Are you interested in knowing how blockchain is shaping the future of real estate?
Blockchain technology has influenced all sectors via cryptocurrency improving financial payments, foreign exchanges, etc., and ICOs affecting stock markets, venture capital, etc. The real estate industry is also not behind.
Future of Real Estate on Blockchain
Blockchain technology is changing the state of the real estate market in the following ways:
Traditional Contracts vs. Smart Contracts
The traditional process of buying or selling real estate is lengthy and involves multiple parties. Usually, it takes banks, brokers, agents, lawyers, etc. to complete the process successfully.
The real estate agents show people different real estate options according to their preferences and budget. Lawyers and attorneys help with deciphering different contract conditions, etc. These intermediary parties take fees as per their services and hence add more expenses to the housing prices.
Buyers have to make sure they have enough money to pay these middle parties their due and also the required down payment.
Blockchain technology introduces smart contracts in the real estate sector. Smart contracts are self-executing contracts. They entail all the conditions agreed upon by both, seller and buyer. There are no intermediate parties and no long communication chains.
Once smart contracts are deployed, they cannot be unchanged. This also makes them more secure. There is a surety that no contract condition has been updated or changed by any party.
As the process gets simpler for real estate markets, it also gets faster. There are no waiting times for the payment to be transferred, approved, etc. As soon as the buyer pays the amount in the form of digital currency, the concerned parties are notified.
Improved Property Searching and Buying Platforms
Traditionally, people interested in buying or selling houses contact different property dealers and agents in the housing market. These property agents connect interested parties for further communication.
With the digital transformation of the housing market, people now go-to real estate websites and mobile apps to look for properties according to their preferences in terms of location, house type, house size, budget, etc.
Back in 2018, 93% of people said they use websites to look for houses. Only 7% said they do not use websites for house hunting, according to the Statista report.
Now, with property websites, there is a lot of chance that property listings are expired or housing market prices are not updated. Sometimes the related data is also incomplete.
Blockchain technology solves this problem by making property browsing more easier and efficient for real estate investors and sellers.
Sellers can enter property details once into a decentralized blockchain database instead of manually entering them on multiple platforms.
Fractional Ownership as a Future of Real Estate
A Blockchain network can make the tokenization of real estate assets possible. It means that sellers or property owners can break their assets and sell them to multiple investors as smaller investments.
This concept of fractional ownership can make owning real estate much cheaper comparatively and also more accessible to people.
A person may not be able to buy a whole property, it being expensive and rising interest rates in the case of house loans, but they can easily purchase smaller shares collectively.
Investors can join together to buy expensive properties and also free themselves from the expense of maintenance and leasing.
Property as a Liquid Asset
Property is generally considered an illiquid asset. As it cannot be converted into cash in a short time like bonds and stocks. Selling of home can take up to months and there is a chance that the seller gets paid in installments.
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Blockchain makes real estate a liquid asset. Tokenization can help sellers to convert their property into fiat currency quite quickly.
A Decentralized Market
Up until now, we have been using centralized networks for almost every activity. Centralized networks have a single central authority that controls the use of the network. Examples can include social media platforms like Facebook, bank institutions, etc.
Blockchain offers a decentralized network. The data is stored on multiple computer nodes and not just under one authority.
The data is encrypted using a hash algorithm. Each block of data contains information from the previous block. In this way, a chain of data is formed.
In case there is an intrusion, the hash value gets altered. There is a mismatch in information stored between the blocks and the chain is broken. This alerts the whole network.
As we can see, such blockchain networks for real estate procedures like displaying information such as home prices, signing property agreements, making down payments of house prices, etc. can make everything more secure and transparent.
The immutability of blockchain data records gives users more control over their data as no external party is able to access or modify it.
Final Thoughts on the Future of Real Estate and Blockchain
The advantages of using blockchain technology for real estate are numerous. Moreover, the housing market forecast shows it is not a distant future. The most expensive Miami penthouse has been sold to an anonymous buyer for $28 million, paid in cryptocurrency.
There are companies now developing blockchain-based platforms to assist real estate professionals. Atlanta is one such example. Users can tokenize and liquidize their assets using this platform. There are many other examples.
If you, as a business leader or CTO, are planning to reap the fruits of blockchain real estate, now is a good time to engage with the market given the housing demand and blockchain popularity.
You can either develop a blockchain product for real-estate businesses or incorporate blockchain technology into existing real-estate software.
However, to accomplish any of this, you need experienced software developers with expertise in blockchain technology. Your development team should be able to understand different blockchain platforms, their working, related development tools, and frameworks.
Read our guide on how to build a blockchain solution for real estate.
DevTeam.Space can help you here via its field-expert software developers community. These vetted blockchain developers have experience in building numerous market-competitive blockchain solutions for multiple industries.
You can easily partner with these skilled developers for blockchain real-estate solutions by sending us your initial product specifications via this form. One of our account managers will get back to you to provide further help.
FAQs on the Future of Real Estate on Blockchain
Crypto tokens, digital blockchain tokens, are generally used for real estate transactions.
Buyers and sellers can use digital currency for financial transactions, investors can co-own properties through fractional ownership, and use it for housing market predictions including the probability of a housing market crash, moreover, smart contracts in blockchain property technology make the property selling and buying more transparent and secure.
Although the concept of buying property on a blockchain is not yet common globally, there are some companies that enable buying real estate legally through bitcoins, Ethereum, etc. in the United States.