Blockchain is proven to hold the potential to revamp every business vertical. The new technology in real estate has given a clear indication that it has various applications beyond cryptocurrencies and can be the right weapon to tackle the prevailing industrial challenges.
A ripple effect of this is that various industries have adopted blockchain technology, even the most traditional ones like real estate.
Real estate is witnessing a disruptive evolution with the blockchain acting as the driving force. What was historically considered as a ‘pen and pencil’ business has now begun expanding to the global market with better and long-term outcomes. This has made numerous entrepreneurs and traditional investors interested in understanding the use of blockchain for real estate. Something we will talk about in this article in detail.
Challenges Faced by the Real Estate Industry
The fluctuation in the economy and growing trends introduce new challenges in the real estate industry every now and then. Realtors keep a check on the hurdles hampering the revenue while staying in business. In real estate, various factors impact the revenue like property listings, contact information management, dealing with stakeholders, and more. A few of the common challenges faced by the realtors are stated below:
- Lack of Transparency
The real estate industry is not open to everyone due to the involvement of various factors like citizenship, cash requirements, accreditation, credit score, etc. Additionally, there is no market database or a concrete way to access the information required for making buying and selling decisions.
This, as a whole, makes the sector unclear and turbid for all.
- Tedious Paperwork
In the traditional real estate economy, every transaction involves a stringed set of tedious and time-consuming paperwork. Because of this, many times real estate companies end up losing their money and potential customers, along with getting distracted from the main goal.
- Higher Risk of Fraud
Since all the property agreements are in paper form and the trust is based on humans, there’s a higher risk of fraud in the Real estate industry. A proof of this is that 404 publicly-reported data compromises in the U.S. represent a 14 percent increase compared to Q1 2021. Q1 2022 is the third consecutive year when breaches have increased compared to Q1 of the previous year.
- Expensive Investment
Due to the involvement of a wider number of intermediaries, various fees like broker fees, attorney fees, exchange fees, taxes, etc., are added to the real estate cost, which ultimately makes real estate investments expensive.
- Large Number of Intermediaries
Another problem associated with the traditional real estate economy is that trust is based on human factors. Any two parties have to involve third parties at different levels to build trust in the process. This is again one of the challenges in real estate solved by blockchain.
- Poor Transaction Speed
Last but not least, real estate processes suffer from poor transaction speed due to the involvement of multiple people.
As per a Chinese global travel survey, 44% of travelers fix an appointment with real estate agents before going abroad. Also, 74% of them meet two or more experts to be sure of their decision to purchase property in the city they’re traveling to.
However, blockchain technology, with its incredible features, is entering different areas and processes of the real estate industry and solving these problems.
Before we talk about the benefits of blockchain in real estate, let’s have a quick recap of the basics of Blockchain – how it works and the features it comes with.
With this attended to, it is a good time to dig deeper into the industry and see how blockchain is one of the key technology in real estate helping the industry thrive during the pandemic.
How to Incorporate Blockchain Technology in Real Estate Business Apps?
When it comes to investing in blockchain development services company for real estate, there are basically two approaches you can go with:-
- Build a Smart Contract using LISK
LISK is a platform for Blockchain application development that acts as a PaaS (Platform-as-a-Service). It offers operating systems, databases, cloud infrastructure, and a programming language runtime environment. This helps in bringing your own code to create a side chain or a crypto token.
- Develop an Ethereum-backed Real Estate Platform
In this approach, the Ethereum platform, which has reached Ethereum 2.0 level, can be employed for building a real estate blockchain platform.
While both approaches are profitable in terms of how to build a real estate app on Blockchain, it is best to contact reputed Blockchain software development company to enjoy a better ROI.
Now while we are familiar with the uses of blockchain technology in real estate and the companies embracing it, it is good to be aware of the fact that there are still some challenges hindering the evolution of the blockchain-based real estate economy. Something we will end our article with.
Areas Revamping with the Adoption of Blockchain Technology in Real Estate
There are several areas in the real estate industry that can benefit from the use of blockchain technology. A few of the common areas that are revamping with blockchain implementation are mentioned below.
- Property Search
Currently, brokers, owners, tenants, and buyers turn towards multiple listing platforms like Zillow to search for any property information.
These platforms are subscription-based and demand high fees. Besides, the property data provided by them is often inaccurate, outdated, or partially distorted. This increases inefficiencies in the process and many times, results in disputes.
But, all of this can be prevented using a Blockchain-based real estate app.
A blockchain-backed application can decentralize data and enable everyone to share data in a P2P network. It also facilitates brokers with an opportunity to receive additional data monitoring options and eventually helps to cut down the associated costs.
- Due Diligence and Financial Evaluation
In the real estate sector, major time is spent on diligence activities before buying/renting any property. Various intermediaries are involved in the process of inspecting property documents to prevent any kind of legal, technical, or financial issues in the future.
Currently, all the property data is kept on papers that can be easily changed or corrupted by anyone.
However, with the adoption of blockchain technology in real estate app development, this subdomain can also be improved.
All the property-related papers can be stored digitally in blockchain-powered platforms, such that they can be accessed publicly but can’t be altered. This will make the due diligence and financial evaluation process automated, quick, and less inaccurate.
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