5 Top Benefits of Blockchain Technology in the Real Estate Industry
Updated: Nov 3, 2023
Every organization is responsible for utilizing strategies and systems that will positively change the company's performance. Blockchain and real estate play an integral role in the current U.S. economy. It is also the most significant source of income and savings for many Americans today. Blockchain has been helping companies solve security, payment, economy, identity, banking, logistics, and trading problems.
In 2014, Walt Disney and PayPal adopted blockchain before companies like Amazon, Walmart, and Alibaba embraced blockchain technology. The number of companies using blockchain has significantly increased, and over 100 companies benefit from blockchain technology. Therefore, without a doubt, blockchain technology plays an integral role in next-level technology in any business sector. Real estate companies are not left behind in this shift and integrate blockchain with their operations to facilitate drastic improvements.
What Are the Benefits of Blockchain Technology in the Real Estate Industry?
In this article, I will discuss the 5 Top Benefits of Blockchain technology in the Real Estate Industry.
1. Cost Reduction
High expenditures impede business development. When inefficient expenditures are resolved, more resources may be employed more productively. Blockchain technology effectively reduces the cost of operations in the real estate industry.
2. Buy/Sell Property Process Efficiency
We rely on brokers/intermediaries or third-party property aggregator websites to purchase or sell a home. When it comes to brokers, they often charge both the buyer and seller; more often than not, they keep people in the dark about the process and operate with opaque business methods. They demand hefty membership fees with no minimum guaranteed conversion on third-party listing sites. Additionally, individuals’ property data and personal information are kept on a single site, making hacking and stealing your data very simple. These issues are resolved by blockchain technology, which enables listing on an unchangeable decentralized network. Property owners need not be concerned about security since the data contained in the blocks are encrypted.
3. Title Management
Title management is a high-risk area for fraud and mistakes. If a problem in the property title is discovered, the owner must pay a hefty fee to fix it before the property may be transferred to the buyer. If you go deep enough and identify the fundamental reason, you will discover that manual paperwork is to blame. It puts the property's owner in danger of losing it. Additionally, it requires every property owner to get title insurance to safeguard their investment. Blockchain technology enables immutable land record administration by digitally recording titles to prevent these problems and remain risk-free. It simplifies the whole process, increases transparency, and also saves money.
4. Elimination of real estate Fraud/Scams
In today's environment, regardless of whether you purchase or sell a home, you are susceptible to being duped in some form. Numerous commentators said they were inescapably victims of such dishonest actions inside the compromised system. However, blockchain technology offers a glimmer of hope to disrupt the system and make it more investor-friendly. The data is kept on a public blockchain, ensuring its security and protection against destruction.
5. Liquidity
Though real estate investment is considered profitable, the problem of liquidating assets has been a pertinent problem for a very long time. Now, decentralized blockchain technology assists in splitting a property into smaller value real estate tokens as per the current need. These tokenized assets can be quickly sold in the token exchanges to the investors or buyers to preserve liquidation without burdening them to buy the whole property.
How are companies integrating blockchain with real estate?
One of the most exciting ways companies integrate blockchain with real estate tokenization. Ethereum assists the real estate industry via digital securitization, or tokenization, of real estate assets that are currently under development. As a result, it is possible to utilize digital assets to represent a range of real-world assets, including real estate, real estate funds, income streams, governance rights, and other types of ownership interests.
Having been tokenized, these assets may be split into more manageable bits, made more accessible to a larger pool of investors, and leveraged to create more revenue. Furthermore, once these assets have been tokenized, the programmable Ethereum blockchain enables the safe and compliant digitization of their related transactions and activities, such as issuance, trading, and lifecycle management, on a secure and compliant basis.
Want to learn more about Blockchain and real estate tokenization? Check out these articles:
Real estate professionals in the commercial real estate market will continue to be relied upon for their guidance, knowledge, and know-how as retail buyers enter the market. However, there will be a shift in how securities will be handled, liabilities managed, papers processed, and accounting performed in the future.
What is the impact of tokenization on real estate funds and asset management?
'Tokenization' is a phrase that refers to the digitization of financial products in the real estate industry, such as securities, alternative assets, and financial instruments in general. Incorporating ownership rights and transaction histories into digital assets may be possible with Ethereum blockchain technology, as well as rules that ensure that the creation, distribution, and transfer of support comply with relevant legislation. Simple examples include regulations that prohibit the transfer of tokens to certain counterparties or no counterparties at all during a lock-up period, among other things. In addition, any issuer may have their digital assets customized to meet their specific requirements.
Tokenization also reduces the cost and time required for creating, issuing, and trading assets, creating new features, administering dividends, and managing other business processes.
Reduced expenditures allow issuers to cut the minimum investment amounts and expand their investor base due to cheaper expenses. In addition, connecting digital assets and the networks that support them increases the number of secondary market opportunities and liquidity. While both issuers and investors will benefit from blockchain technology in the long run, this future will be defined by fundamentally new goods and marketplaces, as shown by the benefits accruing to both.
Bottom Line: Essentially, companies are Integrating Blockchain with Real Estate in different ways. As blockchain technology evolves and integrates with real estate, this space will be redefined and will open new ways of doing business.
What do you think? How do you envision this space and its impact on the real estate community?
By Edith Lagunas
Disclosure: I may receive affiliate compensation for some of the links below at no cost if you decide to purchase a paid plan. This is for entertainment only and is not intending to provide financial advice.
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