Designing blockchain for the real estate industry
There are agents, buyers, and sellers in the real estate industry — how can blockchain maintain user trust while introducing anonymity and fractional investments?
Okay, you read the title and the subheading, so I know what you are probably thinking: “Here is another blockchain aficionado who is going to coerce me to spend ~10 minutes attempting to read their code for a new blockchain use case that is going to change the world.” While I am an optimist about changing the world, I also err on the side of realism so I refuse to promise that this use case will change the world. However, I can lay out the problems for you and clearly define how a solution is needed to help vulnerable communities.
Let me convince you how this will impact you more deeply than that by structuring this article with some help from an abridged design process. First, let’s explore a problem (or rather, a few of them) in the real estate industry and then, proceed to conduct research. At this stage, we will dive into what blockchain is (don’t worry, it will be at a high level) and how it can be integrated into our market. After that, we’ll brainstorm together and begin to create prototypes from the low-fidelity, functional ones to the high-level, sexy ones. At this point, we will end our process, but I implore you to innovate a solution using the subsequent steps of the design process. If this post were to convince you of anything at all, it would be that there is work needed to be done in real estate and this problem is both urgent and necessary.
Problem
Just look up “real estate problems” on Google today and you will be hit with the plethora of issues: Affordable housing, space utilization, COVID-19 housing market impact, and more than can even be counted. We will focus on two in particular: Property fraud and lack of accessibility.
Property fraud. The term is used to describe a general transgression related to a real estate property, so let’s explicate using some examples. Only a few months ago in February, Gurugram police caught a three-member gang allegedly selling off plots in luxury communities amounting to over Rs 523-crore (about $71.7M) fraud. How did they do it? They forged documents using the details of property owners and transferred the properties to themselves. Then, they would sell them off to unsuspecting buyers. (Source: here). Buying property is stressful with finances and bureaucracy, but now, we need to worry about being sold a fraudulent property? Forget it. Even outside of India, property fraud is prevalent in all of its forms whether it be with fake realtor licenses or even related to money laundering via all-case purchases.
Lack of accessibility. Let’s take a step away from traditional buying, selling, and renting markets and look to another money-making strategy: investments. Real estate is what you may call an “illiquid asset” which means that it is not easily sold/exchanged without a substantial fronting of assets (aka you need to pay money to make money). Now, from a physical perspective, that makes sense: You either own a house or you don’t. But that doesn’t change the fact that we are now favoring the rich by providing them with more opportunities to grow their wealth while neglecting low- to middle-income families that may have a lot to gain from such an investment. On top of that, there is a lot of paperwork. People who are well off can easily just hire people to simplify this obstacle, but not everyone has that luxury.
Blockchain Research
Before we even get to real-estate, let’s quickly look into what blockchain is and how it can be relevant. You may have heard of it within the context of Bitcoin or, more recently, Dogecoin. I will stray away from the mainstream cryptocurrency use cases of blockchain to avoid going down that rabbit hole, so let’s start with the basics. Blockchain is a type of database that stores data in blocks and chains them together in chronological order (hopefully the name makes sense now). There are three key benefits to blockchain: Transparency, immutability, and decentralization. As a quick summary of each, transparency means that the data is viewable by everyone, immutability means that data cannot be changed without consent from all users, and decentralization is a system with no leading entity controlling the network. Another key feature of blockchain is asset tokenization that allows each of these blocks to be owned by multiple users in fractional amounts.
That was a lot to take in. I get it, but for the sake of brevity, I’ll keep the explanation high-level. Our key takeaways are that blockchain restricts private transactions and each asset can be fractionalized. Hopefully, the picture of why blockchain may be the right direction for us is slowly being apparent.
Industry Research
We have identified our problem (step one ✅ 🎉 ) but now what? Hold yourself back from diving into a solution immediately as many Silicon Valley engineers seem to promote within entrepreneurship. Why not? Because a product is nothing without the users who are going to use it and the design process teaches us to incorporate those perspectives into what we are building.
Real-Estate
Now, this is the meat of the article — who are the key players in the real-estate space and why does any of this blockchain integration matter? Let’s dive into this problem a bit more using the five whys:
- Why are people illegally investing money under fake properties?
- Why is this problem from (1) important to solve?
- Why are real estate transactions/the process so difficult to understand?
- Why do people want to invest in real estate?
- Why are people scared of investing?
While we don’t know all the answers (yet), this train of thought will direct us towards a strong problem statement. To define the problem statement, let’s break it down into three segments:
- User’s Perspective: I don’t want to get cheated out of my money and I want to feel safe and informed when I invest in real estate
- User Research Perspective: People need a low-effort way to buy and sell real estate without worrying about fraud or lack of information
- Four W’s (Who, What, Where, Why): People may not have a lot of disposable income but as working and busy individuals, our solution should provide them with an easy way to gain money passively from real estate and protect the industry from fraudulent actors
Cool. We just need one last thing to create our problem statement. Who exactly are we designing for? The target user for this would be for the following triangle of users: Buyers, Real Estate Agents, and Sellers. To take our target audience one step further, let’s focus on the US specifically (given that the most information about real estate is available). Let’s eliminate the unlikely chance of an extremely young or old user as they are less likely to be involved in real estate transactions — therefore, let’s focus on users aged 35 to 55. To further develop the socioeconomics, we can expand on their income being in the low-to-middle category, because we want to provide a solution that democratizes the real estate industry and teaches those without experience how they can participate with a low barrier of entry.
