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The adoption of Blockchain in the real estate market raises questions about the need for this technology in a market valued at more than $326 trillion.
The Blockchain is much more than just a marketing ploy that luxury penthouse vendors might use to attract extremely wealthy customers. It can help organizations, enterprises, and common people who want to rent or buy a house.
Five crucial areas that blockchain technology can completely revolutionize or improve are listed below:
The property search is the first step in the entire process, and here is also when the first issues surface.
According to statistics, 93% of Americans looking to buy a property do so online. These websites, which are largely marketplaces and platforms for real estate, connect buyers and sellers while enabling potential purchasers to utilize filters to hone in on the precise specifications of their dream property. But even the best Web2 applications have shortcomings.
The primary issue with these websites is the usually erroneous, out-of-date, or incomplete property information they host. Confusion might also result from data fragmentation across several listing systems. On the other hand, blockchain technology can address these problems in various ways.
Agents and sellers can enter the same data about a property into the blockchain database once rather than manually entering it into many systems. Second, information entered onto the Blockchain is unchangeable and irreversible. Managing duties like listing, payment, and legal documents may finally begin on future platforms.
Since they link buyers and sellers, brokers, banks, and lawyers are the key winners in commercial and residential real estate transactions.
The mediator fees increase in proportion to how rapidly the parties desire to reach a settlement, which results in significant financial losses for them. But according to a Deloitte analysis, Blockchain might soon alter how real estate deals are conducted.
People can skip intermediaries and save money on deals without risks with virtual tours, direct communication between the buyer and the owner, and comprehensive paperwork guidance.
Since real estate agents typically charge 6% for each transaction, a significant amount of money will be saved. Therefore, you would save an additional $12,000 on the realtor’s fees if you purchased a $200,000 home.
Another significant issue in real estate is financing. For days or even weeks, buyers must wait for their mortgage approval.
Manual and ad hoc loan origination and underwriting processes still exist. It takes great effort to avoid asset double-pledging, and security structuring is left up to interpretation. Decisions about trading and asset servicing are routinely made using outdated data. Finally, settlement delays brought on by cross-lifecycle cash reconciliations frequently impact investor cash flow.
Blockchain’s single version of verified information, safe data sharing, immutable transaction monitoring, and real-time payment settlement are advantages for conventional financial institutions. Relevant information, like ownership rights and loan payment history, can be programmed to help future servicing choices by digitizing a loan or mortgage. Smart contracts can gather payments, distribute them to beneficiaries, and report to regulators.
Property platforms powered by Blockchain simplify the house buying process while lowering the possibility of fraud. The same is true of mortgage application submissions. Data on a digital ledger would make any inaccuracies simple to identify.
Just consider how the 2008 housing bubble deflated to understand how crucial data openness is to maintaining market stability. Investors and mortgage applicants would flee if banks couldn’t conceal the real statistics.
Although what has been done cannot be undone, the next crisis can be avoided if the data is available to all network partners and immutable. Blockchain allows users to verify all the paperwork and locate the greatest market alternative for their budget.
Integration of blockchain technology may also assist potential renters. They could avoid tension by learning in advance if the landlord makes the mortgage payments.
Last but not least, by eliminating the need for human intervention in ownership transfers, Blockchain has the potential to simplify and speed up the process. Managing the current system of property titles can be challenging due to its frequent fragmentation. It takes longer for bureaucratic organizations to handle information about ownership changes, leading to issues in court or when selling real estate.
A digital title would be attached to each apartment or property and kept on the Blockchain. It would make tracking ownership much simpler. However, the requirement for documentation may still exist after the adoption of Blockchain. On the contrary, implementing technology will speed up and improve paperwork efficiency. According to officials, a mistake in a document may always be found by checking the data on the Blockchain.
Data storage in a secure environment is a great strategy to thwart fraud. The most important data is still saved on the Blockchain, and scammers have limited possibility of accessing it, so even if they manage to get the owner’s signature and other information, they won’t be able to complete transactions.
