Blockchain is the core technology behind cryptocurrencies used in different parts of the world. The innovative technology is also used in various industries, including banking, healthcare, telecommunications, and retail. Even though the concept emerged in 1982, its popularity only increased with the emergence of bitcoin.
The technology is a digitized ledger that facilitates the monitoring of records and transactions through a distributed network of computers. The need to confirm a transaction by the majority of the network ensures its security, which reduces if not eliminates unauthorized transactions. Aside from the confirmation, it’s also necessary to change previous transactions, which is not easy since it requires changing the transactions on the majority of the computers in the network.
The real estate industry has also adopted the technology due to the numerous benefits it offers to property investors, buyers, and sellers. Here are some of the benefits that blockchain technology provides to the real estate industry.
Blockchain Increases Access to Property Investment
Investing in real estate involves a lot of money due to the considerable value associated with purchasing properties. This makes property investment available only to financially well-off people. But using blockchain technology will change this and allow ordinary people to set aside a small portion of their income to invest in real estate.
The technology converts property values into tokensavailable for people who want to own a part of the property. For instance, a $10 million apartment complex owner converts the property into tokens and offers 10 million tokens or shares. Each token has a value of $1, which is affordable to many people. Converting the values into tokens makes properties accessible to a broader range of individuals in the market. The tokenizing property also increases its liquidity and facilitates the buying and selling of shares of the property.
Bypasses the Middlemen Through Smart Contracts
Aside from making property investment available to more people, blockchain technology also allows buyers and sellers to bypass middlemen by using smart contracts. The technology enables the creation, authentication, and auditing of contracts in real-time without the involvement of middlemen. These contracts contain instructions that both buyers and sellers should conform to.
Even as smart contracts facilitate real estate transactions, the states take care of the enforcement and interpretation of these contracts as there are no existing federal laws associated with smart contracts in the United States.
But both parties in the contract should agree to the terms indicated on the text incorporated in the smart contract code. The signing of these contracts is also performed digitally. Using key encryption technology to prevent alterations makes these signatures valid.
The technology also verifies the identities of the people involved in the transaction. In addition to the identity, it also verifies the incomes of the parties involved, which reduces the risk of payment disputes. The verification process that the technology uses also reduces the risk of fraud.
Verifies the Title Ownership of a Property
People looking to buy properties should look for reliable house buying apps before signifying their intention to buy. These applications feature different properties that are not yet offered in the open market, which allows them to save money when they purchase properties through the software.
Once they signify their intention to buy a specific plot of land, blockchain technology will come into play. The technology can store and verify legal documents, which ensures the verification of the actual owners of the property. Due to this, the technology prevents fraud and allows buyers to work with the property owners.
Checks the Actual Value of the Property
The majority of multiple listing services (MLS) do not have a centralized database. A centralized database makes it easy for buyers to cross-reference properties and check their actual value. The current practice in verifying the actual value of properties is performed by checking the MLS of different companies and manually comparing the prices.
Blockchain technology makes the process easier since it creates a secure database accessible to both buyers and sellers. The information in the database is also verified and secure, which prevents third parties from altering them.
Makes Real Estate Transactions Faster
A digital ledger holds all real estate transactions performed using blockchain technology. The offer, checking of the title, offer acceptance, financing, and closing of the deal are verified and codified.
Using the technology allows buyers and sellers to avoid going through piles of documents to review before finalizing the deal. So, the technology makes the entire process easier and faster.
Blockchain technology offers a lot of benefits for real estate investors, buyers, and sellers. Aside from facilitating the process, it also increases the security and speed of real estate transactions.