Empowering real estate by utilizing blockchain technology is not something new. Although real estate is often seen to be rigid and resistant to change due to its status as an industry that is slow-moving, blockchain technology is making significant progress. Web3 in real estate is changing how you manage, sell and own physical property.
Web3 is the next generation of the internet. It’s a digital space we can access using Augmented Reality (AR) and Virtual Reality (VR). It’s now possible to purchase real estate in virtual reality. You can also invest in real estate properties, which allows you to acquire partial ownership of high-cost properties.
The following applications of web3 and real estate together have transformed the business of managing, selling, and owning physical property.
Applications of web3 in real estate
Real estate tokenization
Decentralized finance services are not limited to ownership. This is based on an interlocking system of smart contracts, blockchains and oracles. DeFi can provide a more seamless and convenient service which opens up new possibilities for innovation, especially in the underserved market. Few DeFi platforms tokenize real estate property. These platforms are working to overcome access limitations, lack of liquidity and composability through interoperability with other DeFi apps. Communities can diversify their portfolios and generate stable yields using real-world assets with constant liquidity enabled by the Automated Market Maker (AMM) algorithm.
NFT based deeds
Non-fungible tokens, or NFTs, are all the rage right now. However, the applications go beyond artist fan clubs and profile pictures. You can use NFTs to identify property ownership. The blockchain stores the purchase record and allows access to legal documents, reducing costs and speeding up the buying process.
NFT real estate property is a programmable plot of land that can be explored by users using their 3D avatars. NFTs can be purchased in the metaverse to represent exclusive ownership of their properties. The project will determine what you can do with your property. Decentraland is an example of a community that allows users to develop land plots, attend events and participate in social functions.
The historical nature of real estate has meant that it exists with liquidity issues, which is why it has been harder for lower-income people to invest. However, the wealthiest have been privileged with the ability to take advantage of the different property market trends worldwide. The term fractionalization is used in the NFT world to describe the sharing of the ownership and costs of a digital art piece or collectible. Fractionalized NFTs allow you to share the ownership and cost of physical assets like real estate with multiple people. A fractional NFT can be used to reduce barriers to entry for those who want to get into the real estate market.
The slow process of the real estate industry is a hallmark. However, NFTs can simplify and speed up these processes. Everyone can access the transaction history and ownership history of NFTs because they are decentralized. Smart contracts, a program on blockchain that executes commands automatically when certain conditions are met, can automate the bureaucracy and the processes associated with assets changing hands.
Improved security and transparency
The downside to having your title deed for your property issued on paper is that it could be lost, altered, or forged easily. Tokenization can make it easier to sell and buy real estate. Anyone can view their history and transactions to verify their authenticity because NFTs are stored on blockchain ledgers. Due to the immutable nature of blockchain ledgers, anyone can mint their title deeds or other documents as an NFT. This could greatly reduce the chance of malicious actors falsifying property documents.
Virtual reality and metaverse in real estate
Web3 allows you to display realty products on the metaverse. The immersive digital technology allows stakeholders to be part of the virtual simulation of real-estate properties hosted on the metaverse. This technology helps realty companies in their day-to-day operations, such as board meetings and internal conferences, and facilitates client interactions. The metaverse allows clients and employees to see every detail of a business.
Web3 in real estate solves inefficiencies and inaccuracies and offers faster and more efficient transactions. It reduces the involvement of banks, lawyers, and realtors in real estate transactions. Smart contracts allow for the automatic activation of the next step without the need to be manually triggered. Also, smart contract technology can assist in making listings, payments, and legal documents. Investors can also save time and money by paying less for these services and enjoy smoother transactions.
Web3 will undoubtedly disrupt the real estate industry and bring about revolutionary changes. It can remove the unwelcome and provide the necessary tools to lower the barriers to investment in real estate.