In a paper-recorded based industry, there are a lot of difficulties the centralised real estate industry faces. Discover why switching to smart contracts and using the power of blockchain technology is the new efficient way of working.
Historically speaking, the real estate industry is usually quite slow in adopting new technology. It still relies on paper-based documents and a lot of verbal communications before completing any transactions.
This outdated system can create a number of issues for both the buyer and your business, including:
- Fraudulent activity – centralised electronic fund transfers isn’t secure, with cybercriminals stealing millions from purchase transactions every year. Printed contracts also leave a paper trail too – what happens if your office is broken into?
- Wasted time – outdated listings result in buyers and investors enquiring about old properties. This wastes time for both parties. Similarly, waiting on paper contracts to be signed can really slow the process down as well.
- Financing difficulties – the period before a bank making a decision on a buyer’s application takes time and is highly bureaucratic. It can even put some people off from buying altogether.
However, there is a solution. Blockchain technology has the potential to transform the way the industry operates. For those of you who are willing to openly change the way your business operates, the future is very bright. Here’s why…
The benefits of blockchain technology in real estate
There are a number of reasons why you should consider blockchain for real estate leasing, purchase and sale transactions.
For starters, the blockchain provides a common database for all transactions. In particular, multiple listing services, which will collate property-level information from private databases of brokers and agents. The blockchain securely keeps all of the information stored in one place and can be safely, but easily, accessed.
Transactions and managing real estate properties involves a lot of modification to the database as well. However, owners, tenants, investors, service providers and lenders can all do it themselves without delay or involving a centralised entity.
Another area to consider is the lack of trust among parties. Understandably, parting way with big amounts of money is quite a daunting prospect – especially when a buyer or investor hasn’t used your services before. The blockchain can reduce the risk through secure digital identification processes and a more transparent way of recording information.
Blockchain technology also provides an opportunity for disintermediation too, with its increased security and transparency in title management, as well as the ability for government land registries to auto-confirm.
Last, but not least, your real estate company can benefit from smart contracts. While many transactions have conditional clauses, smart contracts can help get these sorted without fuss. For example, a purchase-sale transaction is often delayed due to the need for the loan to be approved or title clearances to be made. Smart contracts speed this process up.
The regulatory landscape
Before you can capitalise on the vast riches of blockchain technology within the real estate industry, you should always consider recent regulatory movements.
Whether it’s the favourable agreement from the “Mediterranean Seven” to cooperate on blockchain and DLT technologies or taking note of Brazil’s decision to ban investments in ICOs in 2018, always keep your ear close to the ground for developments.
In the meantime, if you’re interested in adopting blockchain and learning more about it, get in touch with our expert team. We can guide you through the regulatory hoops involved and give you proactive advice on how to use the blockchain to monopolise the market.