When a three-bedroom South Carolina home got sold as an NFT (non-fungible token) for the first time in history, it got real estate agents and homebuyers thinking. Change is coming to the real estate industry, and blockchain technology is at the heart of it.
The NFT home sale proves that traditional property transactions now have a reliable alternative. Buyers, real estate agents, and sellers will welcome the ease Web3 and AI brings to the conventional market. Perhaps the more interesting perspective is that blockchain technology goes beyond the transient "crypto" fad it once had.
Overall, web3 and AI are gradually heralding a real estate revolution. But how does that pan out? We explore how these emerging platforms will redefine property transactions from the ground up, plus the fallout benefits you can expect along the line.
Web3: The Pathway to a Decentralized Future
Put plainly, web3 is the internet's third iteration. The previous versions had centralized models over the world wide web's infrastructure, keeping things stable and usable for internet users.
However, as the netizen population grew, it became apparent that the centralized model distributes powers to a few online entities that determine what happens on the internet, often without opposition or account.
Web3 looks to fill that gap through its underlying blockchain technology. It spreads core internet infrastructures to individuals involved rather than operating corporations. This redistribution creates a decentralized platform where transparent transactions reign supreme.
But web3 is more than a hotfix for an unbalanced internet; it's an upgrade. Thanks to its derivative technologies like blockchain, cryptocurrency, and NFTs, web3 promises to reinvent online and real-world transactions.
The entire real estate industry will benefit immensely from a web3 adoption, and below are some of the innovative applications to expect:
NFT Home Deeds
Non-fungible Tokens, or NFTs, have a dubious reputation in mainstream media. As such, you could imagine the surprise when the concept facilitated a South Carolina home sale. What looked like a one-off event turned out to be the proof-of-concept for the future of home deeds.
NFT home deeds offer the same value and reliability as traditional ones. They're seamless and convenient for buyers looking to own multiple real estate assets.
NFTs appreciate; since they're on a blockchain network, NFTs' home deeds offer more security and accessibility than conventional ones.
Decentralized Home Financing
Web3 promises homebuyers more decentralized home purchase and financing, but how much does that differ from conventional mortgages? Currently, some prospective buyers are considering purchasing their next home with cryptocurrency. As such, Decentralized Financing (DeFi) companies can come in to offer blockchain-based options to buyers.
Interestingly, DeFi financing complements traditional mortgage platforms rather than replacing them. Homebuyers with this financing profile might need help uncovering conventional banking solutions.
DeFi fills these gaps through blockchain fundraising or a blend of fiat mortgage and blockchain Initial Coin Offerings (ICOs). Overall, a decentralized home financing plan gives average homebuyers more alternatives.
Immersive Home Tours
In a web3 future, AI property buyers and sellers will veer into Virtual Reality (VR) and Augmented Reality (AR) to make real estate transactions more immersive. The technology could allow real estate agents to organize home tours that push more boundaries, showcasing more value than traditional open house sessions.
Plus, the industry is already moving in the right direction. Virtual home tours now exist, albeit with still images and pre-recorded videos. Thus, real-time virtual tours with interactive avatars in a connected “metaverse” environment would be a sure step forward.
Smart Contract-Powered Transactions
One niggling drawback to conventional property value assessment and purchase processes is their repetitiveness. Multiple transactions are manually initiated, even with the exact specifications and parameters.
Web3 could solve that with AI and smart contracts. The concept is relatively straightforward: each transaction runs through a series of codes and is automatically executed once both parties reach an agreement.
Self-executing transactions are great in that they save property managers time and resources. More importantly, smart contracts let the seller eliminate needless bottlenecks and third parties during purchases. All these add up to transactions that cost much less than traditional real estate sales.
The Rise of DAOs
The real estate industry goes beyond property sales. It also includes investment funding, portfolio management, and other advanced processes. Web3 can compete with traditional establishments in these areas with Decentralized Autonomous Organizations (DAOs). These blockchain-based investment organizations share voting rights equally among their members.
With such a decentralized approach, members in a DAO can align to compete for significant real estate investments. These individuals can also operate in the same space as traditional real estate companies. The result? A healthier competition and more favorable price control.
Adopting Web3 and AI in Real Estate
The aforementioned applications show that the stage is ready for next-gen real estate practices.
But how prepared are you for this change?
It’s important to consider adopting these newer technologies as quickly as possible. Therefore, real estate experts and other stakeholders could start with the orientation to ensure everyone else gets on board.
The following ideas are worth evaluating:
Information is pivotal in the global real estate industry. So, the first step to adopting new technologies is keeping up with the latest news. Web3 and the concept of decentralization keep changing with the regular updates, fixes, and reviews they get.
As such, consider staying abreast of the latest versions, especially those concerning real estate practices.
That entails reading about the latest industry journals and reports. Attending web3 workshops, conferences, and events also grants in-depth insight into web3 and AI adoption.
