How the Future Will Be Affected by Blockchain Technology in Real Estate

When you consider how cryptocurrencies have improved monetary transactions, foreign exchanges, etc., and how initial coin offerings (ICOs) have impacted stock markets, venture funding, etc., it’s easy to see how blockchain real estate software development has affected every sector. The housing market is maintaining its momentum as well.

Blockchain’s potential is much broader than digital cash. Most people can’t wait to see how blockchain does use in the property industry. The real estate industry has a history of adapting rapidly to new technologies because of its drive to innovate and improve. Blockchain might completely disrupt the real estate sector in the future by altering how residences are bought and rented. That’s why relying on traditionally stable industries like banking or law is unnecessary.

Blockchain technology is a natural fit to solve the unique problems that arise in the real estate industry. So, let’s take a look into the future and see how blockchain technology impacts the real estate market:

1.) It will cut out the middleman by using Smart Contract Technology to:

The process of buying a home can be lengthy and expensive. A legal process known as “conveyancing” must follow when purchasing or selling property. Financial institutions, real estate agents, and lawyers all have a role in the conveyancing process. This may take several months, if not longer.

Legal representation can add another 0.5-1.0% to the final sales price, depending on the deal’s jurisdiction and complexity. It is standard practice for both the buyer and the seller to have legal counsel to ensure that their respective interests does protect throughout the contracting process. On top of that, you’ll need to shell out money for a real estate agency or broker’s commission.

Although the commission paid to a real estate agent or broker is occasionally open to discussion, the standard rate is 6% of the sale price. To what extent does the cost of buying a property exceed the cost of the house itself? In 2017, buyers could pay between $6,422 and $16,066 in closing costs. After a few years, undoubtedly, that sum will have increased.

Right now, the price of legal representation during a real estate transaction can be prohibitive for some buyers. Buyers should have plenty of cash to cover the down payment and closing charges before committing to a purchase. The already lengthy and costly process may take longer and cause more stress. However, blockchain smart contracts offer a better alternative, so things need not be this way.

2.) It will address the problems with conventional property contracts.

Regular contracts stipulate the terms of the deal between the parties involved in a real estate exchange. However, the wording of such agreements is sometimes ambiguous and subject to multiple interpretations.

Every buyer and seller needs legal assistance due to the intricacy of property law and the potential for disputes. While it’s true that smart contracts can’t do away with all complexity, they can tailor to provide increased insight if necessary.

First, though, we should define “smart contract” for clarity. In a self-executing contract, sometimes known as a “smart contract,” the terms of the transaction between the buyer and the seller are written directly into the computer code. The coding will execute the deals as soon as the contract conditions meet.

Although smart contracts can design for any business deal, they show the most potential in the real estate market. To what end, though?

Smart contracts, which do away with the need for a middleman, can allow the buying and selling process to be managed between the buyer and seller by a third-party neutral controller. Smart contracts can program to include mortgages and loans, and they can combine to cover every aspect of a real estate transaction.

In the event of a problem, smart contracts can outline the steps. The running of code is immediate, completely visible, and completely independent. All parties, for instance, will be updated the moment the buyer makes the initial payment. This is a significant upgrade over the current method, which requires all parties to sit tight for updates once a transaction has progressed.

There are challenges, but smart contracts for real estate are not a distant possibility. Several companies already facilitate the use of smart contracts in selling property. When it comes to real estate transactions, for example, PropertyClub promotes the use of blockchain technology and smart contracts to allow users to buy properties with cryptocurrency.

3) Blockchain technology will make real estate search and purchase platforms better: –

Homebuyers and sellers typically consult multiple real estate professionals before making a final decision. The real estate agent’s job is to facilitate communication with those interested in buying or selling a home.

People are increasingly turning to real estate websites and mobile apps to find homes that meet their specific needs regarding location, family makeup, desired amenities, price range, and other factors. There has been a digital transformation in the real estate market.

These online marketplaces and platforms connect consumers and sellers and offer several benefits to both parties.

As of 2018, 93% of home seekers said they used the internet in their quest. According to a poll conducted by Statista, only 7% of respondents never utilize the internet when looking for a new house. In today’s market, it’s very uncommon for real estate listings to have expired or for home prices to be outdated on various websites. At times, crucial information needs to be included.

Blockchain technology solves this problem, making it easier and faster for real estate buyers and sellers to find properties. Sellers can save time by only entering property details once into the distributed ledger system.

4) Tokenization of real estate assets is made possible by blockchain technology. –

This could imply that sellers or lessors will carve up their properties into smaller businesses and sell them to multiple investors. With the advent of fractional ownership, purchasing real estate will become much more attainable and inexpensive.

Individuals may only be able to afford to purchase part of the property due to rising home loan interest rates, but they may be able to buy smaller portions jointly with others. Through group financing, investors may afford to purchase expensive properties outright, avoiding both maintenance and rental payments.

5) Liquid Asset Status for Real Estate

Most people consider real estate to be an untradeable asset. It’s not as liquid as bonds or stocks and takes longer to convert into cash. The sale of a home could take months, and the seller could have to wait to get paid until the sale is complete. Blockchain technology makes property ownership transferable and liquid. Tokenization can help sellers turn their assets into fiat currency more quickly.

Considering the Whole Picture,

Utilizing blockchain technology in the property industry can have several positive effects. The forecast for the real estate market also suggests that this time is pretty close. To aid real estate brokers, companies are increasingly creating blockchain-based systems. Users of this service can tokenize and sell off their possessions with the platform’s help.

As the need for homes continues to rise, and blockchain’s popularity continues to increase, now is a great time to get engaged in the industry, whether you’re a corporate CEO or CTO looking to profit from blockchain real estate. Either develop a blockchain system tailored to the needs of the real estate industry or integrate blockchain features into existing real estate platforms.

Leave a Comment