Blockchain technology has significantly disrupted financial services and has applications across industries. Once just limited to cryptocurrencies, today, it’s near impossible to find a sector that has not been influenced by the technology. The real estate sector is not aloof from blockchain technology’s charm. Blockchain technology has made it possible to tokenize assets like real estate, which has brought several advantages to the sector. That’s what we are going to explore in today’s article.
Tokenization of real estate for smoother processes
Digital securitization of real estate properties, also known as tokenization, enables the division of assets into more granular pieces so that they are accessible to a broader pool of investors and more capital can be raised. It also allows the secure and compliant digitization of the transactions, making processes such as trading and lifecycle management more manageable. It also reduces the costs and increases the speed of asset management, such as asset creation, distribution, exchange, etc.
No third-parties
Brokers, banks, escrow companies, and other intermediaries have long dominated the real estate sector. This revolutionary technology functions through decentralized peer-to-peer platforms, rendering these intermediaries obsolete. With blockchain-based approaches, third parties are not required, which streamlines transaction processes.
Transparent Real Estate Transactions
Incorporating blockchain in the real estate sector increases transparency in transactions and decreases the chances of theft, duplication, or alteration. As blockchain technology is decentralized in nature, it makes the entire transaction exchange visible to all parties involved. When each property owner has access to information about the desired property, this helps establish trust and reduces the chances of disputes.
Efficient Property Management
Property management is one of the most complex areas of the real estate domain. Traditionally, the properties are either managed using manual paperwork or software systems. Thanks to blockchain, the entire process can be handled effectively using a single decentralized framework that uses smart contracts. From signing agreements to filing maintenance – everything can now be handled more efficiently and securely. For example, The SafeWire platform provides security over vulnerable transactions.
Automated Property Buy and Sell
The process of property buying and selling is cumbersome and complex, which leaves several loopholes for criminals and frauds. Smart contracts, backed by blockchain technology simplify the entire process. There is no central authority required to complete the transaction. This makes the process smoother and decreases the amount of time it takes for a property transaction to take place. All the parties involved in a transaction are automatically verified, and necessary checks are conducted to ensure complete safety, transparency, and seamless transactions.
Preventing Title and Deed Fraud
Title and deed frauds are on the rise in the real estate sector, especially in the realm of online property sales. That’s why it is paramount to have reliable technology backing your transactions. Blockchain technology can store all property details, important information of the owners, and legal documents, so no unauthorized party can take ownership of your properties.
Some real-world examples
Although blockchain technology in the real estate sector is relatively new, it is already finding applications in several government projects. Some examples are:
- The Dubai government is working on Real Estate Self Transaction or REST – a digitalized platform based on blockchain, which aims to digitalize real estate transactions completely.
- The UK’s Instant Property Network (IPN) has successfuly completed global trial of blockchain-based system, which aims to shorten the property sales period.
Conclusion
Blockchain technology has significant potential to improve transparency, drive efficiency, and boost cost savings for the real estate sector. However, we’ve just scratched the outermost layer of what the technology can achieve, and as we gain more understanding of this technology, the possibilities are limitless.
