Blockchain is a subject that is on many people’s lips these days and this innovative technology is starting to disrupt several different industries, including the real estate market.
But what exactly is Blockchain and how does it work? Often commonly mislabelled as a type of cryptocurrency much like Bitcoin, Blockchain is a digitised ledger that acts to increase trust through being a reliable and truthful source for information.
Blockchain is able to upend the real estate industry in a number of ways when selling, buying and financing a property. Real estate investors are now looking more closely at why they should explore the advantages of Blockchain.
Blockchain use in real estate
While Blockchain is often confused with Bitcoin cryptocurrency, Bitcoin is a form of cryptocurrency that utilises the Blockchain ledger system as a way to operate. What Blockchain does is to enable the tracking of financial transactions and records over a distributed computer network.
Using Blockchain acts to increase trust with buyers and seller as it works as a fully transparent ledger of transactions that are accessible to everyone and is unalterable. This is an incredibly valuable tool in an industry that manages high-value transactions to keep everything honest and above board.
How does the Blockchain process work?
Here is a very simple breakdown of how the Blockchain process works and why it helps to keep a high level of transparency throughout a real estate financial transaction:
- A transaction or record is requested;
- The request gets broadcasted to a network of computers (nodes);
- The computer nodes process the request using algorithms;
- The original request, which can either be a currency request, a record, a legal contract or any other related information is then verified by the computer nodes;
- Once the request has been verified, the blockchain ledger is then updated with a new block of data;
- This new block of data that has just been generated is then added to the blockchain and cannot be amended or deleted, giving full transparency and traceability.
Makes good sense, right? This is why incorporating Blockchain into real estate applications can help to build an additional level of trust throughout the whole of the real estate industry and all the activities that are conducted, such as:
- Buying a property;
- Legal contracts;
- Selling a property;
- Leasing a property.
The added benefit of integrating computer algorithms and Blockchain technology into legacy real estate practices will help to streamline and improve procedures, speeding up the time it takes to perform processes involved in the buying, selling, leasing and financing of a property.
Using Blockchain technologies is also an obvious advantage when it comes to reducing the likelihood of fraud. This is because the blockchain ledger improves due diligence as it will have the ability to verify all critical information such as client identification and incomes.
Holding entire transactions on the blockchain
Using Blockchain technology, it is possible to hold the entire real estate transaction process on the blockchain ledger. It can handle everything from the submission of an offer on a property and verification of title to the acceptance, due diligence, financial transaction and final closing.
Each stage of the real estate process can be verified, codified and completed within the blockchain ledger. The use of Blockchain in the real estate marketplace will also have a huge impact on employment, and not in a positive way,
Through the digitasion of all transactions, it is expected that many real estate brokers and estate agents’ jobs will be deemed unnecessary and will be cut out of the loop.
Streamlining personal verification processes
When it comes down to checking down to checking the viability of a real estate transaction, potential buyers are used to going through a process of checks, including:
- Credit checks;
- Debt to income ratios;
- Identity verification;
- Monthly expenditure and outgoings;
- Income checks.
All of this information and much more can be verified and held using a blockchain ledger.
Using this technology can centralise everything, meaning that all your critical information can be held on the blockchain rather than it be fragmented between your bank, broker, employer and so on.
Making property leasing easier
If you are a buy-to-rent property owner, it can sometimes be a nightmare to manage the paperwork when accepting a new tenant.
With Blockchain, you can centralise everything including identity verification, income verification, employer checks, drawing references, contract agreement and signing. All these actions can be facilitated and held on a blockchain ledger.
Asset ownership verification
Should you ever need to prove your real estate asset ownership, using a blockchain ledger can be used as your single. irrefutable piece of evidence to verify your ownership. You can see why Blockchain is the future in the real estate market.
Using Blockchain will have significant implications for the future of the real estate inustry. It is a disruptive technology that is set to streamline the whole industry and it is attracting real estate investors.