In recent years, James Harris says he’s become increasingly fascinated by cryptocurrency technology — and the virtual worlds it has inspired.
Now, Harris, one of the stars of the reality TV series Million Dollar Listing Los Angeles, is one of a small but growing group of luxury real estate brokers making an early play in the world of metaverse real estate. In these metaverses, digital “land” can be bought, sold and developed entirely within a virtual world.
James Harris | The Agency
“You want to be part of something new,” Harris, a luxury broker at The Agency, told Inman. “You want to be part of something that’s revolutionary. And this is revolutionary. We’re in this so early right now.”
Harris and other brokers Inman spoke with for this story warn that this is not a space for agents to jump into carelessly. Scams and opportunities to make underinformed investment decisions are among the risks agents face, they said. But if these platforms take off, the early adopters could win big.
Metaverses have been in development for some time, including the blockchain-fueled worlds of The Sandbox and Decentraland. But these cryptocurrency-based environments are also facing competition from big tech companies. Public interest in metaverses surged in October after Facebook announced it was changing its name to Meta and investing further in its own virtual-world experience.
In the long run, a potential rise in metaverse popularity could create opportunities for a new kind of agent — a virtual real estate broker to help buyers and sellers navigate the process safely and make a well informed virtual transaction.
But for a typical agent, those days are likely still a long way off. The most prominent agents in virtual real estate today have been partnering with metaverse developers to design and market properties. Some of them are also investing in virtual land themselves.
Here’s what they have to say about this complex new frontier, and where it might be heading.
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What is a metaverse?
If you’re confused by what a metaverse is, you’re not alone. There’s a whole array of metaverses out there, and each one has a different set of offerings for its users.
A metaverse is a 3D online world where users can interact, hang out and, in some cases, own their own corner of the virtual landscape. Think like a social network, but more immersive.
These metaverses can be explored on a computer or mobile device, and even traversed with special virtual reality hardware.
While the prospect of buying and selling real estate on these platforms is only beginning to gain attention, the social and professional aspects of metaverses are not new to the real estate industry.
The World of eXp Realty is one such virtual reality environment.
In a January conversation with Inman Group Founder Brad Inman, eXp Founder and CEO Glenn Sanford said his company rolled out the World platform as a means for his all-remote network of real estate agents to engage with each other in ways that are normally done in an office setting.
Credit: eXp World Holdings
But the World, Sanford said, was also an opportunity for eXp to increase its profile in the eyes of agents and the public at large.
Glenn Sanford | eXp Realty
“The reason why we did a virtual world in the beginning was because we wanted a unique selling proposition that somebody would talk about,” Sanford said at the Connect Now virtual session. “Something that was different enough that it would be remarkable — remarkable meaning that people would talk about it.”
Sanford anticipates that more workplaces — within and outside of real estate — may take similar steps as they look to improve on video chat and email communications for an increasingly remote workforce.
But the metaverses that have attracted the most attention within real estate circles aren’t restricted to a single company like eXp, or a virtual workplace for agents. In these worlds, the very land itself is for sale — and agents are angling for their place in the process.
Virtual real estate transactions
The most prominent agents diving headfirst into the nascent category of virtual real estate are focused primarily on two blockchain-based metaverses: The Sandbox and Decentraland.
Both of these worlds allow users to purchase virtual plots of land with unique digital tokens known as NFTs. Once purchased, this land can be developed into commercial buildings, residential structures or other developments within the virtual economy.
Some transactions have featured jaw-dropping price tags.
A property in Decentraland sold in November for $2.4 million worth of cryptocurrency. The buyer was Tokens.com, which plans to build out a fashion store and virtual event center.
A few weeks later, metaverse developer Republic Realm bought a plot of land in The Sandbox for the equivalent of $4.3 million in cryptocurrency.
Efforts are also being made to bridge the gap between the real world and metaverse real estate.
Daniel de la Vega | One Sotheby’s
Daniel de la Vega, president of One Sotheby’s in Florida, is working on a major project this year to build and sell a real-world mansion in Miami alongside a close digital replica in the metaverse. The title to that brick-and-mortar mansion and its digital counterpart will be sold as an NFT.
Harris, the celebrity luxury broker, thinks more buyers will want to own a copy of their real-world home in a digital space if the metaverse grows in popularity.
“I think you’re going to get a lot of homeowners that want to dabble in this space,” Harris said. “And I think, ultimately, it’s going to start to attract everybody.”
At this early stage, however, de la Vega doesn’t yet see a robust market for third parties to help broker the typical metaverse real estate transaction. The metaverse doesn’t yet have an equivalent of the traditional real estate agent, he said.
“They don’t exist today, unless the individual is extremely well versed in the metaverse space,” de la Vega said.
But with a bit of imagination, according to de la Vega, there is a pathway to an agent carving out a place in this world, and possibly even charging a commission.
