Blockchain is a new technology that enables the transfer of digital goods without a central authority verifying the transaction. The best way to visualize the blockchain is to think about it as an online spreadsheet with thousands of copies, each one shared by hundreds of participants. This means that in the event someone tries to edit or delete data from the spreadsheet, all other copies will be unaffected, and all participants will remain informed.
The first instance of blockchain being used was as part of Bitcoin’s payment network. But today, you can see blockchain in real estate, supply chain, manufacturing, healthcare, telecommunications, media, and so on.
We have seen Blockchain technology around for a few years now. But it’s only in the last couple of years it has really taken off. Worldwide spending on blockchain solutions has also risen from $95 million in 2017 to nearly $6.6 billion in 2021 and is projected to cross $19 billion by 2024. Tokenization and Initial Coin Offerings have changed the status quo in stock trading, venture capital, gaming, payments methods, and more.
The trend will continue in 2022 and beyond as more businesses use distributed ledgers to provide decentralized tech solutions. But in this blog, we are talking, specifically about blockchain use cases in the real estate industry. We’ll also see what benefits of blockchain for the real estate market you can reap.
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Use Cases Of Blockchain Technology In Real Estate Sector
For years, the real estate industry has been plagued with numerous problems. None of these problems has been more severe than that of fraud in real estate transactions. Even though real estate industrialists have taken many measures to address this issue, scams in the real estate profession still persist. But, Blockchain technology appears as a potential solution to this problem, as it can ensure that all transactions are 100% secure and legitimate.
Blockchain technology provides an excellent way for property owners and buyers to interact with each other securely and without any middleman involvement. Blockchain technology revolutionizes the real estate industry by providing a system where you can record all transactions on an immutable ledger.
Impacts on loans and mortgage
Blockchain is the key technology in transforming the current mortgage system by improving the efficiency and security of financial transactions. At the same time, it provides a single version of verified and immutable information and transaction monitoring with secure data sharing.
You can digitize loan and mortgage processes, programming it to entail applicable data, including ownership rights and loan payment history. Thereby, creating more accurate records. And leveraging Smart contracts, you can automate payments collection and distribution to beneficiary holders with real-time reporting to regulators.
Integrate blockchain for property management
Exerting one single decentralized app baked by smart contracts can streamline the end-to-end property management process. Right from signing lease agreements to handling cash flow and filing maintenance requests, you can conduct all operations within a secure and transparent network.
For example, a tenant and landlord can sign a smart contract agreement that consists of rent value, payment frequency, and other liabilities of both parties. Then, as per the agreed terms, the smart contract initiates monthly rent from the tenant to the landlord. And you can also set the smart contract to send a security deposit back to the tenant when the lease expires.
Blockchain-powered title management
So far, we have been managing property titles on paper that are susceptible to eros and fraud. And if there are any identity defects in the title, you cannot transfer the property ownership to buyers until it’s resolved. But not anymore, as blockchain-enabled immutable digital records of land titles mitigate potential title management issues.
Blockchain-based title management system makes it transparent and reduces the risk of fraud, eliminating the need for additional security. For example, a Washington-based company, UBITQUITY, offers a SaaS blockchain platform with a simple user experience that records, tracks, and transfers deeds securely. The platform makes financial institutions, title, and mortgage companies’ jobs easy by reducing title search time, increasing transparency and efficiency.
Other Blockchain applications for real estate are:
- Real estate property Tokenization and NFTs
- Decentralized Identity Integrations to automate AML and KYC
- Real-time visual data and reports collected via IoT devices and other sensors
- Real estate app development
- Real estate buyers and sellers marketplace platforms
- Ensure compliance and legal regulations in every transaction
- Shared ownership of the real estate and investment
- Real-time cash flow visualization for property owners and investors
Now let us see how blockchain adds value to its use case in the real estate market.
Benefits of blockchain In the global real estate market
Blockchain offers one-of-a-kind functionality to turn real-world assets into non-fungible tokens that anyone can buy and sell individually. Realtors use this blockchain NFT trend to split ownership of any real estate asset, making it accessible for small investors to invest. As a result, more than one investor can invest in a single big-ticket real estate property that they couldn’t buy alone.
Decentralization enhances security
Once you feed information into a system built on a blockchain network, it becomes immutable, accessible to all peers, and stays there for eternity. Besides being transparent, blockchain drives efficiency and accuracy in the real estate industry. Consequently, it allows property listings to exist on a decentralized database.
Such solutions grant brokers and realtors more control over their data, preventing corruption and fraud. On the other hand, blockchain-based KYC/AML procedures accelerate property leasing and investment process, facilitating quick background-check reducing the cost.
Blockchain-based real estate solutions may soon limit or vanish the role of intermediaries, including brokers, escrow companies, layers, and banks. The reason is blockchain technology streamlines storing and verifying records, collecting and distributing payments, and even transferring ownerships. Hence, there will be no need for intermediaries to perform such transactions or maintain records.
Similar to intermediaries’ professional charges and commission, blockchain in real estate cut out other costs as well, such as — inspection costs, loan fees, registration fees, and taxes associated with the property transaction. These expenses are subject to change as per the jurisdiction of the territory. But by automating all these processes, Similar to intermediaries’ professional charges and commission, blockchain in real estate cut out other costs as well, such as — inspection costs, loan fees, registration fees, and taxes associated with the property transaction. These expenses are subject to change as per the jurisdiction of the territory. But by automating all these processes, you can decrease their respective charges or even remove them altogether.
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Bring the revolution!
Real estate is a multi-trillion dollar industry and needs cutting-edge solutions to overcome traditional, time-consuming approaches. On the contrary, Blockchain evolution has exploded in nearly every industry for good. And when we fuse blockchain with real estate transactions, numerous ways appear to help brokers, realtors, buyers, sellers, and investors.
Blockchain integration into PropTech reduces unnecessary costs, external interfaces, and security risks. In addition, it enhances efficiency, opportunities to invest more and gain more. Hence, it is clear that more and more real estate companies will embrace and grow with this technology. What about you?