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While blockchain has already been used in sectors like finance and logistics for many years, the technology is now being leveraged within the real estate sector. Blockchain enables ledgers, records, and transactions to be recorded and tracked across a decentralized computer network.
Because the blockchain is always updated instantly in real-time, the network will only ever have access to the most recent copy which is always accessible to each member at all times. Decentralization of data that is stored on a network via the cloud exceeds any security benefits provided by using the more traditional storage on a server. That’s because once a blockchain has been created or altered, any attempt at manipulation is always rejected by all of the other nodes.
Blockchain can be used to secure and streamline the process of buying, selling, and renting all kinds of properties. A decentralized network also allows for the reduction of costs involved with property transactions. As a result, agents, landlords, and tenants alike can use the blockchain to solve issues and create new opportunities. This is why the entire real estate industry is being revolutionized right beneath our feet.
While real estate brokers and lawyers have long been a major element in the property ecosystem, blockchain technology does not require the involvement of many traditionally required intermediaries. That’s because blockchain can be used to digitally transfer assets like real estate without needing authority verification.
Any transaction conducted is also visibly and permanently recorded, which effectively increases accuracy and security, as well as transparency. Without middlemen involved with each blockchain transaction, there’s less back-and-forth so the entire settlement process becomes much faster, with reduced title costs and legal fees.
Using cryptocurrencies to purchase real estate without using banks has already been happening over the last decade. It’s almost guaranteed that blockchain will also eventually be used for all other aspects of the mortgage financing process in the near future, including identification verification, the transfer of titles.
Portico Direct explains that the whole process of financing real estate is often filled with frustration with all kinds of credit, income, and identity checks. But with blockchain, all legal documents, debt ratios, credit scores, title transfers, and every other piece of critical information about each property buyer can be stored and accessed on the blockchain.
Blockchain can enable entirely digital smart contracts for all property transactions and ownership transfers that are automatically guaranteed by computer protocols that check the legitimacy and other established standards. This speeds up most real estate processes as it can provide complete transparency for all involved parties. Smart contracts can also improve due diligence, save on costs, and reduce the likelihood of fraud, payment disputes, and many other issues.
The establishment of blockchain platforms and smart contracts will allow residential homes, commercial properties, as well as many other big-ticket assets, to be tokenized like cryptocurrencies and traded just like other stocks. Each individual property would receive a unique blockchain ID specifying all technical characteristics such as all title registrations, transaction records, as well as any current or past property encumbrances and agreements.
Blockchain has substantial implications for the future of real estate as it can eventually handle all aspects of property management and the transaction process as a whole, which will have a huge impact on the roles of agents and brokers alike. The initial offer submission, title verification, tender acceptance, due diligence, buyer financing, seller payment, and transaction closing can all be accessed, controlled, arranged, and verified digitally with blockchain technology.
As blockchain technology is used to create platforms that allow the automation of these processes, it will provide innovation and flexibility to an industry that has been impeded for decades by the red tape of inefficiency, unreliability, and volatility. Once it has been widely adopted by the mainstream, it has the propensity to dramatically improve trust, accelerate transactions, reduce fraud, secure records, increase security, improve liquidity, and minimize overall costs between all involved parties.
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