Revealed: 7 Steps to Selling Real Estate on the Blockchain
Find out what happened when Propy ran the first ever online-only real estate transaction in California
When a Ukraine apartment was bought and sold entirely online, Propy made history. For the first time ever, blockchain technology was used to transfer property rights from one owner to another. Legal documents are signed online and we take payment online too, so processing a sale is quick and easy.
The second anticipated deal was set to take place in the States — in California. However, although blockchain technology makes it possible for you to buy and sell property from overseas, the rules for real estate transactions are different in each country. To tackle this, Propy released a new Adaptive Transaction Platform, which is fully customizable for each location, in time for the California deal.
Now when you use Propy, wherever you are in the world, you’ll see the appropriate jurisdiction to seamlessly complete your transaction online.
How the deal in California unfolded
There were 5 participants in the California deal:
- Buyer’s broker
- Seller’s broker
- Escrow (third-party financier)
Both the buyer and seller used Bitcoin as the currency for the transaction.
How the Propy platform works
The Propy transaction platform simplifies the real estate buying process for buyers and sellers — you move through the system in the same way you do when you buy anything online. With Propy, it just happens to be property.
In reality, the buying process is complex. From a technical point of view, this is what the architecture of the registry looks like from behind the scenes:
The 7 steps to completion
To keep the transaction process simple and stress-free for buyers and sellers, each step of the process is carefully constructed.
The seller’s broker invites people into the deal. Once the invites are all accepted, the deeds for the property are reserved on the blockchain registry. If the property doesn’t already exist on the registry, a new property object is created.
Watch this space! There is a certain technical knowledge required to read data from the blockchain, but Propy will build the Propy Blockchain Explorer so anyone can easily search and inspect transactions (see our whitepaper for details).
A purchase agreement is signed using DocuSign and recorded on the blockchain.
The deposit is paid using cryptocurrency or fiat (traditional currency). However, Escrow companies generally take their fees from the deposit, so Propy converts part of the deposit into US$ for this before the sale proceeds.
Steps 4, 5 & 6
The title report, disclosures, and settlement statements are all signed online.
Each of these three steps is recorded in the same way, except for the settlement statements, since these can change the final amount the buyer needs to pay. If the seller has overpaid on taxes for the property, for example, the buyer would need to compensate them for that at the settlement stage.
Deeds for the property are recorded on the blockchain along with all the documents related to the sale. The escrowed funds are then released to the seller and the property transfer fee is paid in Propy tokens.
Ownership of the property is transferred and the transaction is complete.
Real estate transactions made easy using the blockchain
The person buying the property in California didn’t have to attend a single meeting in person. The seller was only required to sign the deeds and every other element of the transaction took place online using the Propy platform.
In no time at all, the property in California had a new owner:
If you’re technically-minded and want to see the full source code for the smart contracts, this is public and available to view on GitHub.