You’ve likely heard of the non-fungible token (NFT) craze by this point. To put it simply, an NFT is a unique, unrepeatable kind of digital currency. Unique, non-replicable codes are part of the token’s metadata. NFT is becoming more widely used, but let’s not forget about fungible tokens (FT). You have definitely heard of FTs at least once over the past few years. Fungible tokens, which are interchangeable and divisible, include bitcoin and other types of cryptocurrencies.
Prior to the current NFT mania, Blockchain development services were available for a very long time. In actuality, investors and property owners commonly combine the terms “blockchain” and “real estate” in the same sentence. In the future years, real estate technologies, such as blockchain, will profoundly change how we produce, purchase, own, and invest in commercial real estate.
Role of Blockchain In Real Estate!
There are several benefits to using blockchain technology in real estate. A complex real estate transaction may be completed quickly and securely with blockchain technology, from title transfers through price negotiations.
Consider the evolution of apartment tours over the past few years. You can schedule a self-guided tour to see an apartment without speaking to a leasing agent. Similar to this, blockchain technology provides secure online options that automate and digitize numerous steps involved in purchasing real estate.
A Historical Overview of Blockchain In The Real Estate Industry
Since the 1910s, real estate brokers have acted as the middlemen between sellers and purchasers. Having the agent handle the real estate deal makes it simpler for the two sides to develop a level of confidence. The agent is familiar with the local laws and regulations. So that they can confirm the buyer’s ability to pay and the seller’s ownership of the property. The industry continues to use the same tactics and practices.
On the other side, blockchain is increasingly altering the process. On January 9, 2009, a person or group of people who went by the nickname Satoshi Nakamoto published the first version of bitcoin. This was followed by the development of the blockchain database. Nine years later, in February 2018, Vermont saw the country’s first blockchain real estate transaction.
The transaction was a part of an experimental Propy project. Anyone may purchase or sell real estate totally online from any location in the world thanks to a San Francisco company called Propy. Its blockchain technology records every phase of a real estate transaction, from the initial statement of interests through the signing of contracts to the transfer of ownership titles.
What’s coming up?
Despite its youth, blockchain technology in real estate is creative and has a lot of potential. Redfin and Propy are only two companies that have already fully digitized all real estate transactions. These technologically advanced brokerages reduce the costs of middlemen, including realtors and bankers, by reducing the need for paperwork, audits, and insurance whenever possible.
The real estate industry will profit from blockchain in the following three exciting ways:
- Smart contracts based on the blockchain
- Making real estate investing more accessible
- Transparent and safe real estate listing services
1. Blockchain Smart Contracts
The terms of the transaction between the buyer and the seller are laid down in a self-executing contract, or “smart contract.” The phrases are stored over a decentralised blockchain network as lines of code. The blockchain algorithms track the execution of the contract, and all transactions are transparent and irrevocable.
Offer sheets, listing agreements, letters of intent, and closing papers are examples of contracts that can be digitized on blockchains. By signing smart contracts as opposed to conventional ones, the entire transaction process can be accelerated significantly. It also eliminates the need for in-person conversations with brokers, bankers, and lawyers while guaranteeing the security and legality of the transactions.
2. More Accessible Real Estate Investments
Historically, investing in real estate has been time-consuming and difficult. Whether you’re investing in a single-family house or a complex of buildings, you need to involve a number of people in the due diligence process. Before you can think about buying real estate, you must also be financially stable.
By acquiring tokens for a building, numerous individuals can jointly own it with the use of blockchain technology. In this method, a property has been tokenized, enabling partial or fractional ownership of the thing. Tokenization can increase the commodity’s liquidity for real estate, making it simpler for owners to resell their shares for a profit. The real estate market becomes more democratic and decentralised as a result, which attracts more prospective buyers and investors.
3. Transparent and Safe Real Estate Listing Services
Most of the real estate listing services available today are privately held and do not have a centralised database for cross-referencing. In the past, the real estate sector used a pen and a pencil to keep track of transactions and data. Even worse, these firms usually impose exorbitant monthly costs on users.
