5 Ways Blockchain is Transforming Real Estate
Blockchain technology is poised to disrupt the real estate and proptech worlds. What can the blockchain bring to the real estate business? Great stuff…except, perhaps, if you’re a lawyer.
The blockchain centers on the “smart contract”. According to Nick Szabo, a computer scientist and legal scholar, writing in a 1996 research paper, “a smart contract is a set of promises, specified in digital form, including protocols within which the parties perform on these promises.” The blockchain technology now available allows for the manifestation of these smart contracts.
1. Fending off Fraud
One thing that the blockchain is bringing to the real estate business is a better way of fending off fraud, which has multiple advantages over the old way of doing things. “Blockchain’s electronic recording system is bringing about an end to a paper fueled world, where real estate in particular can benefit,” says Ashley Perry, Senior Project Manager in JLL’s Project Management team. “One big advantage of a blockchain system is its ability to eliminate risks such as fraud. This in turn provides process integrity, transparency, high quality data, faster transaction and lower costs.”
Speaking of transparency…In a typical real estate transaction, there are multiple stakeholding players. There are the buyer and seller. There’s the land registry. There are the mortgage people. There’s the real estate agency. And everyone’s got a lawyer. But the lawyers could possibly be eliminated altogether by the transparent trust and integrity of the blockchain. For the remaining stakeholders, this would mean lowered costs and sped-up transactions.
3. Easier to Secure Property Rights
Land registry, which means clearly defined “title” or property rights, will become far easier to secure, thereby freeing up a lot of capital. Lantmäteriet, the land registry of Sweden, has already begun utilising Blockchain technology to register land and properties. Matts Snäll, head of development, said in the Summer of 2017, “We have to try it on a wider scale and have more partners to see it also works with a larger number of transactions, but we haven’t come up against anything so far that argues against this technology.” At this writing Lantmäteriet is preparing to conduct its first Blockchain technology property transactions.
4. More Reliable Data at Lower Cost
When it comes to CRE property, brokers, owners, tenants, buyers, and sellers rely on MLS, which is subscription-based and expensive. Because the information made available is dependent on what the brokers want, there’s no set standard for accuracy and coherency of information. But with its peer-to-peer, freely accessible nature, “blockchain-enabled MLS market would likely have access to more reliable data at a lower cost,” says Eric Piscini of Deloitte Consulting LLC.
5. Real-Time Open Database
Furthermore, the vast majority of CRE processes and systems don’t overlap, leaving information scattered and not revealed in real-time. But the blockchain would provide a shared and open database evolving in real-time for all participants in the transaction. Improved decision-making capability for parties involved will be the result.
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