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ShelterZoom, based in New York, plans to launch a real estate application that will allow buyers and sellers to trade deals on a blockchain-based network, which could make buying a home as easy as pushing a button on a smartphone or a tablet.
Set for publication in the first quarter of 2019, the application allows sellers, buyers and real estate representatives to see all offers and acceptances online in real time. Real estate agents, together with clients, can also access property titles, mortgages, legal documents and home inspection through the encrypted blockchain register based on Ethereum.
"Our current platform is already helping agents, buyers, sellers and tenants to take the big step forward in technology and we are excited to start another industry change at the start of 2019", Chao Cheng-Shorland, CEO and co-founder of ShelterZoom, he said in a statement.
The start-up has piloted its application with real estate companies in the last year; It is now tested by over 90 brokers all over the world.
Blockchain, which is a peer-to-peer distributed ledger, can run on hundreds, thousands, or even millions of servers, each of which has the same data items as the other. Because all users of a blockchain have access to records, a user's consent can check if a transaction is authentic or not. Furthermore, the personal information of the user behind the record is encrypted.
ShelterZoomThe ShelterZoom "Offer Now" widget allows potential buyers to place an offer in a property with a mobile device.
Mike DelRose, 32, real estate agent with RE / MAX Revolution in Watertown, Massachusetts, describes himself as a technology enthusiast who became familiar with the blockchain after his cousin advised him to buy bitcoins, the application of cryptocurrency that works on blockgerin distributed ledger technology.
"After researching for six to eight months, I thought:" How does Bitcoin technology go to impact the real estate business? "" Because you see it affects everything else, "he said DelRose, which operates a company with eight real estate agents.
ShelterZoom in use
DelRose found ShelterZoom online, contacted the company and installed the blockchain application widget on its real estate company's website as an option for customers and listing agents. The app required the integration of some HTML codes on the website, but it was fairly simple, he said.
Cyrus Charter of New YorkCyrus Charter of New York was the first real estate company to implement ShelterZoom's blockchain platform.
DelRose, who also collaborated with ShelterZoom to promote the platform, said that technology not only brings transparency to the real estate transaction process, but also reduces the time it takes to process the documents.
Shortly after the widget was installed on its site, DelRose said that it was able to use the application to sell its home to a buyer who was not tech savvy and spoke English as a second tongue. "I was able to guide him through the process." Within five minutes, I had an offer on mine [smartphone]. I sent the offer in PDF format to my lawyer. "
The application, said DelRose, did exactly what he hoped: increased the visibility of transactions so that all parties could see the offers made and accepted in real time; it also cuts out the pile of paperwork typically sent by e-mail or hand-delivered between sellers and buyers. The documents are in electronic format, can be signed online and use a participant's blockchain key as his electronic signature.
"It's extremely exciting, we needed something like that for a long, long time," said DelRose.
Currently, the ShelterZoom app does not help with signatures outside of the initial purchase contract, even if buyers and sellers have the ability to exchange files, DelRose said. ShelterZoom plans to add electronic signatures in the future.
Mike DelRose / ShelterZoomThe offer and acceptance of Mike DelRose's personal property sale is performed via a mobile device in the ShelterZoom app.
"Right now, it's a great complement to what we already have as agents." In the future we expect a much more robust and intuitive platform, which will bring people together into an electronic space in a way that makes a lot of sense, "DelRose said. . "But for now, it makes an aspect of a real estate transaction extremely efficient by improving the experience for agents, buyers [and] sellers to a large extent. "
The main concern of DelRose is that other real estate agents may be wary of the new technology.
"Getting agents from fax machines was quite difficult: when you talk to these agents and they listen to what you're doing, they're like," Wow, I do not know, "DelRose said." I'm not worried about customers, my customers love l & # 39; idea. "
ShelterZoom offers a transaction dashboard, a widget, and a & # 39; mobile app that allows buyers and buyer agents to immediately submit offers from any list of online real estate properties. The ShelterZoom "Offer NOW" widget aims to enable greater interoperability and transparency for faster operations.
Unlike other blockchain applications that digitize resources by turning them into bitcoins, Ether or other digital currencies that can be sold or traded online, the application of ShelterZoom does not handle monetary exchange.
"At this stage, we do not expect real money management such as escrow, back payments and closing payments as this will require a cash transmitter license in every state and in different countries," said a spokesperson via email. "These will still happen outside the platform."
Banks will be involved as mortgage service providers. There are two ways in which the SelterZoom platform can be used:
- As lender for the buyer and part of an end-to-end real estate transaction.
- Offering their services through the market that consumers can acquire.
One of the main attributes that DelRose has mentioned in its adoption of technology is the ability to see the offer and process of acceptance in real time.
While the application of ShelterZoom does not yet allow money to be transferred, the blockchain technology on which it is based can do so through smart contracts: self-executable code that recognizes when two parties undertake to exchange an asset. Similarly, property deeds could be transferred.
Sandy Krueger, Staten Island CEO Multiple Listing Service, presented a draft ShelterZoom concept for his company's property listing site at the start of this year to address the transparency and inefficiencies inherent in bids of traditional properties.
"It makes the transaction more transparent in the sense that I, as a seller, know the arrival of an offer so I can call my real estate agent and say," What's going on with this offer? ", Said Krueger," rather than being left in the dark and waiting for someone to call me and tell me something is going on. "
Also gaining momentum in real estate are new ownership and service models created through tokenization: the digitization of assets that can be sold or traded on DLT. (Tokenization, in essence, converts the value of real-world property into a digital currency that can be sold or traded.
Real estate and tokenization
Blockchain-based app for real estate now includes start-ups that manage foreign investment, estate record keeping, property leases and tokenization. Blockchain networks that transform real estate properties enable traditional investors and consumers to buy shares of a property and obtain a return on rents or mortgages. The money paid for the shares allows owners to make additional investments.
For example, Polymath, Securitize and Harbor are among the leading blockchain networks in the industry that make it possible to make resources, like commercial buildings, tokenised and transformed into negotiable securities.
A start-up, Jointer.io, focuses exclusively on real estate tokenization, but unlike other services, it does not offer a property like shares that can be purchased. It builds a number of buildings into an index, and participants can then buy tokens from that index. The result is less risk and more profit, according to Jude Regev, founder and CEO of Jointer.
The problem with buying shares in a single property, Regev argued, is that you have to trust the owner's words that he or she has the equity they claim. For example, if a building owner owes a mortgage lender to 80% of the value of the property, an investor's own equity is far below the total value of the building. Investors may not even know if a property has a privilege or other financial obligations.
"And how will you force an owner to pay a dividend each time they make a distribution for themselves? [digital token] is not really connected to the bank account that collects the rent, "said Regev," you need to trust the owner to transfer the money from the bank account into a reserve controlled by smart contracts. "
The shares of these properties – represented by coins – can therefore be used by the participants as securities to obtain loans or simply as a financial asset on which they receive a return. For example, large investors get a return of 90% of the assets, while the other 10% goes to Jointer, said Regev. Smaller investors receive returns based on smaller portions of the asset.
Property owners – those who put their real estate in the pool – get the service for free. For the public, Jointer offers to lend funds to real estate blockchain projects while the return is based on multi-family property indices.
"The idea is that you're no longer tied to a specific property, so you do not care if the property is above the market [value] or below it, if the owner sells all equity or does not have any equity …. You move to the index of similar properties, "said Regev. All properties – the strength of their income – which is managed by institutional interests, will be transferred to a main reserve controlled by smart contracts. "