Any successful virtual real estate agent would need to become an expert on these complicated metaverse transactions, de la Vega said. They’d need to understand cryptocurrency wallets and exchanges, and especially the Ethereum blockchain on which Decentraland and The Sandbox operate. These agents would also need to have a clear idea of cryptocurrency security to help steer their clients away from scams and phishing schemes, he said.
A third-party metaverse broker would also need to network in new ways to find cryptocurrency clients. This involves joining the right Discord communities and forming relationships throughout metaverse enthusiast circles.
“My advice to a Realtor would be, understanding it really well is how you can create value, and how you can essentially maybe be able to charge,” de la Vega said.
If they’re going to advise clients, agents brokering transactions in the metaverse must also become familiar with what kinds of properties make good investments there, Harris said.
“I would honestly say it’s no different to the real world. Focus on those key factors: location, location, location. Factor in limited supply,” Harris told Inman. “The same things you would look at buying a home.”
One of the main barriers to entry in this space has been the relative lack of resources aimed at teaching real estate agents the tricks of the metaverse trade, de la Vega said.
“Education is key, and that’s the fundamental of all this,” de la Vega said. “Again, it’s decentralized. So where do you get your education? You can’t go to Gold Coast to get a real estate license on the metaverse.”
But if a new class of transaction aided by a third-party broker begins to take off, that could change.
Marketing or investing
In the absence of opportunities to directly broker real estate transactions in the metaverse, the agents today are engaged in two main activities: marketing themselves as metaverse agents, and investing in digital real estate.
Ryan Serhant, one of Harris’s luxury broker counterparts on Million Dollar Listing New York, has been a vocal proponent of cryptocurrency technology.
In his annual letter to clients, Serhant said he’s seeing increased interest in real-world properties from clients who made their money trading cryptocurrency. Marketing themselves as a metaverse expert could be one way for an agent to attract these buyers.
Ryan Serhant | AJ Canaria of MoxiWorks
“Our agents are currently working on many wallet-to-wallet crypto transactions now, both in NYC and Florida — a trend you’ll read a lot about in 2022 as wealthy crypto holders look to diversify into hard assets,” Serhant wrote in his annual letter to clients and colleagues.
It’s not so different from tried-and-true methods of real estate marketing, Sanford said.
“How can you as an agent figure out a way to take things — whether it be what’s going on with crypto, what’s going on with NFTs, what’s going on with the metaverse, what’s going on with a lot of these new technologies — and create a niche where when people think of that topic, they think about you?” Sanford said.
Even if this strategy only generates a small number of actual cryptocurrency clients, a successful marketing campaign can attract other customers, Sanford said.
“The shiny objects [like the metaverse] can be used in a way to generate business even if most of your clients don’t use that shiny object,” Sanford said.
Other prominent agents active in the metaverse are getting involved in other ways, from buying cryptocurrency and metaverse land themselves, to partnering with developers on branded projects.
The metaverse developer Republic Realm recently announced a partnership with Tal and Oren Alexander, two of Douglas Elliman’s top performing luxury real estate brokers. Together, they intend to roll out a master-planned virtual real estate brand that spans at least three metaverse platforms.
De la Vega’s One Sotheby’s firm is just getting started with its physical-digital mansion combo NFT, and preparing to launch educational seminars later this year.
And while they aren’t disclosing all the details yet, Harris and his business partner David Parnes of The Agency are working with people in the cryptocurrency space on their own metaverse projects.
“I can’t really go into my structure, because it’s a little more on the quiet, confidential side,” Harris said. “I hope you can appreciate that. But I work with some very, very big crypto people who I’m doing this with, so to speak.”
Which metaverses are for real?
As Facebook and other big companies expand their investment in more immersive, metaverse-inspired experiences, the public appears set to give this technology an even closer look.
What’s less clear is which platforms are going to succeed.
Of the blockchain-fueled metaverses, Decentraland and The Sandbox are locked in a battle for attention and market share. Virtual land that’s purchased in one of them doesn’t exist in the other.
But these early metaverses are also set to face competition from Facebook, Microsoft, Apple and other big corporate players who are at least exploring this type of immersive world building.
For virtual property investors, it’s not just important to find a good deal within a given metaverse. It’s also important to pick the right metaverses, de la Vega said.
“As you look at the space, I think the first question that everybody asks themselves is exactly that: They ask themselves, ‘What happens if another metaverse is opened?’” de la Vega said. “I think that ultimately it’s the first mover theory, and these companies are the first movers and they’ve made extremely significant investments in [the technology].”
Advocates of the technology will also have to overcome general skepticism of cryptocurrency from segments of the public, Harris said.
“People are always uncomfortable with something new,” Harris said. “So it’s gonna be a mixture of people that hate it, people that love it, people that are ready to learn it, and people that aren’t. And I want to be on the side of people that are ready to learn what’s going on.”
