What are the benefits of Blockchain in Real-Estate?
The real estate industry has been slow to adopt new technologies for transformations. Its basic tool for driving operational value is a greater dependence on manual labour and personal relationship building. However, when it comes to real estate blockchain technology, the industry is unexpectedly quick to adapt. Because blockchain and its applications can meet the challenges in real estate industry operations that other digital technologies cannot.
Blockchain-based real-estate and smart contract solutions are generating significant value for the real estate industry. Their application is ideal in an industry involving large-scale transactions involving complex business agreements and contracts. Advantages such as automation, digitization, security, and efficiency are helping to boost the transformation of a business sector that has traditionally relied on ineffective and archaic business operations and record management.
In this blog, we will dig into the myriad applications of Blockchain Technology in Real Estate.
Also Read: Benefits Of Building An Intuitive Real Estate Website
Blockchain In Real Estate
Blockchain is a distributed record-keeping technology that is decentralized and invariable. It is distributed across a network of devices. Its design incorporates cryptographic and timestamping mechanisms to ensure the trustworthiness of each digital transaction.
Blockchain technology has the potential to be useful for both commercial and residential real estate development.
Blockchain real estate solutions guarantee the security and efficiency of stakeholder transactions while reducing or even eliminating the need for an intermediary.
They can vary from property purchasing to due diligence management to crowd-sourced investment facilitation, among other things.
Secure & Transparent Exchange Of Information
Acts as an alternative method of securely exchanging information (such as transaction details) by providing data authenticity and censorship resistance.
Distributed Data Sources
Real estate processes benefit greatly from a shared tamper-resistant database that collects data from a variety of stakeholders and documents it in one location.
Most real estate transactions are no longer dependent on wire transfers and time-consuming verification processes that take days to complete. Allows for a more efficient and cost-effective transaction process.
Rendering Intermediaries Redundant
By providing a single source of truth, blockchain applications have the potential to eliminate the need for many intermediaries, such as brokers and escrow companies. It offers a secure means of storing, verifying, and transferring digital records. As a result, it eliminates the need for intermediaries, lowering costs and saving time.
Application Of Blockchain In Real Estate
Improved Due Diligence and Financial Assessment Process
Physical paper certificates are still used as proof of identification today. It necessitates paying close attention to due diligence and financial verification processes, which take a significant amount of time and effort.
With digital identity on the blockchain, this entire procedure can be carried out digitally and securely. It improves performance, lowers costs, strengthens data security, and lowers the risk of human error.
For example, a real estate property's digital identity could include data such as occupancy, occupant profile, financial and legal status, and performance metrics.
This method simplifies the land title transfer process while also adding several layers of protection. It provides a digital identity to all involved stakeholders in the process, including buyers, sellers, and brokers, as well as associated banks and land registries.
Each may submit and sign relevant documentation using a single application powered by blockchain-verified smart contracts. All authorized actors have access to the related documentation and records, including verification of the measures taken during the process.
Efficient Commercial and Residential Property Management
Property management is complicated because it involves numerous stakeholders such as landlords, tenants, brokers, property managers, and others.
The entire property management process, from authorizing rental contracts to managing profitability to requesting repair requests, can be carried out securely with the help of a single decentralized framework that utilizes blockchain technology.
In the case of a residential property, for example, a tenant and homeowner may digitally execute a smart contract containing data such as the selling price, payment frequency, and all tenant and property specifics.
Standardized Title Management
At the moment, land titles are mostly paper-based, which opens the door to mistakes and theft. According to the American Land Title Association, title practitioners discover 25% of faulty titles during settlement.
A discovered flaw makes it difficult to transfer a land title to a buyer until it is corrected.
In addition, title theft poses a risk to homeowners worldwide, provoking many land buyers to purchase title insurance.
Blockchain technologies create permanent digital records of land titles, reducing title management challenges. This strategy will help to simplify the management of property titles, make them more transparent, and reduce the risk of title theft and the need for additional insurance.
Payments and Financial Methods
Existing methods of funding and payment for land purchases are currently slow, expensive, and ambiguous. They entail a lot of paperwork and multiple intermediaries between processes.
According to the National Association of Realtors, the current mortgage acceptance procedure takes between thirty to sixty days to complete. Commercial property, which is more difficult to handle than residential property, can take much longer, often taking around 90 days.
This method will be refined and made more transparent with blockchain technology. Verifiable digital identities for residences, for example, may allow for a reduction in both risk assessment and loan documentation time. As a result, the mortgage acceptance process is sped up.
The parties can create an irreversible blockchain smart contract-based loan document that is accessible to all legal parties.
Making investments in Real Estate
Historically, real estate investment was only available to those interested in investing significant capital, particularly in commercial property. Furthermore, investing in real estate necessitates the use of expensive intermediaries such as investment managers, raising the entry barrier even higher.
Blockchain technology, on the other hand, aims to challenge real estate investment by providing a means to decentralize the transaction through fundraising and tokenization.
Tokenizing real estate properties function as a mechanism in which digital tokens represent shares of properties provided by property owners. Tracking these investments makes it so much easier to limit the possibility of fraud with each timestamped and permanent contract.
It enables the creation of a micro-share market for land, allowing a property to provide multiple co-owners with a vested interest in potential returns in a cost-effective manner.
Certainly, blockchain technology is still in its initial development phase. Several industries and investors are interested in what this technological evolution has to offer the world in the coming years. The real estate market is already seeing a significant impact from blockchain in the form of smart contracts, tokenization, and verification. Besides that, it has created new opportunities for real estate investors to sell and acquire property.
Looking to take your real estate business online? At Blue Ribbon Technologies, we have strong expertise in real estate software and application development. By combining your business objectives with our experience in custom blockchain technology development you can be ensured that you will get the best set of functionalities, as well as a progressive technology stack and intuitive design that meets all purposes for your solution. Feel free to contact our team of experts.