Russell Sage, an early American entrepreneur famously quoted, Real Estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.
The Real-estate market is by far the most significant store of wealth, with an estimated valuation of US$280 trillion in 2018, it is almost 3.5 times the global GDP. While this sector has seen immense growth and opportunity, there has been minimal innovation in technology and process hampering efficiency. Gaps between buyers and sellers, title issues and high costs are roadblocks that must be resolved for this industry to achieve its true potential.
Most buyers require funding from financial institutions, this means the inclusion of multiple intermediaries. The process involves two realtors, each representing the buyer and seller, an appraiser, numerous bank officials and finally a closing or escrow agent. The increased involvement of multiple intermediaries greatly increases the risk of guidelines being flouted for the benefit of any of the parties involved. One could argue, that increased oversight and regulations could mitigate the risk but that also leads to creation of bottlenecks that lead to longer timelines to close transactions.
Blockchain and Real Estate
In its most basic form, blockchain makes it possible for the first time ever for people and companies to make major transactions without going through an intermediary. The process of tokenization democratizes ownership of assets by using cryptocurrency to split assets into tokens that are stored on the blockchain. Someone who wants to invest in a trophy real estate project now has the luxury of being able to resell their share on the open market through a process called secondary trading. This concept has been part of the mortgage industry, known as Secondary Market which was previously accessible to financial institutions only, but could be available to consumers too. The introduction of blockchain will help overcome geographical boundaries and attract a larger section of the society.
The use of a smart contract between the buyer and the seller and limits human intervention. The seller includes all the details of the property and the buyer uploads necessary information and verifies the legitimacy of the transaction.
Also, the issue of liens, a legal claim to an asset that arises from an obligation is a bottleneck to complete transactions. These amounts could well run into thousands in unpaid taxes, settlements or judgements. Often, the notification of liens is discovered much later leaving the onus on the new buyer to settle the lien at the time of closing. Introduction of blockchains could be used to create a repository of information about the property including approvals, improvements, tax history, liens etc. creating a single window of information and streamline the title review process.
Finally, the current closing process is tedious with multiple transactions that originate from the buyer and require an escrow account to hold the funds till closing. We could effectively benefit from the blockchain technology’s ability to create a trust-less environment that eliminates the need to include escrow accounts thereby bring down the costs involved with a transaction.
Real estate is amongst the most preferred investment option for everyone, however, the costs and cumbersome process have put a dent in an otherwise safe option. With so many blockchain companies making its foray into in this industry find ingenious ways improve the existing process. This technology has the potential to be something that is truly inclusive.
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About MoonX
MoonX, the world’s fastest and safest exchange with decentralized ownership, campaigns for one of the 21 SuperNodes of EOS. While existing solutions offer to solve just one problem at a time, MoonX offers a highly secure, useful and easy-to-use product based on the private blockchain. MoonX has raised 29 million dollars in funding within a short period of time and is supported by BCH, DHVC, Fission Capital, PreAngel, NGC, Ledger Capital, Node Capital, DU Capital, NEO, Badwater Capital, and other investment institutions.
