An overview of blockchain technology and real estateJune 20, 2022 . Real-Estate Industry . 10 min read
Blockchain is a new entrant into the field of technology. Ever since its entry, it has been hyped as the next step in the technological revolution. And indeed, it influences how different sectors work and operate.
Real estate, too, is one of the sectors that has been unable to escape the blockchain disruption. With features like decentralization and immutability, blockchain technology finds itself in use with things like transactions, property search, ownership, and more. Here we’ll discuss how blockchain technology will change the face of the real estate sector over the next few years.
Blockchain technology gives solutions to many real problems faced by the real estate industry. It can exponentially transform business processes that are built on transactions and bring a complete overhaul. However, it is much more than that. Its key feature is its immutability. Immutability has the potential to transform the auditing process into a quick, efficient, and cost-effective procedure, and bring more trust and integrity to the data businesses use and share every day. This provides real estate companies with a haven for their business. Blockchain technology has the potential to completely change the real estate sector and make it more growth-oriented and efficient.
Listed below are a few ways in which blockchain helps the real estate sector.
1. Blockchain technology as search platforms
In the current landscape, the most common way for a prospective buyer to connect with a seller is through various listing platforms. These platforms often demand a fee for their services. Plus, the data on such platforms may be outdated or inaccurate. Blockchain technology can improve this aspect by storing the listing data in a centralized database. This offers the seller better management of their properties and frequent update of data resulting in accuracy. Further, it eliminates the middle man in the transaction and fees to third-party platforms.
The real estate sector involves lengthy processes involving contracts and documentation. Blockchain technology can help out here using smart contracts. They are automated self-executing contracts that are executed when certain conditions are fulfilled. Their code comes with specific instructions written, which helps them record all data related to transactions and payments without any human interference. They can help replace traditional contracts and save time and provide safety from fraud.
3. Blockchain technology for tokenisation
Blockchain technology is capable of using something called tokenization. The main purpose of tokenization is the division of real estate assets into computerized tokens. As ensuring the security of the asset is the main priority for realtors, this can help them improve security.
Any investor can buy these tokens and claim fractional ownership of the property, much like traditional stocks. These tokens store rules, assign ownership rights, and save transaction history. Since these tokens are immutable, owners of these tokens can also trade them in the market like a stock. This provides greater security, reduces costs, and improves liquidity.
Ask any homeowner their experience, and they will tell you about the number of middlemen they had to go through. From bankers to brokers, the list of intermediaries is not small. This makes the whole process quite complex and time-consuming. However, blockchain technology cuts out the need for intermediaries by directly connecting the developer/seller with the buyer. As a result, both parties save money in commissions charged by the middleman. This also ensures faster communication and completion of the process.
Blockchain technology can help developers automate the entire process of a transaction and complete it online. This cuts down on the cost of selling a property exponentially. Automation is not only highly effective but it also removes any unneeded processes from the transaction. The use of blockchain technology in the real estate sector also helps circumvent the costs associated with registrations, taxes, and loans.
6. Prevent frauds through blockchain technology
Blockchain technology can help prevent any frauds such as forging of title and deed from ever happening. Since it stores all the information regarding the property and the owner along with the legal documents in a single database, it prevents any third-party hacks. It is also very easy to verify such records ensuring that no fraud happens.
Blockchain technology needs no introduction. Wherever it is introduced, it is a gamechanger. Its integration with the real estate sector can bring in some much-needed positive changes for all homeowners. It has the potential to transform the entire industry by increasing trust among parties, proficient management of data, and access to information in real-time. As long as the right steps are taken, the implementation of blockchain technology can take this sector to new heights. While blockchain is definitely what will drive the future, it will take some time to reach there.
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