Currently, the transactions in the real estate sector is non-transparent and expensive because of the middlemen like brokers, lawyers, inspectors, escrow companies, Notary public, and so on. Now, nobody likes to depend on them or paying them. But now, the need of middlemen can be removed by using Blockchain in real estate.
Today, buying a home is necessity for most people, yet, till now, there has been a couple of technological advancements to accelerate the process and make it more secure for buyers.
In this article, we’ll look at how blockchain for real estate, which can decentralized the information in the network, is solving the industry’s 3 major problems.
1. Accelerating The Process (Cutting out the Middlemen)
The middlemen exists because they hold information that you can’t access or don’t have licence that is needed to operate in the existing property transaction ecosystem.
But, with blockchain in real estate can help you distribute database where anyone can record information, without it being censored, and without needing the permission.
Currently, the title to a property is a piece of paper. And to transfer a property, you need to fill the blanks in deed, sign it, get it notarized to rubber stamp it, and send this paper to your local government office to be in their database.
Do you see the problem here?
The process is too old-fashioned and most importantly, SLOW. In fact, too much time and money is also wasted.
But, now it’s possible to create a digital title by using Ethereum development platform. It is a cryptographically secure token that you can transfer effortlessly, cheaply, and quickly as an email. In fact, in blockchain, you can easily verify the property records yourself, eliminating the need of middlemen.
Overall, the blockchain technology for real estate will have a great impact on the financial verification of the sales process. Up till now, most buyers and sellers opt for escrow and title companies for reducing the risk of fraud and third-party verification, but this third-party verification comes at a cost. Usually around 1-2 % of total value of the property.
But with Blockchain real estate, the middlemen could be effectively cut out. By using blockchain decentralized database to prove authenticity, the homeowners can legitimately transfer the ownership to the buyer without having to pay for third-party verification. In fact, a non-profit organization called IBREA has already taken initiative into implementing bitcoin and blockchain technologies in real estate sector.
2. Reducing Fraud
In this digital world, Forgery of documents showing someone is the owner of a property but actually is not is one major problem in the real estate industry. Somehow, criminals are able to fake the title ownership by using editing software to stipulate the transfer. And this has been reinvented with technology as copying the notary stamps has become too much easier with internet.
However, Blockchain for real estate as proof of ownership, proof of exchange, proof of transaction, and proof of existence is where this technology is showing its strength.
Nowadays, replacing the paper proof with digital proof is what most blockchain real estate startup companies are following.
Basically, Blockchain technology will allow you to upload your title documentation to the blockchain network, which other users in the network record and verify if needed. This helps to provide the proof that you’re the owner of the documents, and the decentralized network helps to prevent forgery.
3. Complete Transparency Through Smart Contracts
Only a small amount of people buy properties outright. And the process for mortgage or loan, as you already know, is quite slow process due to administrative issues. But by creating smart contracts based on blockchain technology, the process could become much simpler.
However, creating a smart contracts is not novice cup of tea. But, you can hire blockchain developers having strong knowledge of blockchain technology and ethereum development platform to create the smart contract.
With blockchain real estate, you can create a digital ID for a real estate asset as a buyer or as a seller. And by doing so, the process of transfer of ownership would become seamless and much quicker than the traditional approach.
Moreover, the smart contracts can also serve as a progress monitor for a real estate transaction. Since these smart contracts are stored permanently on the Blockchain real estate, once published smart contract becomes irreversible, unalterable, and untamperable.
Point being, this new technology could make the process of buying and selling property, taking out a loan or mortgage more streamlined, safe, and total transparent process, helping people to concentrate more on creating new home for themselves.
However, this transformation is not going to happen overnight, but if you’re in the property rental or real estate business, you can approach a blockchain app development company which can help you figure out possibilities to make your business more transparent, safe, and streamlined.