Any technology, idea, or even someone that adds significantly to the market by offering new opportunities or providing solutions to a problem will inevitably influence a firm’s performance. Blockchain is one such technology that has the potential to revolutionize the real estate business. With the assistance of a custom real estate web development company, businesses can benefit from incorporating blockchain with real estate.
Real estate is one of several businesses that have recognized the importance and benefits of using blockchain technology, including insurance and online quoting, banking, website security, and others. Real estate, one of the world’s most valuable and significant asset classes, has recognized how blockchain can be the right technical solution to address the majority of contemporary industrial challenges.
If you want to learn more about how the real estate industry uses blockchain or how the technology helps it address important issues, you’ve come to the correct spot. Continue reading!
What Are the Traditional Real Estate Industry’s Challenges?
Before we get into the benefits of Blockchain in Real Estate, let’s take a look at some of the major issues that this conventional legacy business has been dealing with.
- Access Restrictions
Real estate has always been a market only accessible to the wealthy. Because of the tremendous amount of passive income and capital appreciation provided by real estate, more people have wished to invest in it. However, the barriers to entry into the real estate market have been prohibitively high.
The barriers are too numerous, ranging from citizenship to credit score, funding to international bank accounts, accreditation to monetary needs, and access to the right managers and sponsors. Furthermore, if you wish to invest in another country, dealing with multiple middlemen and spending a long time to inspect the property or perform local research may be a nightmare.
- High costs
Due to the involvement of multiple middlemen, real estate investing necessitates paying high costs such as broker fees, exchange fees, legal fees, taxes, transfer fees, investment fees, and so on. You may be certain that employing an accountant or an attorney to prepare your tax returns will incur additional expenditures.
All of these fees add up to make real estate investment exceedingly expensive.
- Transparency Concerns
Although it may be difficult to believe, there is no direct way or market database available to obtain the information needed to make a real estate purchasing or selling decision. Yes, a lack of trustworthy market data makes the real estate sector muddy and opaque, making combating tax fraud, money laundering, and other real estate-related corruption impossible.
Can you imagine the scope of real estate fraud and corruption? The Panama Papers would then spring to mind!
- Transaction at a Slow Speed
Real estate investing is done by a number of people. Because there are so many people engaged, the transaction speeds here are terrible.
Let us give you an example of how long a real estate transaction could take. Consider the possibility of investing in the real estate business. Even if it takes nearly six months to find the right property, it will definitely take another six months to complete all of the necessary formalities to buy it.
- Limited Availability
The liquidity of an asset or investment refers to how quickly it can be converted into cash. One of the most significant challenges in the real estate market is that real estate investments are notoriously difficult to convert. Real estate investments are not as liquid as cryptocurrency.
In comparison to cryptocurrencies, the number of purchasers in real estate is limited since it is not open to everybody, the entrance barriers are too high, and you can’t quickly put real estate on a public exchange and sell it immediately during open hours.
- Documentation is time-consuming
Many transactions in the traditional real estate market include time-consuming and laborious paperwork. As a result of the time-consuming process, real estate firms have regularly lost potential clients and money.
- Middlemen Existence
The real estate sector has always included middlemen or brokers. To invest in real estate, you must contact everyone from brokers to lawyers to banks, which sometimes leads to paying high fees and commissions required by the middlemen. As a result of the middlemen’s engagement, both buyers and sellers lose money, and the processes become substantially longer as a result of their frequent back and forth.
- Fraud Threats
The real estate sector is built on both records and people. Yes, apart from property agreements, there is nothing else that can provide you with security for your investment. The usage of only paper-based property agreements further increases the potential of fraud. For example, it is estimated that California is responsible for 24% of all mortgage-related fraud charges in the United States.
The Impact of Blockchain on Commercial Real Estate
The commercial real estate (CRE) industry has lately adopted blockchain. Blockchain-based smart contracts are likely to play a big role in the commercial real estate industry. The usage of blockchain in commercial real estate can impact critical activities such as sale, purchase, leasing, financing, and other property transactions, including transaction management. Consider the various opportunities that blockchain technology can give for the commercial real estate industry.
- It has the ability to enhance the overall property-hunting experience.
- It can help you make wise selections. It has the potential to increase transparency and security during the purchasing or selling process.
- It has the ability to speed up the pre-lease due diligence process.
- It has the potential to reduce the cost of property title management.
- It can aid with cash flow management, leasing, and property management.
This technology has huge potential for efficiency, transparency, and cost savings for commercial real estate owners. Blockchain is becoming more significant than ever in commercial real estate, eradicating many of the hurdles and inefficiencies in the fundamental procedures.
Making Real Estate Transactions Easier with Blockchain
Aren’t you intrigued by the different elements of the real estate market that blockchain technology is revolutionizing or has the potential to transform? Then, listed below are some of the most important Blockchain Real Estate Software Development applications that can be enhanced beyond recognition.
- Lookup a Property
Today, there are several property listing websites available, such as Zillow. These sites are used to find property information by buyers, owners, tenants, and even brokers.
These subscription-based systems, on the other hand, not only charge high fees, but also provide property data that is out of date, incorrect, and even significantly warped. A blockchain-backed real estate program, on the other hand, can eliminate all of these inefficiencies by decentralizing data.
Because blockchain data is distributed through a peer-to-peer network, market participants will be able to obtain credible data at a substantially cheaper cost, while brokers will have more control over their data.
- Property Management
Property management operations have traditionally been regarded as relatively difficult due to the involvement of various stakeholders in traditional real estate. Because management activities are carried out on paper or through independent software, all property management information is restricted to a single person or database. Blockchain, on the other hand, has the ability to streamline the entire property management process.
Using blockchain-based smart contracts, property management procedures such as signing lease agreements, setting up lease payments, filing maintenance requests, regulating cash flow, and transferring security deposits can be automated.
- Deeds Management
Deed management is another area where blockchain is having an impact on the real estate apps market. Property titles are now on paper, which raises the possibility of fraud and inaccuracy. Over one-quarter of all land titles are defective during transactions, according to the American Land Title Association.
A defective title invalidates the deed management process. In such cases, the property owner has little choice except to wait for the title issue to be resolved or pay costly legal fees to ensure valid and accurate property titles.
However, because blockchain records are immutable, the entire process can be made secure and transparent.
- Real Estate Investing
The investing process can be accelerated when real estate platforms employ blockchain. The notions of fractional ownership and tokenization can be used to circumvent the limitations of real estate investing.
Winding Up
Don’t know if blockchain is right for your business?
So, if your firm wants to aim for a one-of-a-kind sharing platform or streamlined procedure with less risk and higher transparency, blockchain is required.
Blockchain technology is considered to open new possibilities for potential real estate investors to enter the market. This technology, which boosts tokens’ real-world utility, is going to be immensely beneficial to crypto-space.