What exactly is Blockchain?
Blockchain is a ledger that digitally records transactions and encrypts the information so that it is verifiable and permanent. So once data is recorded on it, there is absolutely no way it can be changed. The technology can ensure security, confidentiality and authenticity.
Blockchain and Real Estate: An Overview.
What would seem like a very unlikely combo is actually a revolutionary marriage.
The real estate industry is built on several, varying transactions between opposing parties. With each transaction, there is some level of confidential or sensitive data being delivered between two endpoints. For this reason, the Real Estate industry a perfect match for blockchain technology.
Besides providing a level of security, unmatched by other solutions, blockchain applications will have a huge affect on time, effort and money.
Top 5 Applications for Blockchain within the Real Estate Industry.
Digitizing and centralizing contracts would drastically reduce the chance of fraud. Smart contracts would combine ID verification and escrow into one simple step made visible on the blockchain. This process would limit any need for intermediaries during the contract step, except for buyer and seller.
Property titles are usually paper-based. This leaves them vulnerable to fraud and error. As of right now, the title management industry has grown to be worth $15 Billion, due to the number of intermediaries involved in transferring properties title. On the blockchain, the entire process would become more transparent thus reducing the need for insurance, a major financial expense during this process.
Property Search Process.
Technology can, and will, disrupt industries. Like the Multiple Listing Service (MLS), at one time, it transformed the way that buyers looked for properties and engaged with real estate agents. Now, as time and technology evolve, blockchain is adding a new level to MLS solutions. In present day, MLS services can be fragmented, decentralized, restricted and out of date. With blockchain technology, the property search process would be transformed. Buyers will have real time access to property information. This means that listing prices, available properties would be instantly updated at any change of status.
With blockchain, monetary transactions have the potential to become more efficient and secure. Right now, both the buyer and seller have to pay for lawyers, brokers, and insurance agencies for a property purchase to be completed. The process becomes more expensive with each new intermediary added to the transaction. With blockchain and the tokenization of assets, this process would be completely simplified. If buyers could purchase properties as “tokens” (In this case, digitized property assets) through a blockchain, the seller or buyer wouldn’t need to invest additional money into a costly transaction. The blockchain would simply record all transactions into one public, immutable ledger.
Due Diligence & Financial Evaluation Process.
One tedious and exhausting step in real estate purchases is conducting research into property. This step includes conducting home inspections, investigating neighborhoods, working with a lender, insurer, and other professionals to acquire all the information about the property and the buyer’s credit history. This process is extremely time consuming, especially because all information about a property exists in various places. By digitizing real estate property information, this could consolidate volumes of information. Vacancy, tenant profiles, financial, legal status, inspection history could be accessible in a centralized location. Access to such a comprehensive property profile would reduce time searching for all required information.
How do you know if Blockchain is right for your business?
It depends on what your goals are as an agent or agency. The bottom line is: blockchain will streamline the real estate ecosystem by enabling people to securely and efficiently share data and money. Frictionless experiences for buyers, sellers, lawyers, etc, will only help with driving more sales. Of course, before you jump into the new trend, it’s important to take inventory of what your business’ current goals are, as well as the current pain points. Are you looking to improve your process for buyers, and provide a secure platform for them to purchase your property? Then it might be a good fit.