The age of blockchain has disrupted financial technology with its application extending to a variety of different industries. Cryptocurrencies have strongly impacted payments, remittances, and foreign exchange. In fact, virtually every industry has been influenced directly or indirectly by this technology. The real estate industry hasn’t escaped the blockchain disruption either. Traditionally, real estate transactions have always been primarily administered in offline, face-to-face engagements, but today, transacting high-value assets through digital channels is the norm. Here are some ways blockchain has impacted real estate.
Introduction of New Platforms and Marketplaces
Real estate technology’s traditional primary concern is with listing properties and connecting buyers and sellers. However, blockchain has introduced new and innovative ways to transact real estate, by enabling trading platforms and online marketplaces to facilitate processes more comprehensively. A platform like RealT Fractionalized Real Estate tokenizes real property, allowing assets to be traded like stocks on an exchange; all transactions are done online. The tokens can then be exchanged for currency, with a percentage stake in the property owned by its buyers.
Elimination of Intermediaries
Blockchain has created new possibilities in the real estate ecosystem by eliminating middlemen or shifting their roles and participation in real estate transactions. New platforms take the function of listing, payment, and legal documentation. Buyers and sellers can get more out of their money as commissions and fees normally paid to intermediaries are no longer involved. The process is also faster and tidier, as time and energy is no longer needed for the back and forth with middlemen.
Asset Liquidity
Real estate tokens can be traded as tokens. Cryptocurrencies and tokens have knocked down the concept of real estate being illiquid assets that take longer to sell; they can now be readily converted to cash. Sellers no longer have to wait for buyers who can afford the entire property to be able to derive value from their property.
Fractional Ownership
Blockchain allows for fractional ownership, which helps to lower the barriers to real estate investing. In a traditional real estate acquisition, significant money is paid upfront as a downpayment. Alternatively, investors raise capital in order to be able to afford to acquire high-end properties. With blockchain, investors can buy and sell fractions of tokens straight from a trading portal.
Security from Decentralization
Investors remember the year 2008 all too well; the housing bubble crashed due to greed and a lack of transparency in institutions, resulting in devastating consequences across the economy. But with a decentralized exchange, trust is built into the system; since the information is verifiable to peers, all parties participate in a transaction with greater confidence. Attempts at fraud are reduced. Information stored in the blockchain can be accessed only by all peers on the network, which makes the data transparent and immutable. As a decentralized technology, Block chain for real estate commands trust and security.
Cost Reduction
The transparency of a decentralized network reduces the costs involved in real estate transactions. Not only are savings made on professional fees and commissions, other cost-savings include registration fees, inspections costs, loan fees, and taxes. Intermediaries are reduced or eliminated, as platforms automate these processes as part of the system.
