Solving Real Estate Hurdles With Blockchain Technology

Blockchain is not a new thing anymore. Today we are not just talking about blockchain technology and we are exploring its application possibilities beyond bitcoin and other cryptocurrencies. A few years back, when people heard about blockchain technology, they soon related to bitcoin, but it is not the same right now.

As the popularity of blockchain has surged in the past few years, its implementation is spread across different sectors like Banking, Advertising, Real estate, Voting, Critical infrastructure security, and much more.

Let see how the chain technology is going to resolve critical issues that plagued the real estate sector. Mainly, the blockchain system could be used to simplify the process, transaction, and eliminate escrow altogether.

Currently, the real estate sector is completely messed up due to lack of transparency, high cost of the transaction, unpredictable timelines, illiquidity, cash flow management issues, limited or no accessibility to average investors.

Here are some of the problems the decentralized network set to solve:

1. Buy / Sell Property Process
2. Title Management
3. Illiquidity
4. Real estate Fraud/ Scams
5. Documentation

Buy / Sell Property Process:

• To buy or sell a property, we all either get the help of a broker/middleman or approach the third-party property aggregator websites.
  When it comes to brokers, they tend to charge an amount from both the buyer and seller; most often, they keep us on the dark side of the process and without transparent business practices.
• In third-party listing sites, they charge high subscription fees with no minimum guaranteed conversion. Further, your property data and your data is stored in the centralized server, which gives the easy way to hack and steal your data.
• Blockchain Technology eliminates these problems and allows listing on an immutable decentralized network. As the data stored in the blocks are encrypted, property owners need not worry about security.
• Real Estate Tokenization is one of the game changer in the real estate sector, it helps to tokenize all the assets and sell it in an exchange to increase liquidity.

Title Management

• Title management is one of the key places where a lot of fraud and errors occur. If any defect is identified in the property title, the owner has to shell-out heavily to rectify it before the property gets transferred to the buyer. If you look deep into it and find the root cause, the manual paperwork is the culprit.
• Moreover, it puts the owner of the property at the risk of losing it. It also makes every property owner spend on title insurance to protect his property.
• To avoid these tensions and stay risk-free, blockchain provides immutable land record management to record titles digitally.
• It makes the whole process a lot simpler, improved transparency, and also saves a lot of your money.

Real estate Fraud/Scams:

• In the present scenario, no matter what you do, you are fooled one way or the other, whether you buy or sell a property. Many concluded we all are unavoidable victims of such fraudulent practices in the corrupted system.
• But, blockchain gives the ray of hope to disrupt the whole system and make it more investor-friendly. The information is stored on a public blockchain which guarantees theft-free storage and protection against damage.
• The implementation of blockchain-based solutions will bring the much-expected disruption to the industry.

Illiquidity

Though real estate investment is considered more profitable, the problem of liquidating the assets is a pertinent problem for a very long time. Now, decentralized blockchain technology assists us in splitting a property into a smaller value real estate tokens as per our need. These tokenized assets can be easily sold in the token exchanges to the investors or buyers to preserve liquidation without burdening them to buy the whole property.

Documentation

• The documentation process involves a lot of costs before buying or renting the property. It involves various intermediaries from the government office and also middlemen in the process of inspecting the property to avoid every possible legal, financial, and technical issues in the future.
• Currently, all the property documentation is done on paper, so this makes the document vulnerable to all corrupt practices to change the details of the record without the knowledge of the actual owner of the property.
• To shield the documents from such practices and keep a record of all the details blockchain technology, and self-executing smart contracts help the asset owners to stay stress-free and save a lot of money.

Conclusion:

For wide-scale integration, the technology also requires further standardization and a clear regulatory structure. However, the lack of collaboration among blockchain firms and the inherently complex nature of blockchain could mean that the law struggles to keep up. Yet, it is essential to adapt to new technology as soon as possible.