There is little that has not been affected by blockchain’s impact on financial services and its subsequent spread across the board for many industries. Payments, money transfers, and foreign exchange have all been impacted by the rise of cryptocurrencies. Coin offerings (ICOs), startup loans, and venture capital have been challenged by initial coin offerings (ICOs). Blockchain technology has even disrupted the food supply chain.
Blockchain hasn’t spared the real estate industry. When it comes to high-value assets, such as real estate, digital transactions have never been the norm before now. Real estate transactions are frequently carried out offline, involving a variety of parties meeting in person. Although blockchain has opened up new avenues for change, this is still the case. Real estate can now be tokenized and traded like cryptocurrencies like bitcoin and ether, thanks to the introduction of smart contracts in blockchain platforms.
What Is the Real Estate Blockchain?
Bitcoin, Ethereum, and Litecoin have become synonymous with the term “blockchain,” which was coined only a few years ago (to name a few). However, the use of blockchain in real estate is not limited to crypto assets, as should be noted. Many industries could benefit from tracking transactions and records, not the least real estate.
A network of computers and nodes will be used as an escrow company in the simplest form of blockchain real estate. However, it is possible to extend blockchain real estate capabilities far beyond simply exchanging closing documents for cash. It is possible that blockchain real estate could help participants in the real estate sector to exchange information such as legal contracts over a secure network of currency, records, and other information.
What the industry can expect from blockchain real estate exchanges is outlined below:
- The seller accepts the money via blockchain.
- There is a vast network of advanced computers, or nodes, that help the seller fulfill their request.
- An algorithm is used to process the request for money by the nodes.
- The nodes must verify the request before the exchange can proceed.
- There will be no one-size-fits-all verification process.
- Once the exchange can be authenticated, the transaction will occur (like an escrow company).
- New data is added to the “blockchain” in verification; this is why the term “blockchain” was coined.
- Adding a new data block is a permanent addition to the blockchain, and it cannot be changed.
How will blockchain impact the real estate market?
Blockchain technology can potentially alter the real estate industry’s business model fundamentally. With blockchain real estate apps, the entire industry is made accessible and accessible to anyone, all while facilitating faster and more secure exchanges; this is a huge benefit. We’ve compiled a list of the many ways blockchain has impacted the real estate industry.
Marketplaces and Platforms
Listings and connecting buyers and sellers have traditionally focused on real estate technology. Real estate trading platforms and online marketplaces may provide more comprehensive support for real estate transactions if blockchain technology is implemented. Blockchain technology can be used to facilitate real estate and rental property transactions, such as ATLANT’s platform. It is possible to trade real property like stocks on an exchange and make online transactions by tokenizing it.
As a result of ATLANT’s platform, sellers can tokenize their assets and then sell those assets in a token sale. A percentage of the property is sold to buyers in exchange for their tokens, which they can convert to fiat currency.
There has been a long history of brokers, lawyers, and banks in the real estate industry. According to Deloitte, blockchain technology may soon change the roles and responsibilities of real estate agents and brokers.
Listings, payments, and legal documentation can all be taken over by new platforms in the future. As a result of cutting out the intermediaries, buyers and sellers will save money on commissions and fees that these intermediaries typically charge. The back-and-forth between these middlemen is also reduced, which speeds up the process.
Real estate is considered an illiquid asset due to the length of time to complete a sale. This is not the case because cryptocurrencies and tokens can theoretically be traded for fiat currencies through exchanges. But real estate can easily be traded as a token. It is no longer necessary for a seller to wait for a buyer who can afford the entire property to get some value out of their property.
Blockchain also reduces the barriers to real estate investment by allowing fractional ownership. Most investments required large sums of money to acquire property in the past. Instead, a group of investors could pool their resources to buy more expensive properties together. A trading app would be all that is needed for investors to buy and sell even fractions of tokens on the blockchain. Because they don’t have to manage the properties themselves, they’ll benefit from fractional ownership as well.
Tenants can be difficult to deal with, and maintaining the property can quickly mount. This also impacts lending, where property owners often have to put their properties as collateral for loans to get quick access to cash. Property owners may keep using their property if the terms of the agreement allow it.
As a decentralized technology, blockchain commands both trust and security. All network members can access data stored in the blockchain, making it immutable and transparent. In the wake of the 2008 housing bubble burst, it is easy to see how institutions’ greed and lack of transparency can have disastrous consequences. The foundation of trust in a decentralized exchange is in place. Customers and sellers have more confidence in transactions because the information is verifiable by peers. Attempts at fraud would also be reduced as a result. Legislation passed in Vermont and Arizona has made smart contracts admissible records. This means that smart contracts will be more enforceable than otherwise.
Real estate transactions can be less expensive with a decentralized network because of their transparency. In addition to the savings made by eliminating the professional fees and commissions of intermediaries, there are other costs associated with real estate such as inspections, registration fees, loan fees, and taxes. Even the jurisdiction in which these costs are incurred can significantly impact the price. Platforms can automate these processes and make them part of the system, reducing or eliminating intermediaries.
Large corporations and wealthy individuals control the majority of the global real estate market, which is worth billions of dollars. More people will be able to participate in the market, where transactions can be made more secure, transparent, and equitable through blockchain technology. Real estate transactions could one day become truly peer-to-peer transactions using blockchain-powered platforms.
In the housing sector, blockchain applications can revolutionize the way it is perceived. If nothing else, groundbreaking technology’s potential applications have the power to upend the entire real estate industry. There is no doubt that blockchain real estate is the wave of the future, and one thing is for certain: We are just getting started. Now is a great time to start thinking about implementing your real estate blockchain applications and strategies. The early adopters could reap huge rewards.