Blockchain technology is becoming increasingly more common within the real estate industry, from payments, to registries and even being used to make real estate investing more accessible.
Blockchain technology can offer a whole host of benefits to investors, institutions and the general homebuyer/seller. Considering Blockchain technology is still in its teens, it's a technology that isn’t being overlooked by industry experts.
So, how can blockchain technology support the real estate industry? Let’s cover five ways it can do exactly that.
Community based development projects are often done with limited input from the community, suggestions could easily be overlooked by decision makers, which might result in leaving communities feeling left out from community decisions or planning.
A planning process that utilises blockchain technology could allow community members to vote on community developments using a token-based voting portal, such a platform would provide public and transparent planning, ensuring integration and greater public satisfaction. This in theory could provide real-time feedback and public sentiment of the project's progress.
Not only would it allow the public a greater understanding of the planning process but Blockchain technology would allow community leaders to better coordinate, integrate and control the different materials, resources and manpower needed for such projects with greater transparency, and efficiency.
By tokenizing assets and financial instruments, you can better programme them to include all the information needed in order to approve transactions almost instantly. Smart contracts can be created to hold ownership rights, transaction history, mortgage details and much more.
These contracts can have pre-agreed conditions that if met, will execute once verified as true by the code, making long tedious approval processes a thing of the past by removing the need for paper documents, and having minimal human interaction as they’d no longer need to read over physical documents.
By removing layers of intermediaries which are currently required, and replacing them with customised and rapid issuance, you could reduce the costs and significant risks involved with human handling of real estate processes.
These reduced costs could mean lower minimum investment amounts and allow more people access to the real estate market that they’re currently priced out of.
Recording everything on a blockchain, whether it be private or public, will allow investors, owners and any stakeholders that are interested, almost immediate and accurate numbers on a balance sheet, cash flow statement and income statement.
These real time audits will greatly benefit relations between investors, developers, regulators and compliance teams. These statements will no longer need to be generated by a human and provided upon request, they can be searched at any time for the viewing of interested and eligible parties
Even in such a digital world, paper documents are still widely used across many industries and their approval processes. Paper-based land titles are vulnerable to many risks including loss, fraud and mismanagement by human interaction.
Transfer of ownership requires many steps which can be long and costly. Blockchain tech would remove paper documents by storing all information on a ledger that is immutable, meaning it cannot be altered or hidden.
These documents could then be used as a trusted and secure source of truth between many organisations and found in just minutes. A well-known example of a blockchain based land registry would be Sweden's land authority - Lantmäteriet.
Web3 technology has quickly grown on the real estate industry and revealed many benefits to developers and large institutions but it also opens up a realm of possibilities for the average investor.
With platforms springing up that allow investors to gain exposure to real estate without directly owning properties.
In the current world of digital real estate investing, you can trade geographical locations like you would a stock or crypto, you can invest indirectly into commercial real estate opportunities or you could buy a home and have the entire process be recorded on a blockchain which would lower your fees.
There are even platforms that will store all the relevant ownership documents on an NFT for you to use as proof of ownership on your home.
With home prices being at some of their highest across the globe, blockchain technology could greatly lower the costs and risks involved in both owning a home and investing.
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