The real estate industry is one shrouded with secrets - primarily to keep competitive advantages. Technology has brought greater transparency to most industries, and has closed the gap between buyers and sellers. As it relates to real estate, blockchain is at the forefront of these solutions, potentially disrupting all property transactions.
Benefits for using Blockchain:
1. Shared Database
A shared database is crucial to leasing, purchase and sale transactions, and results in transparent, efficient and accurate information. This reduces the risk of manipulation and fraud.
E.g. a multiple listing service could be used to aggregate property-level information from private databases of brokers and agents.
2. Multiple Entities Can Modify Information
Blockchain provides a common database where transactions can occur, with multiple users able to modify and verify information. Multiple entities, such as owners, tenants, operators, lenders, investors and service providers, can provide, access and modify transaction information.
3. Streamlined Due Diligence Process
Entities in leasing, purchase and sale transactions may have strict due diligence processes and may have concerns for data integrity between parties. Blockchain uses encryption techniques to verify users and transactions with a digital identity, such that trust between parties is not required. This benefits the process of real estate titles, entitlement, liens, financing, tenancy and more.
4. Removal of Intermediaries
Because of the increased transparency and security of blockchain, trusted intermediaries can be removed. For example, in the case of title companies, blockchain allows transparency in title management, and automatic confirmation by government land registries.
5. “Smart” Contracts
“Smart” contracts are lines of code that give instructions in the blockchain to fulfill transactions. Using smart contracts, transactions can be settled automatically and immediately after requirements are fulfilled for example, in real estate transactions, conditional clauses can be executed automatically, such as purchase-sale transaction after loan approvals or title clearances.