Once you get going with the web3 sensitization, the next step is trying out some of its applications to see how they fit your real estate business. Pilot projects are a great way to adopt blockchain in real estate, as they let you understand how feasible they are in conventional transactions.
However, it's best to start small with any technologies and scale up as necessary. Overall, real estate professionals have a much firmer understanding of decentralized processes when they test them out.
Have an Adoption Roadmap
All of the steps discussed are only useful if there is a plan. A roadmap is necessary if you seek a seamless transition into artificial intelligence real estate practices.
A standard web3 adoption roadmap focuses on the real-world problems the technology aims to solve rather than its tools. As such, you'd want to take notes on the steps, stages, and resources necessary for a complete web3 transition.
The Ally That Is AI
As the new internet and artificial intelligence keep seeping into more industries, people fear that the labor structure as we know it will change forever. In the real estate climate, professionals had the impression that real estate machine learning and AI algorithms would replace realtors, brokers, and other human elements in the business.
But that hasn't been the case, as AI has proven to be more of an ally than a foe. Below are some of the ways automated artificial intelligence in real estate seamlessly complements traditional real estate processes:
Smarter Buyer Recommendations
We've seen how artificial intelligence has revolutionized shopping habits and buyer behavior in industries like retail. Today, AI models match prospective buyers with products they may like with pinpoint accuracy. Incidentally, they're present in the real estate industry, providing more extensive results.
For instance, real estate agents can now use AI real estate solutions to curate their property values and listings to target specific client needs. This move saves both parties a lot of time, especially for structures with numerous property units.
What’s more? Agents can use artificial intelligence on real estate websites to learn the habits and preferences of prospects based on their location and past viewings. And when they initiate a sale, it's a much smoother experience overall.
Most importantly, the benefits of targeted customer recommendations are cumulative. As the client base grows, you begin to appreciate the convenience of real estate AI-powered automation more.
Sharper Trend Predictions
If there's one thing AI technology excels at the most, it's prediction. Each model tries to learn as much as possible from previous patterns and trends to predict future outcomes. Since the real estate ecosystem is all about market trends and results, AI is the perfect forecasting tool.
Real estate AI models have proven to be a formidable tool in the hands of analysts and professionals. With artificial intelligence, real estate development businesses can derive sharper, data-driven market analyses and forecasting. We're talking about future rent, the latest housing market trends, and novel investment opportunities; AI could give you an edge with related predictions.
Since timing makes all the difference in real estate, better AI-powered predictions mean fewer risks and a higher marginal ROI.
Better Customer Service
Almost every real estate website currently has customer service links. With the help of AI technology, these contact points could get more helpful to clients. For one, they will get answers to their burning questions quickly, as customer service will get more reliable and personalized.
For instance, an AI chatbot can handle multiple requests simultaneously. As such, the agency saves on customer service frameworks: they eliminate bulky and redundant call center staff, focusing on their other strengths.
Blind Spots to Note With Web3 and AI in Real Estate
For all the mighty things web3 and AI can do, it's worth noting the potential drawbacks you might encounter. Wrapping your mind around these cons could help put things into perspective so you understand the new technologies more deeply.
Below are a few blind spots to AI and web3 in the real estate industry:
Repetitive Roles Are at Risk
The media has largely fuelled the misconception that AI is out to take all our jobs and end human labor. While that isn't true, artificial technology might steal or change some of the human roles in a typical real estate establishment. Since repetitive processes can get automated on web3 and AI frameworks, it'll be needless to have humans perform related tasks.
Thus, a few fingers might get burned if your establishment goes all-in on AI and web3 technologies. It’s worth mentioning that larger establishments run a higher risk of an AI takeover due to their repetitive operations.
High Upfront Cost
AI and web3 are costly and a complex mix of expensive software and hardware components. But that's not all: AI feeds on big data to function correctly. As such, you'd need to invest in a specialized database for machine-learning information.
Adoption also demands infrastructural updates as the models assimilate more real estate data over time. As you can tell by this point, the initial setup cost is higher, with recurring maintenance expenses in the mix.
Monotony and Lack of Creativity
Albeit efficient, automated systems are cold and robotic. AI models can follow a given instruction set countless times without any variation. Why? Machine learning isn't advanced enough to replicate human creativity.
What does that mean for real estate businesses? AI can only thrive in the most fundamental aspects of an agency's operations. Numerical and predictive processes are more of its forte. As such, realty companies will require the uniqueness of human creativity in advanced decision-making functions.
Technology evolves at a blistering pace, extending its tendrils deeply into more industries. Currently, artificial intelligence and web3 are the new tech pit stops in real estate businesses and companies. But how will these integrations transform the entire real estate vertical?
We've highlighted some plausible ways the new technologies can power property sales, investment funding, and other real estate transactions. Although certain drawbacks exist, these aspects could give you a broader insight into the direction of the industry's evolution.
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