As we move through history, as technology continues to improve, the advancements we continue to enjoy provide a few challenges. Security and the importance of providing it is at the frontier of discussions. With that in mind, blockchain technology promises to provide a lot of benefits; unfortunately, to date, very little attention has been given to the potential effects on the real estate market.
As the most significant purchase in one’s life, there have been few changes in technology to make the home buying process more efficient, and more secure for buyers, lenders and homeowners. Here are a few ways that blockchain technology will serve to disrupt the real estate market through increased efficiency, providing more transparency and offering increased safety for all involved.
Blockchain and Real Estate
What is The Blockchain?
Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.
Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet. — Blockgeeks, What is Blockchain Technology
How can Blockchain and Real Estate work together?
Verifying Property Ownership
If you live in Canada, and Toronto more specifically, you know the demand on housing is at an all time high. While builders and the city have worked to facilitate the increase in demand for today and tomorrow, the process of acquiring these properties has not improved to become more efficient; after all, real estate transactions have always been cumbersome and complicated. On top of that, government from the municipal to provincial to federal levels have all introduced measures to reduce real estate transactions.
In an attempt to protect buyers, and sellers, escrow accounts are regularly used to in conjunction with third party companies which verify title ownership. All this adds the the slowing of the process, and increases the cost to parties involved. With blockchain, the middleman (in this case the escrow company) could effectively be cut out. By using a blockchain distributed database to prove authenticity, homeowners could legitimately transfer ownership immediately without the need to pay for third-party verification.
Blockchain Reducing Real Estate Fraud
Real estate fraud is a problem, which is why third party verification and escrow accounts have been used. Every real estate fraud in the US costs buyers millions of dollars especially in rental scams. Rental scams occur when a fraudster will copy an existing ad, posts the copied content onto a different site and asks for interested parties to send money (for service fees, or security deposit) before seeing the place.
By offering a 100% incorruptible resource, whereby the sender and recipient of funds was logged, and where “digital ownership certificates” for properties are saved, the blockchain would effectively make forged ownership documents and false listings a thing of the past. The unique “digital ownership certificates” would be almost impossible to replicate, and would be directly linked to one property in the system, making selling or advertising properties you don’t own almost impossible.
Transparency of Ownership History
The blockchain will allow people to create a digital ID for a real estate asset. For the buyer, their credit history and income would be instantly verifiable avoiding time-consuming trips to banks, lawyers and estate agents. While homeowners would be able to prove ownership of their property backed up with an easily digestible record of their time at the residence. As a result, houses could effectively be given their own digital identities, which would include the chain of ownership, a documented list of repairs, refurbishments and projected costs associated with owning and running the home. – Tech Crunch
While this transformation is not going to happen overnight, blockchain technology is still in its infancy, and it will take the examples of a few innovative and forward-thinking real estate firms to lead the way and convince the masses that blockchain is the correct path to take.
This article was inspired by the following Tech Crunch article: here