How blockchain technology could alter the real estate business
【Published by Ling Yu Han】
It’s widely known that blockchain technology is expected to disrupt many sectors of the economy. Blockchain’s potential for reducing friction in transactions and automating record-keeping tasks has major implications for the brokers and agents, local governments, investors and attorneys involved in both commercial and residential real estate.
Simply put, blockchain technology amounts to a ledger in which every transaction is immediately, automatically, and permanently recorded and can be seen by other users of that blockchain.
The technology could make for easier and more accurate deed transfers, improved ease and transparency in investing, even more accurate and up-to-the-minute MLS (multiple listing service) listings.
Kristian White, managing member of Steptoe & Johnson PLLC’s office in Canonsburg, Pennsylvania commented that the impact that blockchain technology will have could be similar to the effect of the internet “in that it will revolutionize how business is transacted.”
“It’s something we must monitor and be ready for.”
All real estate transactions are currently registered on the MLS, including contracts, valuations, and login agreements. However, this system is not perfect, and it is difficult for investors to obtain the latest information and restrictions. If the system introduces blockchain technology, all property-related information will be provided to the customer in a complete and immediate manner, and a comprehensive system will be integrated, while ensuring the security of historical data.
“Also, depending upon what type of blockchain you’re using, you also know who is buying what and where the money is moving to or coming from. Those are benefits for a number of use cases. But for real estate, it’s really obvious.”
In addition, the second innovation that the blockchain may bring is the property rights record. At present, property rights information is only stored in the local government, and there is no online system. If you add blockchain technology, you will be able to construct a complete database to preserve and provide access to historical property records.
“However, it requires buy-in by governmental entities. Here in the United States, that’s at the county level. So that’s one of the challenges there. Even though it could provide tremendous transparency, there’s the potential for political or local government inertia.”
Nossa points out that the transparency and immutability of blockchain records would make such issues as title investigations simpler. “You would know who owns the property,” he says. “There will be a lot more clarity with respect to the chain of title.”
The third innovation is about the identity certification and investment line of real estate. Real estate transactions often require huge cash transactions and high risks, and safe investment or trading channels are relatively important. Through the blockchain encryption technology, buyers and sellers have unique identity authentication on the system, which is not easy to tamper with, and can only receive money after the transaction between the two parties is completed. There is no need to go through middlemen or invest a lot of time and cost, which brings more reliable trading channels for investors, buyers and sellers of real estate.
Real estate attorney Dan Nossa said: “The blockchain technology can be expected to be used in real estate investments from a small scale, including all types of one-time investments. There are already examples of using Bitcoin to buy real estate.”
■ Source: cnyes
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