Now we can write our problem statement which is what we are going to do our research around. I will bold it for emphasis:
Real estate agents, buyers, and sellers face excessive bureaucracy and time-inducing complexities with any real estate transaction in addition to the added fears of property fraud or thievery from any side of the transaction. Middle-aged professionals in this space need a solution that ensures their financial security as well as transparency in how their money is being processed.
Problem Statement ✅. Great! Now let’s break down the types of users and each of their needs, goals, and pain points.
Buyer
From an online case study on real estate, users want to find everything in one place — they want to be able to search for listings, bookmark them, and have a good mobile interface for them to search efficiently and on the go. A big reason for us developing this platform is to improve privacy and security when entering the real estate market and buyers want to work with a trustworthy realtor who can help them feel that this property is right for them. The biggest five points of importance in real-estate websites from a UX researcher, Sara Hathaway, are trust, knowledge, experience, approachability, and client focus. According to the same case study, most people in our target demographic use Facebook often which suggests that the platform could be a good advertising channel for a product. However, interestingly enough, most people try to find realtors via personal connections, so the trustability factor is really important and means we may need to include more information about the agent when showing buyers potential listings.
Real Estate Agents
Real estate agents face one main pain point: investing time in a listing but not securing it for themselves. A big challenge with the real estate industry is that once an agent brokers a property between a seller and buyer, they are no longer required so while agents may have many clients, they lack having a lot of listings. Another point that I learned from an online case study is that commercial brokers do not work together and searching for listings is time-consuming as expired leads are not clearly communicated through the platform. We could consider having the platform handle paperwork and therefore update the community on a listing’s status quickly to avoid brokers wasting time searching for listings that are already sold or have an agent of their own.
Sellers
It was a bit more difficult to learn about the seller perspective, but I found some pain points in a few blogs and other resources that will be checked against each other in a triangulation approach (“Triangulation is a research strategy used to 1) gain different perspectives on a single subject and 2) to validate results using two measurements.” -Sarah Christopher). Agents typically don’t ask their sellers many questions but they should be prioritizing both the buyer and seller needs. While agents may be experienced, they shouldn’t make assumptions about the client’s needs so it can be frustrating for sellers who don’t feel heard. Another pain point for sellers is that they aren’t knowledgeable about the real estate space; therefore, the platform must be sensitive about industry-specific language and respect the audience's target market. With the age and technologically-savviness of our target market, it is integral that we build a platform that follows UX guidelines and explicates any complexities.
Some important competitors that were examined are Slice, Fundrise, and RealBlocks, and their UI/UX practices were investigated to be incorporated into our own design.
Brainstorm
Now we have the puzzle pieces, let’s put them together. I like to consider myself a visual learner and with that comes drawings! Here is my (beautiful, I know) sketch note.
Let’s record our key insights. Here are the takeaways to remember when building our prototype:
- The application must have three faces for the three target users: Buyers, sellers, and agents
- There must be human connection/interaction between agents and sellers as well as agents and buyers
- Educate users of the real estate market and how to make smart, financial decisions
Here are the pain points to address:
- Listings and users need to have transparent history while retaining anonymity until contact is to be achieved
- Agents need to mediate conversations between buyers and sellers while keeping both parties’ needs in mind and into account
- There is a lack of reliability of listings — it helps to see the listing history as well as ensuring that it is a legitimate property
Prototyping
Everyone has to start somewhere. For me, I started here:
This may not seem like a lot, but it is essential during the subsequent prototyping stages. How do we take what is above and build a prototype that is both aesthetic and functional? I used Figma to first create the screens and outline what my design specifications are. I researched the colors commonly used in the industry and used my user research to build a product that focuses on helping that specific target, rather than trying to make a product that appeals to everyone. What that means is that the prototype may not be accessible to high-schoolers but because we are not trying to target them, that is okay! My mid-fidelity mockup had the basic structure of every page with some components still left as shapes. The key to this iteration of designs was receiving feedback — my team and I would share our prototypes every week and that allowed me to learn how to defend my design decisions such as the color choices or the font styles. And if I couldn't, back to the drawing board to research what made that color important or why that emoji is crucial to use there.
Allow me to introduce you to the final prototype through a short video recorded by yours truly.
Final Thoughts
And there you have it! I encourage you to process what you have read and taken something away from it — whether it be gaining awareness of the real estate industry or a physical product you build.
