In the past, it was only possible for buyers and sellers to complete private transactions that didn’t require an intermediary party—and even then, it could be difficult to find someone willing to trade with you. Real-Estate has been a victim of fraud for centuries, from people selling properties they don’t own to bankers giving out shady loans.
Fortunately, technology is evolving at a rapid pace—and the real estate market is no exception. As a result of this, blockchain technology and Smart Contracts have emerged as an innovative necessity to reshape and infuse transactional transparency into the real estate industry.
Cut back on unnecessary third-party costs
Blockchain allows for smart contracts to be programmed into the asset itself, which is a major benefit because these contracts allow sellers and buyers to save costs on attorney fees. In addition, blockchain has an open-source ledger at its heart which allows buyers to verify sellers’ ownership and removes the need for escrow accounts. All in all, transactions could be tens of thousands of dollars cheaper after removing unnecessary intermediaries.
With blockchain, identity is a digitized, programmable asset that can be managed autonomously. This means that all transactions will be transparent and immediate without third parties’ involvement. Smart contracts within the blockchain allow users to buy and sell these identities securely in an encrypted environment. This will speed up the buying and selling process by allowing for instant verification of all transactions.
Companies are now creating tokens on top of existing Blockchain platforms to represent ownership of various forms of assets, including real estate. These tokens can be either bought or sold with ease through smart contracts, which allow for a high level of security, allowing the trading of these tokens on exchanges with little red tape.
Take advantage of fractional ownership & cryptocurrency exchanges
The Real Estate industry has been one of the most resistant to change, but Blockchain is finally making its way into this old system. Many people don’t know that fractional ownership was first created because someone wanted to get into real estate but couldn’t find five friends who also had $10,000 to pool for a down payment and renovations on a duplex. Now, through online marketplaces and cryptocurrency exchanges, the demand for these types of tokenized real-estate assets is pre-aggregated so small-time players can more effectively pool their resources. Smart contracts can then further simplify the long-term ownership by taking in rent payments and disbursing proportionate shares directly to the wallets of property owners.
Cryptocurrency exchanges are a little-known but useful tool for real estate development crowdfunding. The Internet has given us the ability to support the company of our choosing from anywhere in the world, without geographical limitations or high transfer fees. Using cryptocurrency exchanges, anyone can invest small amounts anytime and anywhere, even providing investment opportunities to people looking for a small, affordable, and easy way to invest in their home country.
Another advantage of cryptocurrency exchanges for development crowdfunding is that they can offer a greater degree of liquidity, so you don’t have to wait on the long investment terms from traditional banks. This means you can take out your money any time after fulfilling on-boarding procedures and KYC/AML protocols.
Shifting capital expenditures and costs
There are many factors that go into the array of costs that make up the capital expenditure for any real-estate purchase. We’ve already covered how cutting out unnecessary intermediaries can cut costs in some ways, but with further innovation in the blockchain space, we’ll also see banks being cut out, as loans can come directly from cryptocurrency loan pools. Then, the capital expenditures that were previously associated with the purchase itself can be invested into the renovation of property and appreciation of the new owner or owner’s assets.
Now that we know about how blockchain technology can benefit real estate transactions, will it affect your current buying/selling process?
Do you think this type of technology will be widely accepted in the future? Let us know in the comment section below.
Chahat has a deep passion for leveraging blockchain technology to drive innovation and transformation. With over seven years of experience, she has been instrumental in guiding WebMob through the complexities of blockchain adoption. Her expertise and forward-thinking approach make her a key thought leader in the blockchain space, paving the way for a modern decentralized industry.