How Blockchain Technology Can Transform the Real Estate Industry.
The property market, particularly commercial real estate, suffers from high entry barriers, asymmetrical information that favors insiders, onerous paperwork, and sometimes deeds that are defective, falsified, or missing. There are some properties that can take years to sell — this can be referred to as an illiquid market. Thus, it is understandable that many people believe that the $326.5 trillion real estate market is ripe for disruption, particularly with blockchain-based tokenization.
In addition, real estate experts have proposed that the use of blockchain technology in advanced transactions can improve transparency between practitioners and their clients.
In this article, we would explore 3 key areas that blockchain technology can transform in the real estate industry.
3 Key areas blockchain technology can influence:
- Reduce needless intermediaries and speed up the timeline
Brokers and banks play critical roles in the real estate economy. According to a Deloitte report, blockchain technology may cause a shift in their participation and roles in asset transactions. New platforms will eventually take over some of the activities traditionally done by these intermediaries, such as legal documents, listings, and payments.
By reducing intermediaries, buyers and sellers can keep a larger portion of their revenue. As a result, businesses can save money on commissions and fees while simultaneously speeding up the property process, which typically takes weeks or months to complete due to the numerous intermediaries and legal complexities involved.
The use of virtual tours, smart contracts, direct communication between buyer and seller, and a comprehensive paperwork guide will enable people to avoid intermediaries and save more on deals without accumulating additional risks. Moreover, realtors charge a certain average amount of money for each deal, hence the amount of money saved would be a significant portion. In this case, a $100,000 home may cost $11,000 less to purchase without a realtor.
2. Improve property title system procedures
The existing property title system is fragmented. It can be difficult to manage and often prone to errors. In the event of a change in ownership, the bureaucratic institutions take longer to process the information, which exacerbates complications.
Ideally, there would be a digital title for every house or flat stored on the blockchain. This would simplify the process of keeping track of ownership. It is important to note, however, that blockchain does not necessarily eliminate the need for documentation. However, a technology-driven process will make paperwork easier and more efficient.
The storage of data in a secure location is also a very effective means of preventing fraud. It is unlikely that scammers will complete a transaction even if they manage to obtain the owner’s signature and other information. This is because they have little chance of accessing the most critical information stored on the blockchain.
With blockchain, you can avoid bulky paperwork and implement an alternative process to the traditional one. In addition to eliminating concern and enabling the seamlessness of its adoption, the public can also be educated about its benefits and what it can accomplish if it’s integrated by companies and experts.
3. Make the most of fractional ownership.
Fractional ownership allows investors to split the cost of an asset between individual shareholders. Shareholders enjoy usage rights, income sharing, priority access, and reduced rates on their assets. These benefits received by fractional owners are comparable to those of timeshare owners.
People often found that they did not have the lump sum amount necessary to purchase an entire property when investing in real estate. In most cases, property investments require significant amounts of money and so buyers had to pool their funds with other like-minded investors to purchase big-ticket properties.
The fractional ownership system has mitigated this investment barrier. With the help of a trading app, investors can gain access to real estate investing. They can purchase and sell fractions of tokens as they like. Furthermore, fractional ownership saves them the hassle of managing properties themselves. It eliminates the need to worry about leasing or maintenance. Investing in physical real estate can be expensive, as the upkeep of these assets is often necessary.
A fractionalization strategy also results in investors making multiple bite-sized investments over time, thereby lowering market timing risk and gaining dollar cost-averaging benefits.
Ideally, most assets should be available in fractional units. This would enable investors to participate in any opportunity with maximum flexibility. Investing in fractional shares allows investors to adjust investments based on their risk appetites and conviction levels about the underlying investment thesis.
So far, we have highlighted the ways in which blockchain can benefit the real estate industry. With the use of technology; the lack of transparency, onerous paperwork, delays in transactions, and high entry barriers can be mitigated. Nowadays, the purchasing property process can be completed with a few clicks. It is key to note that blockchain technology will not eradicate traditional processes or documentation but will make paperwork and property purchases seamless and more efficient. It is also normal that technology-driven processes can seem intimidating at first glance.
However, learning about blockchain and digital currencies will eliminate the fear of adoption or any misunderstanding of its significance. There is a possibility that it could become a major game changer in the real estate industry, as traditional financial institutions can benefit from a single source of verified information and secure sharing of data etc Thus, it is imperative that real estate industry experts possess an in-depth understanding of distributed ledger technology and digital currencies.
We are making this possible at Koolute.io. Koolute is a property portal that connects buyers & sellers everywhere to the most lucrative property deals across Francophone Africa.
With Koolute, investors can now add the rapidly growing strength of African real estate to diversify their portfolios. Our mission is to increase access to a wide range of high-yield properties delivering steady cash flow and capital appreciation for real estate investors.
We employ a thorough selection process to ensure high service quality for you across our entire experience. Our simple and intuitive platform enables sellers to list their properties, verify their claims and connect them with buyers and investors worldwide. We provide you with the latest market insights and guidance from our team of experts, and a blockchain-enabled feature for tracking transactions and providing visibility to processes end to end. Reach us at firstname.lastname@example.org for your questions, and on Linkedin and Twitter.