Currently, blockchain is revolutionising the digital currency. Many years ago, it was unthinkable. Because of cryptocurrencies’ success, people realise that blockchain can have more uses and disrupt the real estate. Here are some ways blockchain is disrupting the real estate industry:
1. Completes transactions faster
Blockchain offers tons of benefits to various industries, especially to the real estate. For example, when you purchase an office building, you need to go through a complex transaction before you can complete the process. That is, you have to involve insurers, regulators, lawyers, and inspectors. These people maintain separate records required to complete the transaction. Unfortunately, verifying and recording it can be expensive. It also takes a lot of time. With government entities, the process is a lot longer. The reason for this is that these entities slow down the process because of their high demand. With blockchain, it provides the buyer and the seller an immutable digital ledger that can show each part of the transaction. Even though it does not have power over the restrictions of sales and decisions of legislators, it proves to be powerful in the financial verification process.
2. Minimises the risk of fraud
Without blockchain technology, buyers and sellers have to use escrow and title companies to ensure that both parties are keeping the end of the deal. It will also reduce fraud. The real estate industry is filled with fraud. In fact, it is scammers’ nesting ground because of the many steps in the transaction processes that can easily trick people. That’s why third-party verification is vital. However, as mentioned earlier, it is expensive. But with the use of blockchain, it replaces escrow and other third-parties by vouching for the identities of all parties through its distributed database. Blockchain records every transaction. It also protects the transaction with cryptography, which is difficult to hack. Because of that, it decreases the risk of fraud.
3. Allows smooth rental transactions
In one of the best cities for blockchain startups in 2018, various companies offers a decentralised platform to make the rental transaction smooth and faster. This platform enables tenants and landlords to deal with the rental tasks in one place. In here, smart contracts cover paper agreements. The tokenised utility enables a smooth transaction. Every transaction is also recorded on the blockchain. And it can’t be changed. The platform also provides a technology for auctioning. Plus, it has an algorithm that helps landlord in screening tenants. Then, there’s a security deposit funded through crowdsourcing to save more money.
4. Removes the middlemen
In real estate, brokers will always find a way to charge their clients some fees. With the use of blockchain technology, however, it removes middlemen as it empowers peer-to-peer agreements, negotiations, and executions. That’s why the technology makes the real estate transactions less costly.. It also makes the overall transaction more convenient for buyers, sellers, renters, and landlords. For example, in a rental transaction, tenants can access landlord history, contracts, and rent collection, among others. When it comes to their financial information, it is more secure because they don’t have to email their SS numbers or other financial documents to the landlords for screening. It is also convenient for landlords and sellers as they can easily screen their prospective buyers or renters. They can conveniently make negotiation and collect rent. They can obtain market data to make an informed decision about the pricing of their property. Blockchain technology will not eradicate the established real estate market. However, it will slowly break the foundation of the modern real estate system. Investors can own a part of real estate without having to involve banks or agents. They can also use their properties in generating wealth continuously.