Real estate is one of those industries that has been slow to adopt new kinds of technologies. It relies heavily on human knowledge work and personal relationship building as its primary tool for driving value. When it will come to the blockchain, however, the real estate industry has been quick to act.
Why the sudden change? First and foremost, blockchain solves problems for the real estate industry that other digital technologies weren’t well-suited for. Tools like smart contracts and blockchain-verified title ownership are clear ways in which blockchain provides real value for the real estate industry.
Because blockchain is a secure distributed ledger technology, built with transaction management in mind, it’s perfect for an industry that relies on large scale transactions based on complex agreements and contracts.
Everyone in the industry is clambering to apply blockchain to improve existing processes, and whether you’re a mortgage broker, a bank, or a real estate agent, there are probably blockchain applications coming down the pipe that will impact the way you do business. These companies are leading the way with some of the first real-world applications for blockchain within the real estate industry. Read on to learn more about how this technology will impact your industry, and where opportunities for future integration are still open for development.
CATEGORY #1: TOKENIZING PROPERTIES / FRACTIONAL OWNERSHIP
Blockchain market map - Real estate - Tokenizing properties / Fractional ownership !!!
One of the more promising applications for blockchain in the real estate industry is the tokenizing of physical real estate assets. With ICOs pioneering the creation of purely digital securities, there is a clear use case for leveraging a similar model to increase liquidity for real estate investors and open up the possibility for fractional ownership. Since an investor can purchase a percentage of tokens that represent a partial stake in a property, they can invest in properties that would have previously been too expensive. The fact that it’s one of the more compelling use cases is also why so many companies are working to develop tokenized investing platforms.
CATEGORY #2: DIGITIZING CONTRACTS & AGREEMENTS
So much of a real estate transaction is bound up in outdated paper processes. Processes like loan approval, title, and escrow all require a massive amount of paperwork and frequently experience redundancies that could be resolved with more secure identity and financial documents. That’s why blockchain could have such a major impact on the real estate industry. By creating trustless systems that verify all parties' identities, ownership rights, and available funds, these lengthy processes could happen over the course of a single day.
CATEGORY #3: TITLE TRANSPARENCY
The title process works to a degree, but it’s generally opaque, and a lot of information about a property can be lost to time. Since blockchain’s distributed ledger technology is immutable and lasts as long as the network is running, key data about a property can be recorded and made available to all future owners and investors. Whether it be a transparent ownership history or a detailed record of all maintenance and repairs, blockchain could help make real estate investing more fair for all parties involved.
CATEGORY #4: TRANSACTION SECURITY & FRAUD PREVENTION
One of the reasons real estate processes take so long is they involve massive amounts of capital, and there is immense fear surrounding the possibility of fraud and default. The good news is, blockchain is well-suited to prevent fraud and other forms of faulty payments. These companies are leveraging blockchain to streamline payments, improve the security of real estate transactions, and prove that parties have the funds needed to transact in both rental and purchase scenarios.
CATEGORY #5: DECENTRALIZED P2P RENTAL & INVESTMENT
The peer-to-peer and sharing economies are on the rise. With everything from home sharing apps like Airbnb to crowdfunding platforms like Kick starter, people are rethinking how they leverage their existing assets and raise money for new ones. Blockchain shows a great deal of promise in this arena for the real estate industry because it can decentralize platforms to create more egalitarian markets. These companies are using blockchain to facilitate lower cost peer-to-peer rental markets and to reduce barriers to crowdfunding for new properties.