Blockchain Technology: How it Revolutionized Real Estate Industry Worldwide
Blockchain technology is frequently connected with digital currencies or cryptocurrencies such as Bitcoin, Ethereum, and others. However, it goes well beyond just that. With good cause, blockchain technology has found its way into nearly every major business field or industry.
Blockchain in Real Estate
For many years, the real estate business operated offline, thus all data regarding various properties, transactions, and rules were controlled by a number of local agencies and middlemen. This version of the offline system has created completely inefficient and time-consuming procedures, deterring new investors from investing in this industry.
Based on an online platform that links multiple buyers and sellers, blockchain technology has created a method for successfully monitoring, documenting, and trading properties.
Disturbing Problems of real Estate Transactions:
There are several issues in the real estate trade process, including:
- The possibility of fraud: Because regular property agreements are in paper form and rely heavily on the human aspect, they may be readily fabricated.
- Time-consuming paperwork: it consumes your time and money, diverts your attention away from your main purpose, and may result in the loss of your possible buyer/seller.
- A large number of intermediaries: the need to pay additional unwelcome fees in the end.
- High entry hurdles to property investing: If you do not have big quantities of money, you will be unable to enter the real estate investment business.
- Difficult to receive reliable information: it is only available for a fee and is usually wrong and out of the current.
How Does Blockchain Change Real Estate?
Blockchain has the potential to alter the fundamental structure of the real estate sector. Blockchain real estate applications, in particular, have the potential to democratize the whole sector and make it accessible to almost anybody, all while allowing faster and more secure transfers.
As if that wasn't enough, let's take a closer look at all the ways blockchain may improve the real estate industry:
- Trading Platforms & Online Marketplaces
The advent of internet technologies has changed how we look at real estate. A user-friendly site like Zillow has made the process of buying and selling easier. With the global pandemic and lockdowns, blockchain has emerged as a reliable system for retail trading platforms. The use of blockchain in real estate is only now becoming more popular. More individuals will be able to engage in the real estate sector without the worry of fraudulent trades thanks to blockchain real estate apps. As a result, trading platforms will be safer and faster, saving everyone a lot of time and money.
- Smart Contracts in real estate
A smart contract is the digital form of a simple traditional contract. This smart contract may be kept in the block and enables the effective flow of payments under the contract's terms and conditions. The most typical complaint of real estate investors, among other things, is the blockage of money put into real estate projects or the inability to get the indicated property in the contract. The monies are stored in the blocks of blockchain using smart contracts until the necessary requirements are fulfilled by the property developers when transferring the asset. If the item or property does not satisfy the contract criteria, the buyer's payments are refunded. This system works similarly to an escrow account, but any intermediary.
- Transparent Real Estate Transactions
Integrating blockchain into the real estate market promotes transaction transparency and reduces the likelihood of theft, duplication, or manipulation. Because blockchain technology is decentralized, the full transaction exchange is viewable to all parties involved. When each property owner gets access to knowledge about the desired property, trust is established and the likelihood of a conflict is reduced.
- Improves pre-purchase Due Diligence:
Due diligence processes often consume a significant amount of time prior to purchasing or renting the targeted property. This step is required because it helps you to avoid instances in which you find legal, financial, or technological issues after the transaction has been completed. Due diligence often includes a comprehensive examination of the paperwork, which may include title deeds, evidence of occupancy, a list of tenants, and maintenance cases. At the moment, this data is saved on paper, which can readily be manipulated, making it subject to the human factor. The second issue is that the check-up is done manually. As a result, the verification necessitates the participation of numerous professionals, making it a time-consuming and costly procedure.
Property papers can be stored digitally in blockchain-based systems using blockchain technology. The digital papers can contain all of the necessary property data and can be searched at any time. As a result, blockchain enables all documentation to be completed automatically, reducing the chance of bothersome paper mistakes and discrepancies.
- No intermediaries and Affiliated Costs
Blockchain is a transparent and secure system by nature eliminates many legal and financial barriers. Some blockchain systems, for example, allow you to buy entire pieces of property using cryptocurrencies. These transactions eliminate the need for any financial intermediaries and real estate attorneys.
Using crypto, real estate may be bought and sold securely, reducing the costs associated with intermediaries such as closing charges and assessment fees.
- Lower Costs
As more and more platforms use blockchain technology to make buying and selling of real estate assets simpler, total prices may decrease. Many other expenses, such as inspection fees, legal fees, and bank loan fees be reduced by using blockchain platforms.
Blockchain might decrease the barrier to entry for prospective house purchasers by decreasing these costs. Furthermore, if blockchain is utilized to make the process more efficient, it may reduce the risk for mortgage lenders while providing real estate brokers with additional clients.
- Blockchain Allows Fractional Ownership
Tokenization in real estate not only provides prospective owners and investors with faster access to funds but can also decrease the barrier to entry for both. It is no longer essential to spend a large sum of money on a single investment. Tokens allow buyers to simulate partial ownership. If, for example, five tokens represent a commercial building's equitable stake, purchasing all five tokens would result in the entire ownership of the asset. If a buyer simply purchased two tokens, they would possess two-fifths of the asset's equitable interest.
- Decentralized and Transparent
Because blockchain data is decentralized and disseminated, it is available to buyers and sellers across the network. This ensures total transparency and trust in the transaction process and the information available on the database, as it is validated online by other investors and sellers. Because blockchain data is recorded in a chronological structure, it precludes any single person from altering any data, hence guaranteeing the material's validity online. The previous way of purchasing property allowed several flaws in the system that intermediaries may use to trick purchasers into paying more and indulging in other fraudulent actions.
The metaverse is a blockchain-based virtual and augmented reality environment. Prospects viewed properties in virtual reality before the metaverse was a thing. Activities such as property tours, interior design, and so on are carried out in the metaverse and then completed instantly across all relevant channels owing to smart contracts.
The metaverse integrates several capabilities to provide an excellent ultimate watching experience.
It is preposterous that virtual real estate is quickly becoming a thing for those who are unfamiliar with the new economy. You may own digital land and sell it whenever you want with virtual real estate. Beyond the watching experience, we can only speculate on how metaverse real estate links to physical real estate.
- Real Estate Crowdfunding Become Possible:
Historically, high-income individuals were the only ones who could afford to invest in real estate. Blockchain real estate investing is set to revolutionize this by providing greater flexibility than traditional real estate investment or property investment funds. It allows investors to trade real estate shares using cryptocurrency in a simple and competitive manner. As a result, investors with lesser net worth have the opportunity to diversify their portfolios through real estate investments. There is also openness in asset management operations for cryptocurrency owners who want to maximize revenue, such as through high tenancy rates.
Blockchain real estate apps have the potential to change the way the housing industry is seen. At the very least, the applications suggested by cutting-edge technology have the potential to disrupt the whole real estate business. Blockchain real estate is the trend of the future, from more secure transactions to quicker closing windows, and one thing is certain: we are only getting started. Now is a wonderful moment to begin thinking about creating your own blockchain real estate applications and strategy. Those that jump on board with the trend early on stand to gain significantly
Want to build your Blockchain application?
If you’re ready to understand how your business can leverage blockchain to disrupt your industry, Decodermind is happy to help. Get in touch with us for more information on our blockchain development services.