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Less than a decade ago, the blockchain was a foreign term, often associated with the crypto-madness that young investors took in hand instead of the private, ledger it is based on, widely used today to record sensitive information in a multitude of sectors .
Now, the use of the blockchain is also constantly evolving in the real estate sector, it is making its way into the sales and purchase markets and is used to simplify fragmented transaction processes with the goal of simplifying both the consumer experience that the business and reduce risks, mainly within the registration and transfer of the closing of a sale.
What are the benefits?
Safety – The decentralized nature of blockchain reduces the risk because there is no single point of control. Relying on more than one authority instead of creating a system that can not be easily exploited. This makes it the ideal place to record ownership facts and other significant transaction processes, instead of continuing to use the centralized databases currently implemented, which can be tampered with by those seeking to steal information or alter existing records to falsely claim the property.
Furthermore, the permanence of the blockchain safeguards important documents that could easily be lost or modified if kept only by government registries, including securities. The information and transactions recorded on the Blockchain remain on the ledger on a permanent basis; therefore, unpredictable forces, such as natural disasters or hacking, would not pose a significant threat as they would be with traditional methods of storing information on real estate transactions.
Efficiency – With blockchain, the time needed to register a deed is often significantly reduced. The transaction is completed electronically, thus reducing costs and time. With a physical act, there is scanning, printing and delivery involved, and, many times, real estate professionals are at the mercy of local government offices, which they often manage alone, much slower.
Precision – With manual indexing, information can be lost in translation. Just like the phone game played during childhood, the transmission of information from one department to another can lead to problems with communication or incorrect positioning of documents. Since each phase of the transaction can be recorded on the blockchain register, there is no possibility that the information will be lost or transmitted incorrectly.
Who offers blockchain-based transaction / transaction registration?
ShelterZoom: A New York-based company, which is reportedly the industry's first blockchain end-to-end trading platform, ShelterZoom promises that all parties involved in a real estate transaction will be able to see their offers and acceptances in real time, as well as access to property titles, mortgages and related documents via the ledger blockchain of the platform based on Ethereum, which is fully encrypted. These features are available for publication in the first quarter of 2019.
Propy: A global real estate market that operates on a decentralized securities register, with Propy, Inc., all parties involved in a real estate transaction can use blockchain-based smart contracts to facilitate closure. Digital transfer of ownership is often much faster and less expensive than traditional methods used.
Ubitquity: A SaaS platform that allows users to enter data and store them on a blockchain of their choice, with Ubitquity, company owners, municipalities and recorders of records can save information on the ledger in order to increase transparency, reduce the search time of the title and maintain a clean property record.
velox.RE: A blockchain-based real estate company that would produce the first legal software and a procedural protocol, this platform boasts of being able to offer real estate shareholders greater transparency and liquidity, as well as higher profits.
What does the future hold?
Blockchain technology for property title records has already been implemented by the government, which means that a more widespread adoption of technology throughout the real estate sector may not be very far. According to Mintz.com, several countries, including Sweden, Dubai and Brazil – and even the United States, in Cook County, Illinois, with velox.RE – have started using blockchain technology for land title records.
Will companies still be a necessity if the transactions are fully recorded on the blockchain register? While title insurance is currently needed to protect against any title defects, some say the need for this defense mode addition may not prove useful if blockchain can significantly reduce the risk of title fraud. Consumers should keep in mind, however, that blockchain does not completely eliminate the risk, leaving room for services that offer protection.
Liz Dominguez is the associated content editor of RISMedia. Send them your e-mail ideas about real estate news on [email protected]. For the latest news and real estate trends, add RISMedia.com to your favorites.
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