Blockchain in Real Estate
The global real estate market is overdue a huge blockchain disruption and in this segment of the Lisk Academy we will detail how blockchain technology can change this huge industry and how it will be improved through this change.
A future-proof, blockchain real estate market could help with creating new business models of connecting potential buyers and sellers. For example, it is easy to envision how properties of all kinds could be liquified, tokenized and traded much like stocks on exchanges. This blockchain example will also positively affect transaction times as property sellers find they can sell fractions of shares on a particular property, as opposed to having to search for a single buyer. As well as this, it is more than likely that the whole real estate industry will benefit from this shift, by lowering the barrier of entry to real estate investment. New definitions of property ownership and rental contracts will arise from this shift in the real estate business.
The user-friendly automation of all relevant processes and documentation on a decentralized, blockchain real estate platform could also help by cutting out additional inspection costs, registration and loan fees, as well as property taxes, all enforced by quantifiable smart contracts.
The traditional business model of the real estate industry can also experience a shift in the nature of market leaders, as well as the number of middlemen necessary to facilitate each transaction. A blockchain-based real estate marketplace can take over and build upon how listing or legal documentation is processed.
How Can Blockchain Technology Improve Real Estate
It is also important to note how blockchain uses could potentially revolutionize rental property payments. Cost-efficiency and better decision-making in leasing transactions can be achieved with a shared database, where a whole vertical of stakeholders including owners, tenants and service providers can interact with ownership information, or transaction history in an open, secure way.
Combined with new models of flat ownership that could potentially span the global market, decentralized payment projects could be used to facilitate low-cost, high-speed transnational micropayments which would distribute the payment among all stakeholders concerned. Within the context of payments, introduction of smart contracts into blockchain real estate ledgers and transactions, has clear potential in streamlining various real estate processes, such as releasing apartment ownership, or rental documents upon a completion of a cryptocurrency transfer. The benefits of this aspect of blockchain use cases when applied to real estate are already being recognized by a variety of private institutions and governmental bodies.
In the United States for example, states such as Vermont and Arizona have already passed legislation which pave the way for recognising smart contracts as proper points of reference for real estate transactions. Applying smart contracts to real estate also cuts out alternative, fee-heavy middlemen such as property search platforms, or newspaper advertisements.