It’s no secret that blockchain is changing many industries for the better and thus gaining popularity. For example, 77% of executives claim that they can lose their competitive advantage if they do not implement blockchain in their workflows.
Real estate is no exception, and blockchain can do a lot of good in this industry. In this article, we will talk about how blockchain can improve the real estate industry and in what ways. Without further ado, let’s get started.
Deplorable State of the Real Estate Transactions
Before we talk about blockchain benefits, it is worth highlighting the current problems of real estate transactions. Most Americans see current real estate transactions as a real headache and would like them to become much simpler. The following points can be considered the main problems of transactions:
- Possibility of fraud. Conventional real estate agreements are often in the form of paper documents that can be easily forged.
- Tedious paperwork. Paperwork headache takes up a lot of money and time, thereby increasing the risk of losing a client.
- A large number of intermediaries. Besides that, customers may be faced with the payment of unwanted fees and so on.
- Difficulty obtaining accurate property information. Information about properties o the market may be inaccurate or outdated.
Since we have revealed all the current flaws of the real estate industry, it is time to talk about how blockchain can fix them.
Advantages of Blockchain in Real Estate
If earlier it seemed to you that the blockchain could not bring much to the table in real estate, now you will most likely change your mind. We’ll name the most important benefits that the blockchain real estate business can deliver.
Ease of Property Search
Anyone who works in real estate or has dealt with this industry knows that they use multiple listing services to find information about a property or, if simpler, MLS. The main problem with such services is that they constantly require costs, while the quality of the data itself can vary from acceptable to mediocre. Besides that, real estate must pay for real estate API and its implementation into workflows to get access to MLS, which is another point to the spendings list.
With the introduction of blockchain into the industry, such problems quickly disappear. This is due to the fact that real estate data is transmitted to the P2P (peer-to-peer) network, which allows additional monitoring of all data needed. In addition, due to the openness of the information, the commission to MSL would be much lower.
Updated Pre-Purchase Due Diligence
Due diligence is a vital phase that allows for discovering legal, financial, or technical problems before making a purchase. The main steps in this process are verification of deeds, proof of ownership, tenant list, and renovation cases. As you might have guessed, all these documents are a pile of paper that is very vulnerable and take a considerable amount of time to check.
The blockchain allows you to transfer all this documentation to digital with access to them anytime and anywhere in the world where there is an Internet connection.
No More Intermediaries
Buying real estate is always associated with additional fees for lawyers, property appraisal, various applications, and much more. The more intermediaries participate in the purchase process, the more money you’ll spend on their services.
Blockchain easily eliminates the need for all the multiple intermediaries thanks to features such as automatic payments, a single property database, and more.
Smart Contracts Implementation
Often, real estate transactions require the presence of several parties such as tenants, brokers, property owners, lawyers. For example, in addition to drawing up a lease payment agreement, the money trail is checked by banks and auditors. Such a large number of parties makes it difficult to manage and control all the documentation.
The implementation of smart contracts makes all transactions transparent and automated. If both parties sign a smart lease contract, it will automatically initiate payment at the specified time intervals.
The multistage nature of the real estate trade is fertile ground for all kinds of fraud. The only salvation from this was cooperation with various title and escrow companies that guarantee the completion of the transaction.
Blockchain provides a decentralized and transparent approach. All data is available to each participant of the transaction, which significantly reduces the risk of being cheated.
Enhanced Investment Process
The illiquidity of investments is a common problem in the real estate industry. Such investments are very difficult to cash out, and you will not be able to sell them quickly either.
Blockchain aims to solve this long-standing issue thanks to the transparency of all operations. Investors will get a fast and, most importantly, safe way to invest in real estate without paperwork. Thus, real estate investment will become more reliable than any other form of investment.
Introduction of Crowdfunding
Since time immemorial, real estate investment has been the occupation for people with large capital. However, modern technologies in the form of blockchain can and are ready to change this course of things. All thanks to the very high flexibility and the ability to trade using various cryptocurrencies. This allows investors with smaller capital to start trading on the real estate market, thereby raising their capital.
Promising Real Estate Startups with Blockchain Technologies
We have listed a large number of benefits that blockchain can bring to the real estate industry. And these benefits are already in effect right now. Many real estate startups are starting to use blockchain, and here are just some of the most famous ones:
- Harbor. The main idea behind this startup is to tokenize the trading of various assets such as property, securities, and more.
- Ubitquity. It is a huge blockchain-based registry that stores real estate records.
- BitRent. This startup implements RNTB tokens, allowing you to invest small amounts in real estate and protect them by transferring data to a single blockchain registry.
- Smart Law. This startup improves routine notarial processes using blockchain technology.
As you can see, blockchain has a big future in the real estate industry. Thanks to the benefits it brings to the table, you can definitely expect blockchain to become more and more common over the next few years. Also, we believe that the companies that operate in the real estate industry would have to implement blockchain technology in the nearest future if they want to stay on top of the game.
Author Bio: My name is Katherine Orekhova, and I am a technical writer at Cleveroad – a mobile app development company. I’m keen on technology and innovations. My passion is to tell people about the latest tech trends in the world of IT.