The real estate sector has witnessed plenty of disruptions in the recent past, some good and some extraordinary. And from the latter group, one disorder has garnered immense interest from the industry worldwide: Blockchain. Before we discuss this technology in real estate’s niched context, it is imperative to get our basics about the concept right. So, here goes: According to the textbook definition, blockchain is a distributed ledger technology wherein data is collected and stored on thousands and thousands of servers all over the globe. Now allow us to simplify it: Blockchain is a public ledger system comprising information collected via a network. This information is then copied and distributed across the structure mentioned above computer systems on that particular blockchain. Every single block contains data about every transaction on the network. They are updated every time a new transaction is made. This means that you get a decentralized database of information where anyone on the network can see all ledger entries. It also makes it impossible to forge entries, meaning swindling is immediately rendered impossible.
Phew! Now, on to blockchain in real estate; you see, this technology is neither new, but what is new is how it enables data to be recorded and documented. Real estate, which typically involves hefty transactions, often suffers from a severe lack of trust due to various factors. What blockchain does, then, is usher in a whole new level of confidence. And unlike what many people may be inclined to believe, blockchain isn’t merely about cryptocurrencies and financial transactions. The very premise of the concept translates into immense scope for possible applications in the whole industry.
The integration of advanced technologies such as blockchain, algorithms, and more stands to reinvigorate an archaic sector- real estate, helping companies tend to various challenges, speed up their processes, and much more. But we digress; the point is there’s much this technology can do for this sector. In addition to facilitating financial transactions, blockchain can also enable financing, purchase and sale of properties, and legal contracts, among several other such things.
Now that we understand the scope of blockchain in the sector allow us to walk you through some of the most meaningful ways this technology already has and will continue to impact the real estate industry.
- Eliminate intermediaries: No matter how much one may wish to keep transactions in real estate simple. Though, the truth is that it is quite a task, mainly on account of the countless intermediaries involved in the ecosystem. First, there are the brokers and then the banks, lawyers, etc. However, blockchain offers the opportunity to effect a fundamental change and ultimately transform their involvement and roles in real estate transactions. The new and advanced lot of relevant platforms are poised to assume the responsibilities and functions, including listing properties, facilitating documentation and payment, etc. This, in turn, will immediately do away with the need for the middlemen and countless other intermediaries, thus allowing both buyers and sellers to glean increased value out of their money and investments. And it is not just eliminating the fees; blockchain also helps accelerate these processes significantly.
- Tokenization: It is a well-known fact that real estate’s selling and buying can be a long drawn and tedious process. However, this can be eased significantly via tokenization. In the context of real estate, blockchain tokens would refer to a stake. So, say, a handful of investors owned an apartment complex that was to be secured by blockchain. Each of the investors could be issued tokens that would then attest to their ownership. But then what? Well, then the blockchain platform would enable them not only to store and document these tokens but also authenticate these tokens. Oh, and that’s not all — with these tokens verified and secure, trading, selling, and liquidating them is, then, rendered that much simpler.
- Smart contracts: Yet another compelling benefit enabled by blockchain in this regard are smart contracts. With blockchain, it is now possible to create and verify contracts in real-time and without necessitating the involvement of agents, middle-men, etc. But what’s even more intriguing is that with blockchain, one can now also integrate specific instructions into these contracts. If the parties involved so wish, one could ensure that payments are executed only when the specified instructions are complied with. As a result, one can achieve 100 percent transparency in the process and avoid any issues and disputes related to payments.
- Property development: Construction and property development has always been a tricky endeavor, but the challenges become that much more significant when it involves a large scale project. However, with a blockchain platform’s quality assistance, real estate companies can greatly ease raw material procurement and other supplies via reputation management for subcontractors, suppliers, etc. It can also facilitate top-notch project management, thanks to the digitization of processes across the entire ecosystem.
- Property management: Contrary to popular belief, property management is not a cakewalk, which is especially true for large properties. But it can be simplified to a considerable extent with blockchain, which organizes the process of collecting rent and payments and enables sharing of requisite data and that too, with high levels of security. But wait, there is more — with blockchain, it is also to achieve substantially better levels of diligence across the real estate company’s entire portfolio. As a result, such companies can save both time and money and achieve significantly better efficiency levels across their operations. Oh, and, of course, there’s also that access to high-quality data that can then be analyzed to help drive informed decisions for the business.
There is no denying that blockchain is poised to be a mainstay of the real estate industry. Hence, any operator in this space would do well to undertake real estate mobile app development and fortify it with technologies such as blockchain to truly embrace for the future.
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