BLOCKCHAIN IS FOR EVERYONE
Lear how on of the biggest industries of the world is introducing blockchain within its operations.
Real Estate transactions are one of those things that have not been able to completely migrate to online transactions; some, if not all, parts of the process are still being conducted during face-to-face interactions, especially those involving the legal steps of the process. As the true potential of blockchain keeps becoming more evident, more and more industries are adopting it within its operations. In the case of real estate there are three ways for this adoption: one is using the shared ledger technology to immutably store documents, sales contracts or other crucial transaction records, the second is to use blockchain to power a marketplace for renting and selling properties, and the third way is to tokenize real estate and offer properties as tokens, which allows fractional ownership. This article will focus on the first two means of adoption, which are the ones with real life use cases.
When starting the process of selling a property the first step is to get all the documents in order, and this is something property owners usually struggle with; the required documents tend to get stored away and forgotten, or sometimes they don’t have them at all. After the owner succeeds on collecting all the necessary documents, the next step is to list the asset. In most cases this is done through a certified real estate agent. He will then market the listing to potential buyers, who will then get back to him with their offers. This process goes back and forth until both owner and buyer reach an agreement, and more paperwork is done. When it all gets to an end, you become aware of how lengthy and costly the whole process is.
Blockchain offers the right tools to solve both issues, plus some other benefits. There has been a development of platforms that offers owners and buyers a safe and fast way to communicate and agree on the sale, where every step of the process is securely managed through smart contracts. The platforms operate as a marketplace where they list the properties for sale alongside the required documentation, such as property deed and home inspection report, pictures, blueprints, description or any other information, all of which buyers have access to. They can also host the buyers’ information such as pre-approvals or proof of funds. Buyers can find their desired property through a search engine with filters. When owner and buyer reach an agreement, these platforms will also offer digital management systems, in accordance to the legislation where the property is domiciled; this way all the process is executed through blockchain, leaving an immutable and accessible registry of every transaction and document. In the end, the costs and timelines of the real estate process are reduced, at the same time that they are made secure and reliable.
Some examples of successful real estate platforms built on blockchain are:
● ShelterZoom: the first blockchain real estate application for making and receiving offers.
And soon on Telos Blockchain Network:
● Cudurru: peer to peer real estate blockchain platform that will offer an improved process of selling and buying property with real-time information, high efficiency, and at lower costs. This project has come to Telos as a Worker Proposal submitted by its founder Sam Mahmood in association with EOS Detroit. Check the proposal at Chainspector.
Other use for blockchain in the real estate world is by offering effortless and reliable platforms for home renting, whether it’s a long-term rental or for short periods such as vacations or work trips. To tackle long-term rentals, several initiatives offer two services: first a listing service for the rental in order to connect potential tenants, and second after the property is rented, it offers a platform to manage documents, payments, and more. For short-term rentals, blockchain place-based initiatives, offer platforms similar to Airbnb, where they offer in a marketplace for lodging or vacation stays. One company offering these services is:
Finally, the last approach taken by blockchain enthusiasts to get on board the real estate industry, is tokenization of properties. This is by far the most innovative and out of the box use of blockchain in this industry, where their main goal is to overcome the liquidity issues in order to offer easier access for everyone to jump into this business. Real estate is an industry where entry level requires elevated funds, primarily owned by only one person. By tokenizing a property, buyers have the opportunity to buy tokens that represent only a fraction of said property freeing the condition of buying the whole property and allowing fractional ownership: the property is owned by several investors whose fraction is represented by the number of tokens they have.
In the end, blockchain’s immutability and shared registry features are the key elements towards expansion of the real estate industry by reducing costs, by minimizing fees and timelines, with fast and accurate listings, marketing with a broader reach, digital management of the documents, and closing processes, while also offering opportunities to open the market for lower profile investors.