Cryptocurrency may not be mainstream yet, but it’s well on its way to be. Due to the blockchain’s revolutionary power and abilities, it’s no surprise that as cryptocurrency progresses in changing the financial landscape, it impacts other industries along the way. Real estate is no exception—and for that, we should be grateful.
Real estate is an industry that impacts us all. Everyone needs a place to live and work, right? Unfortunately, the real estate industry is also one of the most convoluted and painful to deal with (did you just nod your head in agreement? I think you did). Because there are so many steps and processes involved, it’s an opportune landscape for fraudsters to lay their traps. Files can be hacked, scams can be enacted, bureaucracy allows for things to get lost… it’s a scary world to deal with and operate in.
However, blockchain has the power to change that. Because of its ability to record every change and transaction made on it, blockchain is incredibly transparent. It’s a lot harder for things to get lost or altered without consent when all parties involved are able to monitor information.
The Punctual Abstract says that blockchain-based “digital certificates would be linked to a single real estate property in the system, which would make it impossible for an actor to sell a property they don’t own. It would also make it impossible for a fraudster to put themselves between the buyer and the title company to steal funds.” Real estate will look like a much more unattractive nesting ground for scammers when they have no hiding places.
Using cryptocurrencies for real estate transactions also reduces (if not outright removes) the need for third-party verification. One of the highest costs of transactions “arises from transaction friction due to so many middlemen (think escrow, title, insurance, brokers). The blockchain allows all transactions to happen peer to peer, with no middlemen and with all information recorded in a fully transparent manner.”
Imagine that — direct, authenticated transactions without someone else having to do it for you. Crypto real estate transactions might be increasing in popularity due to this particularly desirable aspect alone!
So who are the new participants in this crypto-readied real estate world? Deedcoin is a tokenized platform that “replaces the way customers find their next real estate agent. Instead of choosing a random 6 percent commission agent, customers access [the] platform, input their property information, and link up with their local Deedcoin agent for 1 percent commission.”
What does that actually look like? For example, “a family with a $300,000 home for sale can continue their lives while they get a full-service local agent and tech-based platform for ⅙ the regular cost. This family can pay a fair price of $3,000 to sell their home instead of losing $18,000 of the most valuable thing they own with a traditional agent.” Property owners in the United States stand to lose $900 billion in commission fees out of the total $15 trillion they hold. Deedcoin isn’t for buying homes, but it helps you save 80 percent or more on commission fees and hooks you up directly with an agent.
So while Deedcoin helps you with the agent side, Real Estate Revolution (REX) helps you find listings. Because their database is decentralized, you can search for properties worldwide, and it minimizes listing fees and elongates listing exposure. REX is also prepared “to provide universal access to real estate information and streamline the transaction process.”
And then there’s Muirfield, a “private equity real estate investment firm” that focuses on “value-add and opportunistic investments across all real estate sub-sectors” to deliver “flexible, creative, and scalable capital solutions to high-quality, high-integrity Sponsors.” Muirfield can attest to blockchain’s power because transactions are streamlined. There aren’t any transaction fees, so they are made quickly and securely.
Ragnar Lifthrasir, the International Blockchain Real Estate Association Chairman, says, “In a year people will be surprised at the marquee real estate companies who are adopting blockchain.” It’s not just because listings and transactions are more secure; it’s because blockchain can be used for all sorts of things, like title registration, smart contracts, and transferring conventional money.
What if you’re not buying or selling property? Blockchain can still affect apartment residents because “owners of flats in apartment buildings often make decisions affecting shared infrastructure, such as major repairs or works on common areas, by voting. Distributed ledger technologies would guarantee reliable remote voting and give owners the certainty that their votes have been registered correctly.” That’s right; blockchain can be used for decision-making. Even if you don’t need tokens to transfer property (or related documents), you can use the technology across numerous facets of the real estate industry.
How do you think blockchain will affect the real estate industry? Let us know what you think in the comments below.
Images courtesy of Flickr, Shutterstock
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