A decade ago, blockchain was created to support Bitcoin, the first ever cryptocurrency. For most people, when they hear the word ‘blockchain,’ they’ll automatically think of Bitcoin. Maybe they know other cryptocurrency platforms, but only a few can understand its potential. Even the blockchain enthusiasts can have a limited understanding of what the blockchain technology is capable of doing.
Nowadays, blockchain technology is tapping into the different industries. Among these is the real estate business. More and more companies are now utilizing this game-changing tool and slowly altering the world.
In 2017, the world has witnessed the first ever real estate property, an apartment in Ukraine, to be sold using blockchain. The $60,000 worth unit was bought via smart contracts. Around the world, more and more companies are integrating blockchain with real estate. One of these is the i-house real estate platform.
Blockchains eliminate the need for a third-party. As a result, we see companies utilize this technology to prevent any fraud, lessen costs, boost user experience, and improve efficiency. The potential changes in the real estate industry are already starting to take shape.
Real Estate Problems
Currently, the process of purchasing and investing in real estate is a bit confusing. Any person who has tried to buy a property finds out that it can be overwhelming what with all the paperwork, red tape, and different hoops that they have to get through. In all honesty, the demands and steps for buying and selling a property are absurd, time-consuming and stressful.
It goes to show that people who were able to buy their own homes have gone through stressful deals with gritted teeth. Despite the fact that investing in the real estate market is one of the most profitable strategies in the world, its complexity is what turn away people. Individuals don’t want to go through the hassle of engaging with all the procedures. The blockchain technology can address the problems concerning buying and investing processes in the real estate industry.
Let’s take a look at how the integration of blockchain technology in real estate is going to change its investing and buying processes.
1. Provides transparent transactions
What’s better than cheap sales? Transparent transactions. Here, you’ll be able to see how much money goes in and out, where it goes and who gets what and this is what blockchain technology can offer to the real estate industry.
A transparent process builds more trust and reduces bureaucracy on all sides of the transaction. With the blockchain smart contracts, a “self-executing contract,” users are confident that all of the needed steps are done before the money gets transferred, and repaid to the bank. Because of the blockchain, people don’t need to rely on only one source of truth – mostly a lawyer. It has increased the trust between all parties, increased transaction speed and lowered the costs. No sole intermediaries will keep things moving along.
2. Allows renters to have an incremental ownership
The ownership model which enables renters to buy an added equity in the property then paying the rent for the remaining price can be accessible to buyers that meet strict criteria. By using smart contracts, the original owner can enjoy a steady income from the rent, and the renter can do whatever he or she likes with his property knowing that it is his. The blockchain technology can adjust with the blockchain ledger that’s on record and the ownership level. Users can even automate the additional equity’s continuous valuation.
3. Increases trust
Because the blockchain technology allows sharing of files between organizations and people who don’t know one another, it builds trust among each other. Also, it ensures the information’s accuracy, tracks comprehensively and brings value to different procedures like registering ownership titles.
4. Fractional property ownership
In most countries, homeowners can’t sell a small part of their property to a close relative or a friend because of the current practice and property restrictions just like an equity crowdfunding. With blockchain, fractional ownership of a property can turn into reality just like how the stock market works.
5. Clarify rights to property and release of capital
Blockchain can have a significant impact on real estate regarding establishing the ownership rights of property in places that do not have a centralized land registry. Included here are registries that have a high risk of fraud and those that have trust concerns. It is crucial to assert ownership rights to properties with titles as it allows the release of capitals into the economic system when mortgage lending becomes sustainable. Blockchain’s powerful balances and checks make it perfect for commercial development uses in markets that do not have enough trust in its governing bodies.
6. Enhances efficiency in operation
With automation in operation transactions for verification, time stamps, and allocation, blockchain can increase the real estate industry’s operational efficiency. Imagine how powerful a click of a mouse can be with this technology. It can record who was in a place in a specific time and can let particular people in certain locations. All of these done through smartphones that have their GPS enabled.
The Future of Real Estate with Blockchain
Blockchain can turn into an ecosystem’s backbone with smart devices interconnecting with one another which can create a peer-to-peer exchange composed of services and information. In the future, sales, leasing, financing and management transactions of the real estate industry will change.
Blockchain provides a lot of possibilities for the real estate industry. It can diversify trust and allow self-enforcement. Regarding efficiency, it can enhance speed and transparency. With all the promises of the blockchain technology, it can eventually transform the real estate industry for the better.
However, as homeownership and real estate properties adapt to the blockchain technology, laws will also need to change to allow it to facilitate new models for reliable and safe ownership. Collaboration among the industry and the blockchain innovators will be necessary for future advancements.
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