In the subsequent widespread application of Blockchain across industries, it’s hard to find a segment that has not been influenced by this technology. Compared to other sectors, the Real Estate Industry seems to be quite slow in adopting this digitized ledger because trading high-value assets such as Real Estate through digital platforms has never been the norm. However, recently, the discovery of advantages of Blockchain in Real Estate, which promises to open up a new way to change the previous situation has caught the attention of increasing investors and businesses. Let’s follow this blog to acknowledge more details about the top 3 advantages!
1. Blockchain NFT Offers Fractional Ownership In Real Estate
By allowing fractional ownership, blockchain opens a promising future for those who are on a strict budget but still desire to purchase or manage a house. Typically, the investors have to pour a significant amount of money to acquire property. For example, you need $0,2 million to own land, which is seemingly over your budget, but thanks to Blockchain in Real Estate, just 1/20 of such capital can help you to invest. By accessing a trading app, people now can simply buy and sell even a fraction as they see fit. This can be explained by the NFT applications in real estate.
So, the question now is “What is NFT?”. NFT (Non-fungible token) is a token issued on a blockchain, and it is unique, rather than being identical and interchangeable with each other. In a commercial real estate blockchain, NFTs represent ownership of their property. Homeowners could sell a fraction to a large number of investors by issuing tokens on the blockchain network. For instance, if a 200-unit apartment building is held by 50 different buyers, each of those investors could own tokens, or NFTs, to reflect their possession in the equity of that asset. Such investors could keep these tokens and receive a rental income, profit split on capital appreciation upon sale or both. Therefore, it can be said that Blockchain in Real Estate increases the liquidity in the market and creates opportunities for more investors who want to unlock equity without borrowing or moving.
2. Blockchain Smart Contract Provides A Convenient And Transparent Transaction
Making use of blockchain Smart Contract in real estate transactions can get rid of third parties as well as reduce the likelihood of fraud. In the past, the real estate transaction always called for the brokerage firms to ensure agreement and increase security because the seller was hesitant to transfer the ownership before receiving funds while the buyer was afraid to send money before receiving the property. However, the term “Smart Contract” came up to solve the aforementioned problem by consolidating all the functions of notaries and brokers into one autonomous mechanism. Smart Contract is defined as an electronic protocol that executes transactions when specific conditions embedded in the code are met, without the intervention of any intermediaries. Therefore, instead of bankers, lawyers, and brokers as previously, this innovative technology can reduce the time between the signing of the preliminary sales agreement and the deed of sale before the notary. Moreover, cutting out the middleman also leads to the saving of a huge amount of brokerage commission and fees. That’s why Smart Contract is considered as an evitable assistant that makes the transaction between buyers and sellers faster, easier, and more reasonable when compared to the traditional one.
Additionally, adopting Smart Contract also improves the level of Blockchain Transparent Transaction. In general, the majority of Smart Contracts are used in the automation of value exchanges in the form of virtual currencies, the crypto assets. All the accounting entries corresponding to these exchanges of digital values are automatically recorded in the blockchain, making the transfers visible and immutable. Entries into the ledger can only be made if they are validated by the system. And in order to change it, every single other blockchain in the system would also need to be modified. Therefore, it is nearly impossible to delete a blockchain transaction in an attempt to hide it and fraudulent transactions cannot be added.
3. Blockchain Secures Property Right
The land titles often rely on paper documentation, making it difficult to access but vulnerable to loss, fraud and mismanagement. To tackle these problems, Real Estate Blockchain is a potential solution, which can alleviate issues related to lack of trust, insecure data, and vulnerability to cyberattacks. With a blockchain network, land management is recorded and preserved, and such information is accessible to all peers. Because a blockchain-based solution is not controlled by a single party in an opaque manner but cross-checked by many users, it may decline chances of record tampering and land grabbing. Moreover, anyone attempting to reject or modify records leaves a visible trail as all data is paired with a unique “fingerprint” to ensure integrity. Therefore, once there, there are greater assurances of ownership based on immutable and transparent transaction records, helping buyers better track property-related legal processes in real time.
At first glance, we can easily see that this Software Platform helps to manage the property right in a clear and detailed way. Any buyer can have access to the information of their favorite home or commercial building by clicking on the “View/ Edit” button to gain more information such as the owner profile, the area, and the location of the land. Moreover, this Real Estate Blockchain app also eliminates cumbersome work related to the procedure as almost all documents are recorded in the blockchain network and easily transferred from the property managers to the real estate investors.
4. Final Thoughts: Future of Blockchain in Real Estate
There is no doubt that Blockchain technology has an important role to play in Real Estate Industry. A blockchain-based platform can do various things, ranging from eliminating the need for middlemen in transactions, improving trust among investors, speeding up the process to reducing brokerage commission or fraud.
Hundreds of corporations/organizations/startups have been looking for the answers to their digital transformation concern, regarding “What are the best Blockchain development companies?” or “What companies are developing Blockchain in Real Estate?”, etc. With 550+ in-house developers, SotaTek helps to provide dedicated blockchain developers and cut engineering costs by roughly 30% while remaining quality for our global Clients. With the view to be your top trusted IT Consulting/Development Partner, we all look forward to adapting to new technologies and assisting to bring your PropTech concept to reality. So, why not contact us now?