Will Blockchain Disrupt the Real Estate Industry?

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“If you don’t adopt disruptive technology, you will be disrupted.” ― Brad Inman

In the past decade, there has been a tremendous amount of excitement in the housing market. Housing values were on the rise starting in 2012 after coming off a falling market cycle that started to in the mid- 2000’s.

In July, Forbes  reported that all eyes are now on the housing market again. Heading into 2019, the housing market showed signs of “softening for the first time in recent memory.” By the end of 2018, a significant rise in housing inventory, and Fed talks of interest rate hikes, along with a dampening price in homes—a cloud of uncertainty surfaced in the industry.

Image Source: zillow.com

With that background, real estate brokers, agents, and investors may be wondering what is on the horizon for the rest of 2019, and how they can best work in an era of uncertainty. Now, with blockchain taking root in real estate, this could be a game changer that goes beyond the natural up and down swings of the real estate industry.

Blockchain Used in Real Estate

Many of the features and attributes of blockchain’s distributed ledger technology are favorable to real estate transactions. These include the ability to have full transparency in blockchain records. It is a secured, immutable way to record data and it offers the ability to record smart contracts. All in all, blockchain has the potential to be secure, resistant to fraud, and has the ability to streamline the real estate transaction processes by removing levels of the real estate transactions, reducing the overall costs to buy and sell a home.

CB Insights offer a review of how blockchain can assist the many challenges in a real estate transaction. Here’s how.

Improve trust: Blockchain’s transparency offers a verifiable and censorship-resistant option for sharing information.

Enhanced database access: Real estate transaction processes can benefit from being able to share secured and tamper-resistant databases with compiled transaction documents and data involving the various stakeholders.

Increased transaction process efficiency: Blockchain transactions may enable streamlined processes which reduce delays and costs for verification processes, wire transfers, title search, and more.

Limits the use of intermediaries: Many intermediaries, brokers, title, escrow companies, and the like—could be rendered obsolete with blockchain technology—as records may be stored, verified, and transferred using blockchain technology.

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Source: CB Insights 

Two Blockchain Real Estate Use Case

Propy is a startup founded in 2017. According to Hank Tucker, writing for Forbes  —Propy uses the Ethereum blockchain to streamline home-buying. Indeed, Propy promotes the ease of buying on their website: “Enjoyable Home Buying Anywhere in the World—Papers signed, funds and title transferred – all securely via Propy.”

Along with reConsortia, Propy was one of two blockchain startups selected by the National Association of Realtors (NAR) venture capitalist arm—Second Century Ventures. (Forbes) The investment allows the two startups to access NAR’s 1.3 million real estate agents.

Propy’s blockchain technology will focus on smart contracts. Clearly, an appropriate blockchain use case scenario since all real estate transactions involve contracts from the buyer, seller, escrow, title, and others as needed by the specific transaction.

One can’t buy property as one might buy a product on Amazon. This is primarily because of the lack of tools for online payments and ownership transfer via online platforms for high-value assets such as real estate. Thus the blockchain use case application for Propy to provide secured and immutable real estate data on the blockchain record. Using smart contracts, Propy is looking to replace the need for third party agents such as escrow agents who process transactions. By removing this level of transaction involvement, the real estate purchase process is streamlined, and is more secure with immutable smart contracts.

Blockchain technology has the added potential to provide additional levels of security on home ownership. One of the features offered with blockchain is  transparency with the entire process, which—as anyone who purchased a home knows—under the current system is highly suspect. There is a lot of trust that the buyer (and seller) places in their real estate agent.

The second arrangement of NAR’s Second Century Ventures—includes reConsortia. reConsortia blockchain use case will track referrals. It will help to log and organize the $20 billion worth of referral revenues  that are currently untracked, as claimed on reConsortia’s  website.

Conclusion

If you’ve ever purchased real estate, you know the complexity of the real estate transaction. So, we rely on real estate agents or lawyers to help us get through the process.

Blockchain technology applications for real estate is beginning to take hold. It has the potential to offer a significant change in how to do business in real estate. Beyond the hyperbole, blockchain clearly has the potential to disrupt the real estate home buying process, saving countless dollars for the two most important parties to a real estate transaction—the seller, and the buyer.

 

Eric W. is a self-educated ghost writer who for the past seven years has been involved in Blockchain, Cryptocurrency, and Digital advertising sectors as Project Director, Miner, and NRA (Network Resource Application).

Contact Eric

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