Blockchain is transforming the financial world every day. Its innovative applications make it a tech wonder that has transformed how we transact in a large number of industries. One of these industries that one never thought would go so digital is now using blockchain and how!
Earlier, transacting in real estate involved face-to-face meetings. Although most marketing is digital, nothing could take away the fact that this industry required real human interaction to close transactions. Guess what, blockchain has changed the way this works. Smart contracts that are a part of blockchain platforms permit assets (real estate among others) to be made into tokens and traded just like cryptocurrencies.
Here are some glaring ways in which blockchain has transformed real estate:
Because it takes time to buy and sell real estate, it has never been considered a liquid asset. However, tokens and crypto can be traded for fiat currency. Hence, real estate as tokens also enjoy this liquidity. As a seller, you don’t have to wait for someone who can afford your whole property!
Marketplaces and platforms
The whole real estate industry comprises connecting buyers and sellers through listings. Blockchain has changed this. Online marketplaces and platforms can now be the place that supports these transactions. All one needs to do is turn their asset into tokens that can then be traded similar to stocks. All transactions can be done online.
The central feature of blockchain is it being a decentralized technology. This means all the information on a blockchain network is available to all the people on that network. This means utmost transparency, which adds up to trust. All information on the blockchains is available to all peers on the blockchains, which means buyers and sellers can be secure about the transactions they are making. The chance of malpractice and fraud is automatically cut down.
The norm when it comes to any kind of real estate transaction includes brokers, banks lawyers and such. However, when blockchain technology enters this ecosystem everything changes. New platforms are emerging that do the listings, legal processes and payments. As a result, there is an automatic reduction in intermediaries. A consequence of this is that costs are cut due to lesser commission fees and so on. The who transaction process is also quickened as there is no back and forth or scope for miscommunication via the middleman.
We spoke about the savings on commissions and other middlemen related costs. Apart from this, buyers will save on registration fees, taxes, inspection fees and the like. Often there are numerous other costs that are linked to real estate that are circumvented with blockchain.
Blockchain allows fractional ownership, which means the investment cost is immediately reduced. Usually, buying a property needs a large sum of money upfront but now investors can just buy or sell fractions of the tokens of real estate depending on their capacity or requirements. This also mitigates the need to lease and maintain the property.
Overall, this large industry that was previously dominated by large corporations and wealthy names has now become more accessible in a secure and transparent manner. Blockchains have enabled real estate investing to be a common man’s dream too!