HOW IS BLOCKCHAIN CHANGING REAL ESTATE
The real estate industry and its transactions have an established reliance on intermediaries such as credit card services, banks, and governments. Continuously hindering the process, these services slow down major transactions affecting the liquidity of the asset as well as opening up room for fraud or other crimes. In summation, the entire transaction process is a little too fragmented for the good of all participants.
Consider this, you or a loved one wish to sell his or her property. To begin the process, the property owner must coordinate with a licensed broker or agent. The real estate professional must then meet with their own staff before marketing the property out to prospective buyers. Once a deal has come to agreement, a myriad of contractors, appraisers, inspectors, etc. come into play, bringing with them many opportunities for delay or confusion. How do we mitigate these possible delays? Enter, Blockchain technology which allows home buyers and sellers to flow through the real estate process on a single platform.
WHERE DID THIS TECHNOLOGY COME FROM?
Blockchain technology was originally created two decades ago and made famous by the cryptocurrency bitcoin, but it has grown to be so much more. It has led to the creation (and loss) of millions of fortunes, the launch of a multitude of new companies, billions of dollars in investor funding and, unfortunately, due to its complexity, a lot of confusion around its true benefits.
WHAT IS IT?
For those unfamiliar with how blockchain technology operates, it is essentially a block containing encrypted information (seller information, buyer information, capital exchanged) that uses a unique code to chain itself to another block. This results in a protection that is symbiotic in nature. One block helps secure the next, and if one block becomes compromised, the unique code changes causing the information in the rest of the chain to become inaccessible. This decentralized network can help create the most secure and efficient transaction process and data storage to date.
For example, every town has their own way of storing property data. Some cities and towns have put records online while others still use printed paper. If all property title was decentralized on the blockchain, an immense amount of time and money would be saved and, potentially, it could eliminate the need for title insurance altogether. It could also be possible to add information about construction, damages, and improvements to the title. Because everything on the blockchain is transparent and available, home buyers would know exactly what they’re getting without any surprises.
GOOD OR BAD, YOU DECIDE
Although this may seem like a win-win from most perspectives involved in the buying and selling of real estate, the new technology is only just taking shape which means fewer platforms have been established to support blockchain. Some companies have emerged to take on the challenge, such as Propy. With Propy (a tool for sellers, buyers, and agents) individuals can close on a property online, sign the offer, pay, and get the deed all through a single chain. In fact, the U.S. National Association of Realtors (NAR) has invested in the blockchain startup Coindesk. For brokers, buyers, and owners today, this is an exciting time to set themselves ahead and preemptively adjust to what could be the new norm. However, some have questioned if the technology would be worth the price and time to set up.
Whether you’re buying, selling, or leasing commercial real estate, Pepine Commercial uses the best technology to help you get the greatest return on your time and money.