The real estate sector is one of the world’s oldest industries in the world. For as long as there has been a civilization somewhere, there has always been a real estate sector. Today, the global real estate market is estimated to be worth around $10 trillion.
However, in most places around the world, the real estate sector has remained unchanged for over a century. One technology that could help to breathe new life in the sector is the blockchain. Here is how:
Improved Transparency
While money laundering remains a global problem, one of the areas where it seems to have found a home is in the real estate sector. Every year, hundreds of billions of dollars are laundered via the real estate sector. The reason why this is possible is the lack of transparency in the industry. This is because most processes in the sector are still done manually. As a result, while a property could be valued at $1 Million one day, the same property could be valued at $5 million a month later without any clear explanation why that is.
Using the blockchain to secure real estate transactions could help to establish a clear immutable record of each real estate transaction. Doing so could help to eliminate the obscurity that has dogged the sector for decades. Having a clear, immutable record would make it many times easier to track transactions in the sector.
Reduced Fees
With time, the real estate sector has become more complex, despite the advent of computers. To complete a single real estate transaction could involve multiple steps, as many as 12, and numerous third parties. Each step in a real estate transaction comes with a fee, and every party in the transaction expects to be paid a fee.
These fees can be astronomically high when international transactions are involved. Since the middlemen involved are usually lawyers and accountants, you can expect to pay quite a hefty fee. The result is that purchasing real estate becomes an extremely costly investment.
Blockchain technology can eliminate all of these fees. The main role of intermediaries in a real estate deal is to help with authenticating the sale. By creating a blockchain-based platform that connects buyers directly to sellers, most of these fees would be eliminated.
Improved Liquidity
The real estate sector is notorious for its lack of liquidity. In some cases, a property could be valued at millions of dollars but remain on the market for years without a single buyer. Using the blockchain to secure real estate purchases could enhance the speed and efficiency of conducting real estate deals. As a result, it could lead to enhanced liquidity in the sector.
Lower Entry Barrier
One of the biggest reasons why more people are not in the real estate market is the high entry barrier. While many people would love to join the sector, they lack the upfront amount needed. Consequently, real estate deals remain a preserve of a small clique of extremely wealthy people.
One way that blockchain technology does this is by lowering the fees needed to conduct real estate deals. Another way it does this is by enabling the fractional ownership of the real estate. With the blockchain, it is possible to fractionally own property anywhere in the world for a small initial investment. While this concept is still in its infancy, it could democratize the real estate sector in the long term.
Eliminate Title Deed Fraud
Title deeds are meant to show the clear conveyance of land from the original owner to the current owner. However, that process is still conducted manually in almost all places in the world. As technology has evolved, it has become extremely easy to counterfeit land documents, which makes it difficult even for the authorities to find out the true ownership of a piece of real estate.
The immutable nature of blockchain records could deal a decisive blow to title deed fraud. Since every transaction is recorded and unchangeable, it could help buyers to access information with ease regarding a piece of property. In general, it would be of benefit for both buyers and sellers. This is because sellers would spend less time confirming the authenticity of a property while buyers could sell properties faster.
Faster Property Searches
Most property search platforms today come with a huge subscription fee. Without them, the only other option is to physically be present at the local lands office and conduct the search. However, that is not easy because of the cost of transportation, and the number of documents involved. A great solution for this problem is to secure all records using the blockchain. Such records would be updated automatically, which would eliminate the need for costly property searches.
Summary
The use of blockchain technology in the real estate sector is an area that needs more exploration. It holds massive potential benefits without any downsides. If implemented in the real estate sector, it could help to bring it into the 21st century. It would eliminate huge fees, and make it more accessible to more people globally.