The two primary characteristics of real estate assets are their heterogeneity and immobility. Because of these two factors, the market for buying real estate tends to be illiquid, localized, and highly segmented, with privately negotiated transactions and high transaction costs due to the involvement of a vast amount of trusted third parties (Ling & Archer, 2013).
What to know about Real Estate and Blockchain
Blockchain is a concept that can change the way we see technology and our lifetimes.
The Blockchain is decentralized and transparent, which makes it an effective means of recording data on the Internet.
The implications of this technology are huge across industries, from finance to supply chain management.
Gradually this technology will be integrated into our lives, and I would like to bring you a series of articles that will bring clarity to this exciting new technology.
Let’s start with the real estate market.
There are definitely many use cases for blockchain technology in the real estate sector.
With the rise of the Internet, people flocked to buy, sell, and rent real estate online.
Real estate transactions are still, however, heavily paper-based, which can make a complex process even more complicated.
With blockchain technology, security, transparency, and an added layer of efficiency can be added to the existing system to make real estate transactions faster, easier, and more secure.
Today, the process of buying and selling real estate is slow due to government bureaucracy.
What Happens when you buy Property
Blockchain offers, the buying process of commercial real estate, and the involved stakeholders could be affected majorly by this technological phenomenon. The lack of transparency, high transaction costs, and the need for digitalization in commercial real estate companies give Blockchain its game-changing potential.
The results have shown that the pre-marketing phase and due diligence phase are most suitable for the implementation of Blockchain. This is due to the characteristics of the phases, the characteristics of the stakeholders, and the characteristics of Blockchain. The main aspect here can be focused on the added value of Blockchain as a data-sharing program
When people buy property, they also do so through intermediaries.
Through the use of smart contracts, the transfer of ownership can be done faster and more efficiently. Eliminating the need for intermediaries or intermediaries and making the process transparent.*
The use of blockchain technology will make the transfer of ownership seamless.
One of the first to apply the practice of blockchain was the Dubai Land Department in 2017. Dubai Land Department employs the blockchain in three initiatives (Ownership verification in DLD Mobile Application, Property sale by Developer, and Smart Leasing Process) targeting the improvement of providing the services, improving the collaboration with other parties involved the real estate market, and to create secured digital assets.
An online real estate marketplace that uses blockchain is ready for instant issuance of property rights and also offers real estate that can be purchased with cryptocurrency.
The use of NFT technology can help to remove intermediaries in a transaction.
NFT real estate is a digital certificate of ownership that is minted on the blockchain and made publicly available. This helps to ensure a high level of security and transparency for the transaction, eliminating the need for scammers and fraudulent activities.
Since the blockchain is a digital ledger, there is no need for additional documents such as legal agreements. All the information is already recorded.
As an example of using NFT, the company Housebit offers to the clients purchase NFT which “gives you the exclusive right to live in the house, condominium or unit in the apartment building/multi-family residence.”
Fractional ownership or real estate crowdfunding is not a new concept, it’s a powerful tool for investing in real estate without taking on the burden of the entire cost alone.
When a group of people pools their resources to jointly own property, it can be a compelling way to diversify your holdings using one of the most stable assets in the world.
For example, the blockchain-based company Max Crowdfund allows you to be a real estate investor without actually owning any property and putting a lot of capital at risk, managing your funds in the domestic and international markets, significantly reducing transaction costs and time.
While blockchain technology is gradually being integrated into the real estate industry, its use is still in its early stages and mostly limited to theory. The first possible applications have been explored, but blockchain still needs to be further developed before it can be widely used.
About the Author: Natasha Shirshova
As a crypto enthusiast, I am always interested in following the implementation of blockchain in everyday life. I am curious about the political, economic, and social implications of the digital asset revolution.