Given blockchain's disruption of financial services and its widespread adoption across sectors, it's difficult to imagine a sector that hasn't been touched by the technology. Payments, remittances, and foreign exchange have all been impacted by cryptocurrency. Initial coin offerings (ICOs) have posed a threat to traditional investments such as stocks, startup loans, and venture capital. The food supply chain has also been disrupted by blockchain.
Real estate isn't immune to the effects of blockchain. Previously, exclusively transacting high-value assets such as real estate through digital means was not the norm. Real estate transactions are frequently handled offline, with numerous parties engaging in face-to-face interactions. The blockchain, on the other hand, has made it possible to modify this. Assets like real estate may now be tokenized and sold like cryptocurrencies like bitcoin and ether thanks to the development of smart contracts on blockchain platforms.
Blockchain Can Allow You To Have More Liquidity with Real Estate
Real estate has traditionally been seen as an illiquid asset since sales take time to complete. This isn't the case with cryptocurrencies and tokens, which can theoretically be easily exchanged for fiat money. Real estate, on the other hand, may be easily sold as tokens. In order to gain some value out of their property, a seller does not have to wait for a buyer who can purchase the entire property.
Say Goodbye to Centralized Ownership
As a decentralized system, blockchain demands confidence and security. The blockchain makes data transparent and unchangeable by making it accessible to all peers on the network. To illustrate how greed and a lack of openness on the side of institutions may have fatal effects, one only needs to go back to the housing bubble disaster of 2008. The mechanism of a decentralized exchange is predicated on trust. Buyers and sellers might have more trust in executing transactions since information can be verified by peers. Fraudulent efforts would be reduced as well. With the passage of legislation in Vermont and Arizona, smart contracts are rapidly becoming acceptable documents. As a result, smart contracts would have more enforceability outside of the technology.
Blockchain lowers the obstacles to real estate investing by permitting fractional ownership. In order to obtain property, most ventures demand a large sum of money up front. Alternatively, a group of investors might pool their funds to purchase a larger property. Investors would simply use a trading software to purchase and sell even fractions of tokens as they see fit using blockchain. Furthermore, fractional ownership would allow them to avoid the hassles of property management, such as maintenance and leasing.
The expense of upkeep alone may be substantial, and dealing with renters can be a difficult task. This has an impact on allied businesses such as lending, where property owners are frequently required to use their homes as collateral for loans in order to obtain rapid cash.
Digitalization and Simplicity
The focus of real estate technology has typically been on listings and connecting buyers and sellers. However, blockchain opens up new avenues for real estate trading, allowing trading platforms and internet markets to better support real estate transactions. ATLANT, for example, has created a platform that makes real estate and rental property transactions easier using blockchain technology. Real estate may be tokenized and traded online in the same way that equities are exchanged on a stock exchange. ATLANT enables sellers to tokenize assets and liquidate them through a token sale on the platform, much like a stock sale. The tokens may be swapped for fiat cash, and buyers receive a percentage share in the property.
The real estate sector's blockchain systems offer a solution in terms of speed and security that can significantly lower the danger of fraud. This revolutionary technology and its consequences for simplifying data transfer and shortening the time between the signing of the preliminary sales agreement and the deed of sale before the notary impact all phases of the real estate transaction.
Although this new digital architecture clearly enables the automation of real estate transactions, it is important to note that its use has already progressed beyond the project stage. This is particularly intriguing in countries where corruption or a lack of openness makes determining who owns a piece of property difficult. We might think of blockchain as a tool for visualizing the state of properties and titles, allowing complete access to the property's or land's history. Banks, real estate agencies, buyers, and sellers can consult it at any time and without restriction.
The transparency provided by a decentralized network can help reduce the expenses of real estate transactions. Other costs involved with real estate include inspections, registration fees, loan fees, and taxes, in addition to the savings realized by eliminating intermediaries' professional fees and commissions. These prices differ considerably depending on the jurisdictional region. These, like middlemen, can be decreased or even eliminated from the equation as platforms automate and integrate these operations.
Hundreds of billions of dollars are invested in global real estate, yet it is dominated by the rich and major enterprises. More individuals may be able to access the market as a result of blockchain technology, which makes transactions more transparent, safe, and egalitarian. Real estate transactions might become genuinely peer-to-peer in the future, with blockchain-powered platforms doing the majority of the labor.
Cutting Out The Middlemen
The real estate ecosystem has traditionally included brokers, attorneys, and banks. According to a Deloitte report, blockchain may soon usher in a transformation in their responsibilities and involvement in real estate transactions. New platforms might eventually take over activities including listings, payments, and legal paperwork. By eliminating middlemen, buyers and sellers will get better value for their money since they would save on commissions and fees levied by these intermediaries. This also speeds up the process by eliminating the back-and-forth between these intermediaries.
Every transaction is built on the foundation of transparency. While we aim to include technology into all we do, the existing, hidden method of purchasing and selling properties will soon become obsolete. Of course, blockchain isn't the panacea for all problems in the real estate industry.
However, with the blockchain, we now have a system that improves confidence and decreases reliance on real estate brokers while also lowering costs, speeding up house transfers, and, most crucially, opening up possibilities for networking by providing a digital platform that other businesses can connect to. Even though it appears to be a long way off, there is reason to assume it will become the standard for the real estate market much sooner than one may expect.