Can blockchain technology really make an impact on real-estate?
Today, business leaders everywhere see the technology as a means of bringing transparency, traceability, and reliability to their operations.
While development has been slow in the real-estate industry, the technology has the potential to disrupt and transform the industry to delight regulators, owners, and even brokers.
Truth be told, the real-estate market be it in the Asia Pacific or anywhere else around the world is yet to really harness the potential of the blockchain because any meaningful implementation will need all participants to adopt a common platform.
However, when the technology is implemented (mostly as a result of a push from regulators or an industry association), there will be many benefits to the industry. Here are some of them:
# 1 | Blockchain increases transparency
A typical, traditional property journey involves multiple stakeholders. Assuming it is a chain-free transaction not involving multiple buyers and sellers, it still includes a buyer, a seller, the land registry, and a team of lawyers, mortgage providers, and surveyors at a minimum.
The transaction journey can become a long and complicated process as the stakeholders involved figure out who needs to do what and when. Sometimes, participants in the leasing lifecycle do not have pre-existing relationships, which can result in mistrust.
Blockchain seeks to create transparency in the buying journey, increasing the degree of trust and reducing bureaucracy. The adoption of ‘smart contracts’ can ensure that all steps are completed by the appropriate party before any money is transferred.
Due to the distributed qualities of blockchain, the parties involved would no longer be reliant on a single source of truth (usually a lawyer), thus increasing trust and speeding up the transaction.
# 2 | Blockchain helps reduce costs
Much to the frustration of buyers, the real estate purchasing journey can often involve countless extra fees and processes that go beyond the price of the property itself.
Blockchain seeks to cut down some of these costs by reducing the number of people involved in the journey.
New platforms will be able to take over these functions such as listings, payments, and legal documentation.
Cutting out the “middlemen” will mean that buyers and sellers will get more out of their money as they will save on the fees and commissions issued by these intermediaries. It will also speed up and streamline the process as there will be less back-and-forth action.
# 3 | Blockchain helps prevent fraud
Real estate fraud costs home-buyers millions of dollars every year, and the victims are commonly those individuals who are looking to make a quick deal and thus willing to forego appropriate safety measures.
Technological advances have made the forgery of documents and advertising of fake properties much easier for fraudsters.
Blockchain offers to solve these fraud issues by being 100 percent incorruptible, storing details of funds from sender and recipient.
Through blockchain, “digital ownership certificates” can be created for properties, which would be almost impossible to replicate.
These digital certificates can be directly linked to one property in the system, meaning that forged ownership documents and false listings will be a thing of the past.