Real estate is an ever-growing industry. Right now, it suffers from centralization. Some of the issues in buying and selling real estate are bureaucracy, lack of transparency, fraud and mistakes in public records. Using blockchain technology can speed up transactions by reducing the need for paper-based record-keeping it can also help with tracking verifying ownership ensuring accuracy of documents and transferring property deeds.
There is a clear need for blockchain in real estate. With the ever-increasing valuation of the real estate over a year over, it is no doubt that it can use a brand new technology to help cope with the increasing growth. Any enterprise blockchain should have the right set of features for the real estate with the ability to maintain a decentralized database.
The use-cases of blockchain include proper land titles and deed records, tokenization, real estate funds, and asset management, investors and tenant identity, real-time accounting, and finally leasing and payments. Among all the use cases, tokenization can be the biggest disruptor. It will enable issuers to ensure that distributions are done according to a certain condition. Moreover, it will reduce cost by improving execution speed, innovation, better administration, and so on. Ubiquity is a blockchain secured platform for real estate record-keeping that is an alternative for legacy paper-based systems.
Deeds, on the other hand, can also be accessed through distributed ledgers as blockchain is immutable. This means that no one can change or hamper information without the proper right access.
Here Are Three Exciting Ways That Blockchain Will Enhance The Real Estate Industry
Although still in its infancy, using blockchain in real estate is exciting and full of possibilities. Several startups, such as Redfin and Propy, are already transforming all real estate transactions to be entirely digital. By doing so, these tech-enabled brokerages reduce the costs of intermediaries – including realtors and bankers – by eliminating the need for paperwork, audits, and insurance whenever possible.
1. Blockchain-based smart contracts
A smart contract is a self-executing contract outlining the terms of the agreement between buyer and seller. The terms are written into lines of codes that are stored across a distributed and decentralized blockchain network. The blockchain codes monitor the execution of the contract, and such transactions are trackable and irreversible.
Listing agreements, letters of intent, offer sheets, and closing documents are examples of contracts that can become digitized on blockchains. Signing smart contracts instead of paper contracts can significantly speed up the whole transaction process. It also eliminates the need to meet and negotiate with brokers, bankers, and lawyers while ensuring peace of mind that the transactions are secure and legitimate.
2. Making property investment accessible
Real estate investing has long been exclusionary and time-consuming. Whether you’re investing in a single-family home or a multi-building property, you need to involve multiple parties in the due diligence process. You also need to be well off financially to even think about investing in a property.
With blockchain technology, multiple people can buy tokens of a particular property and co-own the building. This is the tokenization of a property, allowing fractional or partial ownership of the asset. Tokenization also allows real estate to be a more liquid commodity, meaning that owners can easily buy or sell their shares cheaper and faster. Therefore, this process attracts more potential investors and buyers in the real estate market by democratizing and decentralizing it.
3. Property listing services that are transparent and secure
Most property listing services available today are privately owned and don’t have a centralized database for cross-referencing. Real estate is historically a “pen and pencil” business, often relying on old and inefficient methods to keep track of transactions and records. Even worse, those services often require users to pay hefty subscription fees.
However, moving those property listing services to a single decentralized blockchain-based server creates a uniform and secured database accessible to everyone. Also, since the data is vetted and stored securely, third parties can’t interfere with it by inflating the price or listing fraudulent information.
How Everyone Can Benefit From Blockchain Technology
When multiple parties can invest in a development project, developers can raise the funds needed to start the project faster and more efficiently. Although fractionalization in real estate is nothing new, blockchain technology streamlines the process and casts a wider net for potential investors. Sponsors of the project can solicit capital contributions from investors outside their immediate network without worrying about vetting them or completing massive loads of paperwork. Blockchain records all the data, facilitates the signing of smart contracts, and issues briefings and updates to all involved parties.
What’s more, blockchain securely stores all architectural documents, engineering plans, appliance manuals, and other information. This means that if investors, owners, or anyone else involved in the development project want to access those materials, the data is readily available on the blockchain system. This significantly reduces transaction time and costs, allowing developers to focus on the project’s actual development.
Property owners and investors
Since blockchain technology makes falsifying or corrupting data nearly impossible, potential owners and investors can have peace of mind when buying real estate. In short, when they’re putting their money into a property, they can rest assured that the price and legitimacy are transparent and accurate.
Furthermore, the tokenization of real estate – converting its value into crypto – liquidates the industry. Liquidation makes the entry point for potential buyers or investors more accessible. This means that a seller doesn’t need to wait for a buyer who can afford the entire property to get returns on the investment.
Residents and tenants
From taking virtual tours and signing leases with smart contracts to submitting rent payments or making maintenance requests, renters enjoy a better leasing and living experience with blockchain. Blockchain technology secures these features, so all parties involved know the property listing is legitimate, identities are verified, and personal information is encrypted.
With blockchain, moving cross-country – even across the world – has never been easier. You can lease a property in San Francisco and negotiate deals from Tokyo without stepping foot outside, since blockchain eliminates geographical barriers and prevents privacy and data breaches.
Today, property management encompasses far more than just applying a fresh coat of paint or upgrading the appliances. A bulk of the job entails processing paperwork, whether for lease agreements or maintenance requests.
However, when you use a single decentralized property management system based on blockchain, all that paperwork becomes smart contracts that are nearly error-proof. A blockchain-based system provides fully transparent information on rental value, payment frequency, tenant and property history, and contractor agreements.
- Real Estate and Blockchain : An Exciting Future Ahead – https://101blockchains.com/enterprise-blockchain-use-cases/
- Exciting ways that blockchain will enhance the real estate industry – https://butterflymx.com/blog/blockchain-real-estate-industry/