Blockchain is gaining momentum in the real estate industry. $326 trillion.
Blockchain is more than a gimmick that luxury penthouse sellers can offer their ultra-high net worth customers. We can help governments, businesses and the general public looking to buy or rent a home.
Here are five key aspects that blockchain technology could improve or completely transform.
1. Flow of property search
The whole process starts with a property search, but here comes the first problem.
According to statistics 93% of US homebuyers use online websites to find homes. These websites, primarily real estate marketplaces and platforms, connect buyers and sellers and allow prospective buyers to use filters to drill down to specific criteria for their ideal property. However, not all Web2 applications are without flaws.
First and foremost, property information hosted on these websites is often inaccurate, outdated, or incomplete. Additionally, fragmentation of data across multiple listing platforms can lead to confusion. Blockchain technology, on the other hand, has the potential to solve these problems in a number of ways.
Instead of manually entering the same information about a property into multiple platforms, agents and sellers only need to enter it once into the blockchain database. Second, data entered into the blockchain is irreversible and cannot be changed. Finally, future platforms may start processing tasks such as listings, payments, and legal documents.
2. Fees and surcharges
The main winners in commercial and residential real estate transactions are the intermediaries who connect buyers and sellers: brokers, real estate agents, bankers and lawyers.
The faster the parties try to close the deal, the more money they have to pay the arbitrator. So they end up losing a lot of money. however, report Deloitte says blockchain could soon change the way real estate transactions work.
Virtual tours, direct communication between buyers and owners, and full paperwork guides help people avoid middlemen and save money on transactions without risk.
Realtors average 6% for all transactions. So if you bought a $200,000 house, you could save an additional $12,000 on the services of a real estate agent.
Financing is another big problem in real estate. Buyers have to wait days or weeks for a mortgage to be approved.
Loan Origination and Underwriting Continued manual and not standardized. Structuring security is open to interpretation and great effort is required to avoid double collateralization of assets. Trading and asset servicing decisions are often based on outdated information. Finally, cross-lifecycle cash adjustments often cause settlement delays, impacting cash flows for investors.
Traditional financial institutions can benefit from blockchain’s single version of verified information, secure data sharing, immutable transaction monitoring, and real-time payment settlement. By digitizing loans and mortgages, relevant data such as ownership and loan payment history can be programmed to support future service decisions. Smart contracts can collect and distribute payments to beneficiaries while reporting to regulators.
A blockchain-based real estate platform makes home buying easier while reducing the risk of fraud. The same goes for applying for a mortgage. Errors can be easily spotted using digital ledger data.
4. Tenant and Landlord Decision Making
One need only remember how the housing bubble burst in 2008 to understand how important data transparency is to market stability.Investors and mortgage applicants will flee in fear if banks can’t hide real numbers.
What has been done cannot be undone, but if data is accessible and immutable from all network peers, the next crisis can be prevented. People can use blockchain to check all documents and find the best market option for their budget.
Potential tenants could also benefit from blockchain integration. They can know in advance if their landlord is keeping up with their mortgage payments, removing a source of stress.
5. Property title management
Last but not least, blockchain has the potential to make ownership transfers easier and faster by removing the human factor from the equation. Current ownership systems are often fragmented and difficult to manage. Bureaucracies take time to process information about changes in ownership, which can cause problems in courts and when selling real estate.
Each house or flat has a digital title stored on the blockchain. It makes tracking ownership much easier. However, blockchain does not necessarily eliminate the need for documents. On the contrary, technology makes paperwork faster and more efficient. If there is a mistake in the document, the authorities can always check the information on the blockchain to find out.
Keeping your data safe is also a great way to prevent fraud. Even if the fraudster gets the owner’s signature and other information, they can’t complete the transaction because the most important information is still stored on the blockchain and has little chance of being accessed.
Prospects for the Real Estate Industry in the Blockchain Era
I am not saying that blockchain will one day completely dominate the real estate market and eliminate the need for paperwork and consultants of all kinds. Everything I have suggested before should be viewed as an alternative to the traditional process.
Blockchain will greatly simplify the lives of those who believe in artificial intelligence instead of humans. Concerns about technology not being reliable enough stem from misconceptions about its importance, reliability, and accessibility. However, big companies may solve this problem by educating their clients about what they can achieve when blockchain is integrated. Adoption always starts with someone people trust.