How is Blockchain Technology Changing the Real Estate Industry? 

Blockchain is no longer a buzzword anymore. Being the foundation of cryptocurrency, Blockchain has made itself a familiar name in the race of upcoming technologies that will change the future for the greater good. For those who don’t yet know, Blockchain is a distributed network of computers to store digital transactions. The transactions involved in technology are not under the control of a single authority and hence are transparent and hard to tamper with.  

Given Blockchain’s disruption of financial services and the resulting applications across industries, there is probably no segment not influenced by technology. Digital currencies have strongly impacted payments, foreign exchange, venture capital, and investments. The supply chain landscape has also been recently affected by blockchain technology.  

The blockchain real estate industry is among the ones that have been unable to escape the disruption. The sector, which has always been slow at adopting newer technologies, is on the verge of adopting Blockchain and holds the potential to revolutionize the way people trade and invest in real estate assets.  

Presently, the real estate sector transactions are still carried out traditionally with multiple parties and heaps of papers involved in buying or selling a property. However, breakthrough technology will soon change how people buy and sell properties; it is already happening in some places.  

With this in mind, let us see how blockchain technology in real estate is changing the game for the better.  

What is Blockchain in Real Estate? 

Blockchain has recently become synonymous with the most popular cryptocurrencies, including Bitcoin, Litecoin, and Ethereum. It is, however, essential to note that Blockchain’s application in real estate is not limited to cryptocurrencies. Though each crypto asset uses Blockchain as a decentralized ledger across computers, its power to track records and store transactions can be utilized by any industry, including real estate.  

Blockchain real estate would use a network of computers to provide a more secure and robust platform. Rather than simply executing transactions, the capabilities extend to different aspects of the industry, allowing real estate enthusiasts to exchange contracts, currency, records, and other information over a secure and safe network.  

Real Estate Tokenization with Blockchain: 

The changes in the real estate industry brought about by blockchain technology can be easily understood via tokenization. It is a process of digitally converting someone’s interest in an asset into a token that represents an equitable interest. 

For example, if two partners buy a commercial property and tokenize their interest on a blockchain, they get tokens equal to their asset ownership. Whenever the investment is split, they receive equal amounts of tokens. However, if their interests are not the same, the tokens represent the difference. Each investor’s tokens stand for their share in the property. These tokens can store, verify, and document asset ownership.  

Once tokenized, real estate assets can be sold, purchased, and liquidated over blockchain applications. This process differs from traditional transactions, where assets are exchanged for money. However, tokenizing real estate and using Blockchain to facilitate transactions is more secure, quicker, and free of third-party intermediaries.  

Here are some of the prime advantages of Tokenization in blockchain real estate. 

• Allows for completing real estate transactions faster 
• Less hassle of paper contracts or documentation 
• The entire process can be completed electronically, saving time and effort 

A blockchain-based real estate operates through smart contracts to ensure better transparency for all parties and reduce the likelihood of disputes.  

How Blockchain Revolutionizes Real Estate Landscape: 

Blockchain technology has the potential to change the face of the real estate sector completely. Real estate applications based on the Blockchain can democratize the industry to make it available to everybody while facilitating more secure and faster transactions. 

Let us look at a few ways Blockchain can transform the real estate industry.  

Platforms & Marketplaces: 

Most buyers and sellers use online platforms when looking to buy or sell a property. Real estate platforms and marketplaces primarily connect buyers and sellers and offer them unique benefits. They offer a more comprehensive view of available properties in the area and allow buyers to filter their options by criteria to find their ideal home.  

However, these marketplaces and platforms have their limitations and flaws. 

• Firstly, property information hosted on such websites is outdated, incomplete, or inaccurate. 
• Secondly, data can often be fragmented across platforms and lead to confusion. 

Blockchain solves these problems through a decentralized database that third parties cannot alter. Blockchain technology enables these platforms to support real estate transactions more comprehensively. Shortly, real estate marketplaces would allow completing online rental and sale transactions and even tokenizing assets to make them more accessible and cheaper for investors.  

No Intermediaries: 

The real estate landscape has always relied on lawyers, banks, financial institutions, and brokers. Blockchain would bring about a shift in the roles and significance of these parties in real estate transactions. 

The emerging platforms would assume functions like 

• Documentation 
• Listings 
• Payments, and 
• Getting middlemen out of the equation 

Cutting out intermediaries would help buyers and sellers get more out of their property as they save on fees and commissions these parties generally charge. Not only this, the entire process would get quicker as there is no back and forth between these intermediaries.  

Liquidity: 

Traditionally, real estate has remained one of the most illiquid assets as it can take time to find the right deal and close sales. To tap into the asset value, owners or investors need to decide on selling and then market the property to buyers before going through the lengthy closing process.  

This has changed with Blockchain, where tokens can be readily traded through exchanges.  

As digital tokens represent ownership, one can sell the token and avoid the hassle of selling an asset through traditional methods. A seller no longer has to wait to find a buyer willing to purchase the property to get the value out of the holding.  

Fractional Ownership: 

One of the most significant advantages of Blockchain is lowering the barriers to investment in the sector through fractional ownership. Investing in real estate crm software traditionally demands vast sums of money to acquire property. However, today investors can pool their money to own parts of more prominent properties. Blockchain lets people buy and sell fractions of tokens through trading apps.  

Fractional ownership also helps avoid the cost and hassle of managing and leasing the properties themselves. The task of upkeeping on your own can accumulate expenses, while dealing with tenants can sometimes seem to be troublesome. This also impacts other activities like lending on collateral for quick access to cash.  

Decentralization: 

As a decentralized technology, Blockchain focuses on security and reliability. Data stored on the network is accessible to all the peers in the network, making it immutable and transparent. 

A decentralized platform has trust instilled into the system from the ground up. As peers verify all the information, parties involved in real estate transactions can put more confidence in the process and see fewer occurrences of fraud attempts. Intelligent contracts will see better enforceability in the future as states make further efforts to legislate their use.  

Costs: 

One of the essential benefits of a decentralized network is cost-cutting blockchain and real estate transactions. Apart from the savings from eliminating intermediaries’ commissions and fees, there are other costs like loan fees, registration fees, inspection charges, and taxes associated with real estate, which can vary depending on the jurisdiction. As platforms automate the processes, these costs can be minimized or eliminated from the equation altogether. 

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Conclusion: 

Blockchain technology certainly has an immense potential to revolutionize the real estate industry. Blockchain-based platforms can streamline complete real estate transactions from start to end, making it easier for buyers and sellers to connect, offering a transparent and secure way to stay on top of the transaction.  

Blockchain also enables fractional ownership of real estate assets to make them more accessible to investors, opening up newer investment opportunities and democratizing the market. Though it can take some time before the technology is fully integrated into the real estate industry, it is easy to say that Blockchain is undoubtedly changing the way people trade property.  

Real estate CRM software can play a significant role in smoothening this transition. Sell.Do is one such real estate CRM designed to help real estate stakeholders buy, sell, and lend solutions online with an integrated platform. It simplifies real estate transactions by integrating business processes with powerful real estate software and benefits clients with better productivity and transparency.