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Progress in blockchain innovation means that the real estate industry no longer has to rely on dusty documents and traditional sales processes, because property titles, insurances, property transfers and escrow processes are all shifting. on the blockchain. While buying a property will not be as quick and simple as buying a book from Amazon, at least for now, the world of real estate from home to the purchase of real estate investment is about to be transformed.
Why change the purchase of a traditional home?
A EY report published at the beginning of this year pointed out that residential real estate markets with their agents, brokers, lawyers, mortgage lenders, appraisers, securities companies and more, constitute an expensive and time-consuming network. The current due diligence processes, for example, can take weeks and, in some cases, months.
The constraints of traditional real estate processes often include errors in land registry records, disjointed and inefficient tracking systems within the sales process, lack of transparency, high and sometimes unnecessary commissions and even fraud. For homebuyers and real estate investors, money is wasted and profits squeezed. Sometimes at the end of everything, the sale fails.
Current systems operate at almost uncertain levels, so it is not surprising that this sector is ready for change.
Blockchain, the irresistible force
Enter blockchain. Blockchain is an encrypted electronic record of data on a distributed ledger where information is shared simultaneously and stored on a large number of computers. Technology has the ability and flexibility to streamline business processes in the real estate industry and much more.
One aspect with enormous possibilities for change in this area is the legal process. With its many third parties, delays and lack of transparency, the legalities involved in the purchase of property will be drastically simplified with blockchain.
For example, in the verification of title deeds; a title record for a property could be used on the blockchain in the form of an intelligent contract. Smart contracts do not require a trustworthy third party, and when a property is bought and sold, the details are encrypted and added to the record. This means that there is a clear, accurate and unchanging story of the titles of ownership over time that can be accessed instantly.
Innovation creates new approaches to real estate
This is not just hype. Some national land registries are starting to use the blockchain, including the Swedish Land Registry, which is piloting a scheme and reporting positive feedback. Now in its second year, Digital Street, a UK land registry project, is exploring the use of blockchain technology and smart contracts.
The goal, of course, is to bring more transparency, speed and confidence in real estate transactions, which will improve the system and bring the much needed liquidity to the market.
But blockchain will also contribute to increasing liquidity in other ways; like the fractionalization of property. This is a radically new approach that is gaining momentum – being able to own units or tokens in residential real estate – and opens the market to people who otherwise would not be able to invest in this sector.
This form of tokenization will have a huge and far-reaching impact on the market. The property could be bought and sold at the touch of a button. But where does all this change leave real estate agents? Undoubtedly, their roles will change, but there is no sign that they will soon disappear.
With so many new concepts under development, real estate agents will have a wider range of roles and will be more productive in helping homebuyers through the process and offer investors sophisticated and personalized advice on fractional investment options. . There will still be a vital role for them.
Blockchain will not only improve the current processes of buying and selling properties, but will also revolutionize our traditional attitudes towards real estate. How we live, how we choose and pay for our accommodation and how we invest in real estate are all up for grabs.
