If you’ve been on the internet in the past six months, you will know that it’s near impossible to ignore the growing bitcoin/cryptocurrency phenonium. As it falls under the mainstream spotlight, it seems to be the sole focus of every news and media outlet to cover any change or event that happens to be tied in with bitcoin, blockchain or anything else cryptocurrency related.
The property industry hasn’t managed to escape the blockchain internet heist either. Traditionally, transacting real estate exclusively through digital channels has never been the industry standard. Typical real estate transactions are carried out offline, in person and involve various entities. Blockchain has provided an alternative method to this. Recently introduced, smart contracts in blockchain platforms now enable significant assets such as real estate and property to be tokenized and traded exactly like cryptocurrencies are traded.
Tradition V.S Blockchain
Formerly, a typical residential property sale also known as a “vanilla” sale included a range of different participants; The buyer, the seller, their lawyers, the land registry, real estate agents, mortgage supervisors, etc. Even assuming a “chain-free” transaction, where there are no other buyers and sellers included in the sale, the process can become complicated quickly. This is due to various participants in the sale figuring out what needs to happen to proceed to its next stage of the deal.
Many times, different participants involved in the sale do not have a pre-existing relationship, resulting in mistrust. The blockchain is disrupting the property Industry by changing this process and making it completely transparent. What was once an excessively complicated and administrative procedure can now be simplified considerably. Smart contracts, which are essentially self-executing contracts that include the terms of the agreement between the buyer and seller directly written into the lines of code, revolutionize the way property gets sold and brought. They guarantee all steps have been taken and executed to standard before transactions take place. Given the distributed qualities via blockchain of the deal means stakeholders would no longer be putting all their trust on a lawyer. Not only would this increase mutual trust and lower cost, but it would also make for fast and easy property transactions. Once buyers and sellers gain control over the process and can approve actions, it’s easy to see how lawyers, agents and other jobs that were involved with moving the progress along will disappear. Obviously, a housing industry without any real estate agents, lawyers and conveyancers may be out of reach for the near future, a select few countries have already orchestrated blockchain property sales.
Blockchain supporting multi-property ownership
At the time of writing this, legal and obvious reasons restrict homeowners from selling a percentage of their home to a friend or trusted source for a monetary gain, Or a buyer from giving individuals who helped them finically with stakes in the property similar to crowdfunding. Although a few start-ups are trying to position themselves to normalize fractional ownership in the property sector, none are looking at blockchain to act as a tool in supporting it. Applying the same rules and processes as mentioned above in property transactions through the blockchain, it would be much easier to overcome all the difficulties that entail a fractional sale of a property. Blockchain would do this by securely and reliably tracking the size, value, and agreement of individual stakes in the property, like how stock ownership in companies is recorded.
The world we live in today has a constant influx of revolutionary technology, as most technology comes with a clear goal or aim to improve business and increase profit. Much like property inspection software, there is always a threat to survival if a company fails to adapt to the ever-changing times. As blockchain continues to push the status quo on traditional property transactions, it’s also demanding attention to be drawn to the subject. The blockchain is still very new and in its infancy, meaning change isn’t going to happen overnight. If blockchain were ever to become the norm, it would take a few cases from innovated real estate firms to lead the way and set a new industry standard to convince the masses that blockchain is superior to old-style sales methods in real estate. If it were ever to be implemented across the board, this new technology could make buying & selling a house, getting a mortgage or bank loan a streamlined, safe and secure process. After all isn’t technology supposed to make our lives easier?