We all have heard a lot about Blockchain & Ethereum, but when it comes to dApps, not a lot of us would have heard about them. Even a tec...
In this tech-savvy world, Blockchain has become a new normal and it is here to stay. Introduced in the finance sector, blockchain technology soon got attention and attraction from a myriad of industries, considering its benefits. The transparency and safety blockchain promise as a database cannot be expected from any other type of technology as it is next to impossible to hack it.
According to a statistics portal, Blue Future Partners reports that investment in real estate tech rose from $33 Million in 2010 to over $5 billion in 2017.
Before understanding the working of blockchain technology in real estate and its use cases, let’s first quickly cover the basics of the topic.
What is Blockchain technology?
Blockchain is a distributed, unchangeable ledger that makes recording transactions and managing assets in a corporate network much easier. A tangible asset (a house, car, cash, or land) can be intangible (intellectual property, patents, copyrights, branding). In the simplest words, it is a system used to record information that is not just difficult but next to impossible to hack. The system is a digital ledger of transactions where transparent databases are stored.
According to a report, a staggering 53% of respondents said that Blockchain is a top priority for their company in 2019, and 23% had already started deploying the technology. From financial services to healthcare to telecommunications and life sciences, almost every industry has identified a compelling use case for Blockchain. Instead of asking "why should we embrace Blockchain," the issue today is "how do we implement Blockchain."
The decentralized database is managed by several participants and the information is stored in blocks, secured by computational science. On a network built by Blockchain technology, virtually anything of value may be recorded and traded, lowering risk and cutting costs for all parties involved. The transaction stored on the blockchain database is viewable to anyone and is updated in real-time.
Blockchain as a part of the real estate industry:
But how can blockchain be a part of the real estate industry? It may be difficult to imagine blockchain entering and benefiting the traditional business industry, but this image is a very practical reality of this time. The real estate industry has not bypassed the digital advancements introduced in the market and blockchain technology has started rising within the real estate industry for all the positive, profitable reasons.
The real estate industry is the largest asset that makes up a significant economic global segment in terms of asset base and transactional activity. The procedures involved in the real estate industry are not straightforward.
This is where blockchain technology, as one of the most secure and efficient technologies introduced in the market, proves to be beneficial for the real estate industry.
Challenges in the real-estate industry
The real estate industry has witnessed a significant drop down in growth due to some issues and problems faced by the industry.
1. Lack of transparency:
One of the biggest problems faced by the real estate industry is the lack of transparency that causes fraud and corruption. Blockchain significantly increases the level of transparency by offering record-keeping systems that are transparent and viewable for real estate entities and assets.
Transaction records shall become common knowledge and this would prevent realtors from stepping onto each other's toes for selling and purchasing information.
2. Dependency on the intermediaries:
Since buying and selling a property includes a very complicated procedure that includes several third parties and dependency, the process is often slow, and thus, the operation takes considerable time to finally get the work done, which includes everything from buying and selling to getting the paperwork done.
Blockchain technology eliminates the involvement of third parties and thus makes the transaction more direct. This reduces the time invested in completing all the formalities required and saves the investors from researching and gathering information regarding the property.
3. The tiresome task of record-keeping:
Record keeping and data management are extremely difficult and problematic in real estate. Blockchain technology makes record keeping comparatively easier for the business by giving digital identities to all the entities that cannot be mistaken or manipulated. With less human error and more digital technology involvement, record keeping and data management become appropriate and efficient.
4. Corruption in real estate:
The ultimate challenge that the highly growing real estate industry faces is corruption, which can be broadly traced back and connected to the time and cost the whole process of selling a property can consume. Blockchain technology can certainly eliminate this challenging condition by making the transaction and procedure less time-consuming and transparent for both parties.
5. Liquidity issues:
Real estate has always been considered an illiquid asset due to the time taken by the sales to conclude. This isn't the case with tokens and cryptocurrencies since they can easily be traded for fiat currencies through the exchange. With the help of Blockchain-based tokens, real estate can be easily traced. A seller would not have to wait for a buyer to get some value out of their property.
6. Restricted access to market
Real estate has long been an industry for the riches of society. The barriers to this industry have always been high, can be crossed by only the “resource-rich” individuals and organizations. People working in real estate have to cope up with several fees from the banks, third parties, and governments.
With Blockchain technology, the expensive assets can be co-owned. The Blockchain-powered systems help cut out the middlemen, leading to significant cost savings.
Blockchain in the real estate industry: Use-cases
Tokenization is one of the most known uses of blockchain as it is related to the widely famous cryptocurrency. Tokens holding either equivalent or unique values are introduced and allotted to different commercial and residential properties and their values are stored on the blockchain that is viewable and transparent for all the buyers. The buyer can simply sign the contract digitally and buy the property. The information shall be transparent regarding the owner's rights.
Tokenization can save weeks and months' worth of time for the buyers, local as well as overseas, with online transactions, and easier purchases from anywhere around the globe by transferring the finances within minutes.
#2 Smart Contracts:
Smart contracts can make the endless, hectic paperwork a lot easier than one can imagine. The property transaction that once was extremely dependent on the physical paperwork can now be transacted digitally between the buyer and seller and the transparency and security are considerably higher in the technological transaction than it ever was, in paperwork.
Everything is automated and hardly requires human involvement thus eliminating the chances of human error and fraud.
#3 Cost Cutting:
This is by far one of the most efficient use cases of Blockchain in the real estate sector. The integration of blockchain technology into the networking infrastructure can simplify the whole process of buying and selling property which shall save time and reduce overall costs immensely. This is not only beneficial for the realtors or businessmen but even for the customers as it shall save them from paying additional fees to the middleman.
Blockchain technology shall completely replace the third party and this can save considerable money for both buyer and seller as they both shall deal directly, digitally without any third-party interference.
#4 Secured Transaction, Less Fraud:
The transaction and payment systems, through the integration of blockchain technology, can be made transparent and secured. This means the transaction and funds shall be made viewable to both buyer and seller and this can make it clear to both the parties that the other party has funds required for the transaction. This ensures safety and no fraud as it eliminates third-party involvement and eventually the possibility of anything suspicious happening amidst the transaction process. The technology even makes the whole transaction process fast, less expensive, and transparent as it reduces the documentation and involvement of intermediaries that used to exist in the real estate industry.
#5 Transparent Data Tracking:
The ledger technology makes all the data related to the property available and transparent for buyers, owners and investors. This data includes everything from the history of the property to the records that are crucial for inspecting and decision making, for the buyers. Furthermore, blockchain can even provide and track data related to the customers and their bank history. This eliminates the risk of default and fraud from the buyers’ side.
The real-estate industry is one of the most prominent and limited-resource industries, and it is full of challenges. From transactions to contracts, everything in the real estate industry is being conducted offline, making the process more cumbersome. The number of intermediaries involved also opens up holes for corruption and mishandling. So, the digital disruption that too with a reliable technology such as Blockchain is the need of the hour. Blockchain technology opens up a lot of new ways to handle all the challenges involved in the real estate industry.
If you are in the real estate industry, we highly recommend you to connect with a blockchain app development organization and gather information regarding the technology for your personal and commercial benefits. Also, you can hire the best Blockchain app developers with us!
Learn how Debut Infotech is transforming real estate with Blockchain technology.