The blockchain is fast becoming a universal technology disrupting every industry. Realty is one of the industries this tech is revolutionizing. Since the question is no longer if it is affecting the sector but how it is impacting it, this post will delve into the latter – its impact. Before ordering our SA writing service, our realty specialists will explore ways in which blockchain is transforming real estate.
Land records
Records are at the heart of all real estate transactions. They ensure clarity regarding the legal ownership of every piece of property and power all the activities in the industries. Also, they act as evidence and memories of every transaction that takes place. However, they appear in fragments, thus empowering different jurisdictions to make their own rules. Moreover, some of them are still offline, thus compounding the problem further.
However, blockchain is set to change all this. For instance, Sweden has implemented its second phase of transitioning to blockchain in its land registry matters. By the time the project matures, it will save the country some $100 million annually. This will make it easy for land records to be listed safely. Also, it will be easy for records to be exchanged between parties. Lastly, the availability of smart contracts will ease record management.
Fractional ownership eliminates entry barriers
Another way through which blockchain is impacting real estate is the provision for fractional ownership. The reason is that it opens investment doors to other players. Conventionally, investing in real estate demanded heavy capital to enter. This way, it was difficult for the small fish to break through into the industry. However, the dawn and application of blockchain are changing the game by enabling fractional ownership for smaller investors. With this provision, it will be possible to buy and sell fractions of investment property. With this model, investors will enjoy the following benefits:
- Use this form of ownership to fund their real estate ventures instead of depending on the traditional mortgage.
- The ability to avoid rental management issues because they don’t need to stress themselves with maintaining their investments or managing tenants.
Liquidity
Traditionally, real estate has poor liquidity because it takes a long time for real estate deals to finalize. This means that the cash the investor pumped into a piece property will remain “solid” for all that time it is still on the market. However, the onset of blockchain can change the narrative because digital currencies and tokens running on blockchain are highly liquid. This means you can trade them into cash easily and faster. Therefore, there is no need to wait for buyers who can afford to buy the entire property you invested in.
Peer-to-peer transactions
The worldwide real estate value is estimated to be $217 billion. However, most of this wealth is in the hands of a few well-oiled companies and dynasties. But the entry of blockchain is set to rewrite the script since it has opened the door for more investors to access the market in a more equitable and transparent way. With the power of blockchain at work, investors at all levels can trade in a peer-to-peer manner using blockchain-powered platforms.
Secure transactions and assets
With this tech at work, the real estate industry is set to enjoy greater levels of security in its transactions and assets. The reason is that it fosters complete transactions in an online trade by enhancing transparency owing to its decentralized nature. This way, all investors can access the information on their computers in real-time. Consequently, it boosts the level of trust and security as buyers and sellers interact. This way, all attempts to compromise the details through fraud are thwarted.
Decentralization
Centralization is one of the greatest tools for manipulation that systems use to advance the interests of a few selfish men. With a centralized system, it is easy to hide and advance all forms of ill practices. The very idea of hiding information that concerns other people in the hands of a few people is enough to cause worries among them. But the good side of blockchain is that all the information is available to all parties with no central control to manipulate it. Additionally, the data are immutable, and hence, the greed of a few men can no longer take advantage of other people in the industry. Moreover, having a decentralized system makes it tamper-proof and secure to use. That is why states like Arizona in the US have passed legislations to enforce the use of smart contacts. Under such laws, smart contracts will be admissible into and recognized by the legal system. With such laws in place, transactions conducted in this manner will remain enforceable beyond blockchain because they will have a strong legal backing.
Reduced overheads
The degree of profitability a real estate investor enjoys greatly depends on the level of costs they incur. This means that cutting off unnecessary costs is one clear way of improving an investor’s profit margin. With the inclusion of blockchain, it becomes easier to achieve this goal. For instance, it is now easier to save the costs that used to go to intermediary professionals such as attorneys. Moreover, blockchain enables investors to eliminate unnecessary commissions, inspection costs, registration fees, and loan fees since process automation automatically removes these expenses.
Smart contracts
Lastly, blockchain is revolutionizing real estate in through smart contract management. With the current status quo, transactions require lots of paperwork and long hours of coordinating between brokers, banks, buyers, sellers, and local governments. However, the entry of blockchain into the equation solves most of these issues. Moreover, it can assist in dealing with and automating other transactions such as rental agreements between renters and property owners. This can benefit commercial and residential transactions.
Blockchain transforms and impacts real estate in many commendable ways. With what we have shared in this post, we firmly believe that your eyes are now open to see how this technology of the future impacts this crucial industry.
