If you need assistance, please call 828-279-0998

  • Technological Advances in the Real Estate Transaction Process

    Wednesday, May 17, 2023   /   by Amy Brown

    Technological Advances in the Real Estate Transaction Process

    Unknown-1 (10).jpeg
    The digital age has reached the real estate world and new processes are being implemented to make your most prized transaction more secure, convenient, and flexible. Blockchain technology has the potential to revolutionize the real estate industry by introducing transparency, efficiency, and security in various aspects of the sector.


    What Is Blockchain In Real Estate?

    The relatively recently coined term “blockchain” has become synonymous with today’s most popular cryptocurrencies: Bitcoin, Ethereum and Litecoin (just to name a few). However, it is worth noting that the use of blockchain in real estate isn’t relegated solely to crypto assets. While each cryptocurrency takes advantage of blockchain’s ability to act as a ledger across a vast network of computers, the ability to track transactions and records may be utilized by just about any and every industry, not the least of which includes real estate. 

    In its simplest form, blockchain real estate will utilize a network of computers and nodes to act as a more advanced and secure escrow company. Instead of simply trading closing documents for cash, however, blockchain real estate capabilities may be extended to almost every facet of the industry. Consequently, blockchain real estate may help participants in the real estate sector exchange currency, records, legal contracts, and other types of information over a safe and secure network. 

    Here are some potential uses for blockchain in real estate:

    1. Property Ownership and Title Management: Blockchain can be used to create a decentralized and immutable ledger for recording property ownership and transferring title deeds. By digitizing property titles and storing them on a blockchain, it becomes easier to verify ownership, reduce fraud, and streamline the process of buying and selling properties.

    2. Smart Contracts: Smart contracts are self-executing agreements that automatically execute predefined actions once specific conditions are met. In real estate, blockchain-based smart contracts can automate and streamline various processes, such as property sales, lease agreements, and rental payments. These contracts eliminate the need for intermediaries, reduce costs, and ensure the execution of agreed-upon terms.

    3. Tokenization of Real Estate Assets: Blockchain enables the fractional ownership of real estate through tokenization. By dividing properties into digital tokens, investors can purchase and trade fractional ownership units, providing access to a previously illiquid asset class. Tokenization increases liquidity, diversification, and accessibility for investors.

    4. Real Estate Crowdfunding: Blockchain can facilitate real estate crowdfunding by providing a transparent and secure platform for investors and project developers to participate in property investments. Smart contracts can automatically distribute profits, handle voting rights, and ensure compliance with regulations, making crowdfunding more efficient and secure.

    5. Property Data and Due Diligence: Blockchain can enhance the process of property data management and due diligence. By securely storing property-related information, such as surveys, inspection reports, and permits, on a blockchain, it becomes easier for stakeholders to access and verify essential data. This improves transparency, reduces errors, and simplifies the due diligence process.

    6. Land Registry Systems: Blockchain can improve land registry systems by creating a transparent and tamper-proof record of land ownership, transactions, and encumbrances. This can help eliminate land disputes, simplify the transfer of property rights, and provide a reliable source of information for government agencies, buyers, and sellers.

    7. Real Estate Marketplaces: Blockchain-based marketplaces can connect buyers, sellers, and agents, streamlining property listings, transactions, and payments. These platforms can provide verified property information, secure payment options, and facilitate peer-to-peer transactions, reducing the reliance on traditional intermediaries and increasing efficiency.

    Here is what a blockchain transaction would look like:

    1. A seller accepts an offer on their house and requests the money over blockchain.

    2. The seller’s request is facilitated by a vast network of advanced computers, otherwise known as nodes.

    3. Using predetermined algorithms, the nodes process the request for cash.

    4. In order for the exchange to take place, the nodes must verify the request.

    5. Verifications will be determined by each party involved in the exchange.

    6. The exchange will take place once (and only once) the exchange can be verified (much like an escrow company).

    7. In the event of verification, the blockchain ledger is updated with a new block of data, forming an additional chain in the string of data (hence the term “blockchain").

    8. The newly created block of data is added to the blockchain and can’t be altered in any way.

    bc2_-?-+-+-?-¦-¦-+-¦-? -+-¦-+-¦-?-?-? 1 -¦-+-+-+-? 12.jpeg
    It's worth noting that while blockchain has significant potential in the real estate industry, its widespread adoption is still in the early stages. Regulatory challenges, scalability concerns, and the need for industry-wide collaboration are some of the factors that may impact the pace of blockchain integration in real estate.

    While I haven't seen it in regular practice yet; it's coming...this is the future of real estate transactions.