The creation of a unified, safe database that is accessible to everybody is made possible by combining various real estate listing services onto a single server powered by a decentralised blockchain. Decentralised finance (DeFi) services, for example, allow users to make rational investment or purchasing decisions. Furthermore, since the information has been validated and is securely held, third parties are unable to tamper with it by raising the price or disseminating incorrect information.
Potential Benefits of Blockchain Technology
We’ve talked about the benefits of blockchain technology for the real estate sector. Let’s now talk about how you may earn from it, whether you’re a resident, manager, investor, developer, or property owner.
There are significant consequences for:
When multiple parties may invest in a project, developers can raise the money needed to launch it more swiftly and efficiently. Although fractional ownership of real estate is nothing new, blockchain technology makes the procedure easier and increases the number of possible investors. When requesting capital contributions from people outside of their personal network, the project’s sponsors won’t have to worry about vetting investors or dealing with a tonne of paperwork. The execution of smart contracts is made possible by a blockchain consulting firm, and it also distributes updates and briefings to all parties involved.
Additionally, all engineering plans, appliance manuals, and architectural documents are safely and securely maintained by blockchain. This shows that if owners, investors, or anybody else involved in the development project needs to access the information, it is simple to do so using the blockchain system. Due to the significant reduction in transaction time and costs, developers are now free to focus on the actual project’s development.
Real Estate Owners and Investors
Due to the nearly complete elimination of the possibility of fabricating or manipulating data via blockchain technology, prospective owners and investors may feel secure while investing in real estate. In other words, when investing their money in a property, individuals can do so with confidence regarding its value and legitimacy.
The tokenization of real estate, or the translation of its value into bitcoin, also destroys the sector. Through liquidation, the entrance point for potential buyers or investors is facilitated. As a result, a seller does not have to hold off on making a profit on their investment until a buyer comes along who is willing to pay the full worth of the property.
Both Occupants and Tenants
Renters benefit from a better rental and living experience thanks to blockchain, including the ability to take virtual tours, sign leases with smart contracts, make rent payments, and seek maintenance. Security offered by blockchain technology is good, all parties are alerted that the property listing is genuine, identities are verified, and personal information is secured.
Thanks to blockchain, moving across the country or even the world has never been easier. Thanks to blockchain’s removal of all geographical boundaries and prevention of privacy and data breaches, you can rent a home in San Francisco without ever leaving Tokyo, do business without ever leaving the country, and even rent a house in Tokyo.
The modern definition of property management goes much beyond just painting walls and installing new appliances. The majority of the labor is processing paperwork, like lease agreements or maintenance requests.
However, all of that documentation becomes essentially error-proof smart contracts when you use a single decentralised, blockchain-based property management system. In a blockchain-based system, everything from rent amounts to payment schedules to tenant and property histories to contractor agreements is completely transparent.
Should you accept Blockchain-Based Rent Payments?
Although cryptocurrency has not yet been widely used in the real estate market, some organizations are using blockchain technology to record rent and other pertinent transactions.
Even the adoption of online rent payments has been slow, demonstrating the continued dominance of cash and checks in the industry. Although we have not yet reached the point when people only pay their rent in cryptocurrency, certain condos and upscale apartment buildings have started to accept bitcoin in recent years. Even though a few apps, like ManageGo, let renters pay using cryptocurrencies, the funds are only converted into dollars.
The Future of Blockchain Real Estate!
Blockchain technology has the ability to totally revolutionize the real estate industry. The positions of industry actors will change as a result of this disruptive innovation, to be completely honest.
On the other hand, every previous technical advancement at first looked improbable or unachievable. For example, consider smartphones. Just around 20 years ago, you couldn’t have envisioned always having access to the internet in your pocket. Or, that such a device could make purchases, unlock your apartment door, or start your car. Blockchain has given real estate a bright and exciting future.