Blockchain is proven to hold the potential to revamp every business vertical. For instance, blockchain in real estate has given a clear indication that it has various applications beyond cryptocurrencies and can be the right weapon to tackle the prevailing industrial challenges.
A ripple effect of this is that various industries have adopted blockchain technology, even the most traditional ones like real estate.
Real estate is witnessing a disruptive evolution with the blockchain acting as the driving force. What was historically considered as a ‘pen and pencil’ business has now begun expanding to the global market with better and long-term outcomes. This has made numerous entrepreneurs and traditional investors interested in understanding the use of blockchain for real estate. Something we will talk about in this article in detail.
Challenges Faced by the Real Estate Industry
The fluctuation in the economy and growing trends introduce new challenges in the real estate industry every now and then. Realtors keep a check on the hurdles hampering the revenue while staying in business. In real estate, various factors impact the revenue like property listings, contact information management, dealing with stakeholders, and more. A few of the common challenges faced by the realtors are stated below:
1. Lack of Transparency
The real estate industry is not open to everyone due to the involvement of various factors like citizenship, cash requirements, accreditation, credit score, etc. Additionally, there is no market database or a concrete way to access the information required for making buying and selling decisions.
This, as a whole, makes the sector unclear and turbid for all.
2. Tedious Paperwork
In the traditional real estate economy, every transaction involves a stringed set of tedious and time-consuming paperwork. Because of this, many times real estate companies end up losing their money and potential customers, along with getting distracted from the main goal.
3. Higher Risk of Fraud
Since all the property agreements are in paper form and the trust is based on humans, there’s a higher risk of fraud in the Real estate industry. A proof of this is that 404 publicly-reported data compromises in the U.S. represent a 14 percent increase compared to Q1 2021. Q1 2022 is the third consecutive year when breaches have increased compared to Q1 of the previous year.
4. Expensive Investment
Due to the involvement of a wider number of intermediaries, various fees like broker fees, attorney fees, exchange fees, taxes, etc., are added to the real estate cost, which ultimately makes real estate investments expensive.
5. Large Number of Intermediaries
Another problem associated with the traditional real estate economy is that trust is based on human factors. Any two parties have to involve third parties at different levels to build trust in the process. This is again one of the challenges in real estate solved by blockchain.
Areas Revamping with the Adoption of Blockchain in Real Estate
Blockchain in real estate can benefit several areas in the industry. A few of the common areas that are revamping with blockchain implementation are mentioned below.
1. Property Search
Currently, brokers, owners, tenants, and buyers turn towards multiple listing platforms like Zillow to search for any property information.
These platforms are subscription-based and demand high fees. Besides, the property data provided by them is often inaccurate, outdated, or partially distorted. This increases inefficiencies in the process and many times, results in disputes.
A blockchain-backed application can decentralize data and enable everyone to share data in a P2P network. It also facilitates brokers with an opportunity to receive additional data monitoring options and eventually helps to cut down the associated costs.
2. Due Diligence and Financial Evaluation
In the real estate sector, major time is spent on diligence activities before buying/renting any property. Various intermediaries are involved in the process of inspecting property documents to prevent any kind of legal, technical, or financial issues in the future.
Currently, all the property data is kept on papers that can be easily changed or corrupted by anyone.
However, with the adoption of blockchain software development company in real estate app development, this subdomain can also be improved.
All the property-related papers can be stored digitally in blockchain-powered platforms, such that they can be accessed publicly but can’t be altered. This will make the due diligence and financial evaluation process automated, quick, and less inaccurate.
3. File and Payments
A significant impact of blockchain on real estate is also experienced in the field of file and payments.
At present, the extensive documentation and involvement of third-party intermediaries are making the process lengthy, troublesome, and costly. And this effect is becoming more significant when international transactions or mortgages are involved.
Now here, blockchain, the new technology in real estate can simplify the filing process and bring innovation in real estate processes by introducing verifiable digital identities for properties.
Likewise, the introduction of cryptocurrencies can lower the barrier of different currencies used in different places. It can even minimize the involved taxes and fees, alongside streamlining the payment process.
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