realty for 2020 and 2021 and is recognized as the #1 Realtor for Total Sales Volume in Pinecrest Village for 2018, 2019, 2020 and 2021. 2021, Michael closed out the year with an impressive total volume of $230,737,000, including $168 million in closed sales, $38 million in referral volume, and $23 million in pending sales.