As the idea of buying and selling virtual “land” in immersive metaverse platforms gains attention, a few luxury brokers have made a high-profile splash in this space.
But in the long run, are the typical real estate agent’s services even welcome?
This is a question that Janine Yorio, CEO of a major metaverse developer, says is largely unresolved. The role of a third-party broker in these digital worlds may look unlike its counterpart in reality.
“In the crypto world, the middleman is the villain,” Yorio said last week in a video conference with reporters and academic researchers.
Yorio’s company, Republic Realm, buys virtual tracts of land in multiple metaverses, builds out that land with structures and activities and keeps close tabs on the state of this startup industry. In November, the company announced it had completed the largest virtual land transaction in any metaverse, scooping up 3 square miles in The Sandbox for nearly $4.3 million worth of cryptocurrency.
Buying and selling digital land may resemble a real estate transaction on the surface, but Yorio cautions that they are very different activities in practice.
“It is nothing like real-world real estate,” Yorio said. “It is highly risky. It is a derivative trade of crypto. You have to pay in cryptocurrency. The value of the asset is largely correlated to the value of the underlying cryptocurrency, which tends to be very volatile.”
While Yorio expects this space to undergo substantial growth in the coming years, these platforms are still at a very early stage in their development, she said.
As of December, fewer than 25,000 people owned virtual real estate in a metaverse platform, according to records tracked by Republic Realm. The userbases of active platforms like Decentraland have yet to truly take off, and the metaverse that’s attracted the most investment so far — The Sandbox — has yet to launch to users, according to a report from the developer.
Investment in virtual land amounts to an early stage investment in specific crypto gaming startups, Yorio said. It’s a far cry from what we typically think of as a real estate transaction.
“It is buying future pixels in future platforms that are being built in a category that has yet to be defined, built on technology that, much of which, has not yet been built,” Yorio said. “It is very, very early.”
For many crypto enthusiasts, the idea of making these transactions without the expertise of a lawyer, the help of an agent or the oversight of a governing body is part of the draw of metaverse real estate, not a downside, Yorio said.
“That entire concept of an agent is an anathema to the crypto ecosystem, and the metaverse ecosystem is the crypto ecosystem,” Yorio said. “However, people have been trying to disintermediate real estate agents for as long as I’ve been in the industry, and as much as we try to do so with technology, for some reason, we have not been able to do so successfully.”
Yorio suspects that if these metaverse transactions become more popular, certain buyers may seek the help of third-party brokers who understand the space. The human broker may yet be able to gain a foothold, she said.
“There are points in a transaction where I think the human touch is something we have been unable to replicate with computing power,” Yorio said. “And so I suspect there will be brokers in the metaverse, much as I would like for them not to show up there.”
As prominent luxury brokers have gotten increasingly involved in this space, some have mused openly that homeowners in the future may want detailed copies of their real-life homes in the virtual world.
One Sotheby’s in Florida is in the process of selling a real-world mansion later this year alongside a digital copy that will exist in the metaverse. The Agency’s James Harris has told Inman he believes more homeowners may want to own a digital copy of their home in the metaverse, which may present opportunities for agents to get involved.
But whatever the future holds for real estate agents in the metaverse, Yorio doesn’t believe these copies of physical homes are going to take off. The main draw of a metaverse platform is doing things that users are unable to do in real life, she said.
As agents look to understand metaverses in this early stage, Yorio said they should consider the more exciting applications of virtual land development that might someday draw in users.
“Yes, we can call it real estate; yes, you can certainly enter, but think about why people would come to the metaverse,” Yorio said.