Will Blockchain Disrupt The Real Estate Industry?
The transparency and effectiveness of blockchain will streamline global real estate transactions.
pixabay
Currently blockchain was best associated with the technology behind Bitcoin. However, many industries are looking to leverage blockchain technology and the smart contract functionality to play a significant role in the how they operate. Commercial real estate markets are no different as the implementation of this technology can potentially transform commercial real estate operations like property transactions (purchase, financing, management, and leasing). Commercial real estate companies can now mitigate some of the challenges in their leasing transactions using blockchain technology including paper-based, time-sucking due-diligence processes and removing the complexity in managing lease agreements, property operations, and cash flows.
The existing process to purchase property especially cross-border is daunting including multiple intermediaries, multiple steps, a time-consuming endeavor and bloated costs. Typically the method includes locating the property, organizing inspections, placing and accepting an offer, engage a 3rd party assessor to inspect the property and ensure valuation is accurate. Go physically visit the place to ensure everything is satisfactory, involves applying for a visa, creating bank accounts, etc. for international transactions. Then finalize the purchase and wait for the title deed to be issued. Peer-to-peer digital transactions are especially compelling in markets where global sales are frequent because they’re instantaneous and remove the need for currency conversions and transfers between foreign banks, which can take weeks or in some cases months. Without the middlemen, real estate transactions suddenly become cheaper. By bypassing lawyers, escrow companies, banks, and other traditional institutions, homebuyers and renters can save on fees and payments that typically go to these intermediaries. Also, all data concerning the investment deal and ongoing valuation can be stored in a decentralized database where it can’t be altered or manipulated. Between not having to pay high marketing fees for documentation and additional costs to save and verify information, investors have more cash to park in their investments.
According to the National Association of Realtors Home Buyer and Seller Generational Trends Report 2017 “Finding the right property was ranked highest among all generations for the most difficult step in home buying, paperwork and understanding the process was more difficult for Millennials than any other generation”.
https://ico.etherty.com/
One blockchain based startup is gearing up to disrupt and innovate how people, buy, sell invest and trade within the real estate markets through their crowd sale and trading platform. The organization is called Etherty, they have a global property portfolio and are issuing their cryptocurrency to be used on their platform. Regarding the real estate industry, the technology has the potential to allow countries around the world to develop a comprehensive real-time database of the use and ownership of buildings. On a broader, international scale there is a clear link between transparency and the attractiveness of a country’s property market to foreign investment. Through decentralization, smart contracts, and prevention of fraud, the blockchain technology represent the ideal solution that can mitigate the current problems facing the global real estate market. Ehterty provides three different solutions to the global real estate marketplace, the portal, one-stop solution for real estate transactions, the ability to crowd-sale properties powered by blockchain and the Etherty trading platform (DEX). The introduction of smart contracts in blockchain platforms now allows assets like real estate to be tokenized and traded. This means there is technology to digitize the asset value of a real estate transaction and issue ownership to people or entities who possess the digital token.
Will 2018 be the year blockchain disrupts the real estate market? Only time will tell, but there seems to be so many inefficiencies across the buying and selling process that it will happen soon enough.
