For several years, the distributed ledger/blockchain technology largely centered on banking and payment systems. During this period, cryptocurrencies in the form of Bitcoin and the plethora of other cryptocurrencies became popular and prevalent. However, blockchain has far more utility than just cryptocurrencies. The underlying technology, namely the smart contracts and the distributed ledger, can be used and is being in a wide variety of fields, industries, and businesses.
One of the industries that stand to gain immensely from blockchain technologies is the real estate industry. There are plenty of ways this technology can be used in the reals estate industry. Whether you are a large-scale real estate owner, a property owner, a property management firm, an asset holder, there are plenty of ways you stand to gain from using this technology.
Blockchain Technology Can Negate Wastefulness In The Real Estate Industry
One of the most notable benefits of using blockchain technology is the potential cost reduction for industry players. The real estate industry is plagued with plenty of inefficiencies that add to the overall cost for builders, property owners, and tenants alike. Moreover, in the case of large-scale property owners, asset holders, property management companies, and REIT’s, the inefficiencies and wastefulness can easily compound leading to huge losses that have a very negative impact on the bottom line.
Blockchain technology is well placed to negate the inefficiencies that the industry faces and do away with the best wastefulness prevalent in the real estate industry. For instance, property owners and managers could use smart contracts to in their property management procedures and processes to improve the efficiency in the industry thereby reducing the overall cost of managing properties. Another example to consider is the reduction of labor cost. By using a distributed database, property owners and property management firms do not have to employ as many people in the IT department, the legal departments, and other departments as is currently the case.
Distributed Ledger Can Improve Time Efficiencies
The real estate industry has largely remained a paper industry. Despite past technological developments in the information technology realm, the real estate industry has not changed many of the operational procedures and processes and in many regards, paper transactions are the gold standard in this industry. Whether it is leasing, buying, renting, transferring ownership, or any other kind of transaction, the industry uses paper transactions.
As such, the vast majority of property transactions are slow, time-consuming, and in many regards, laborious. In the times we live in, this should not be the case. However, distributed ledgers and smart contracts can significantly reduce the time it takes to complete transactions. This development would not only make for a far better experience for real estate customers, but it will also make it very easy for property owners and managers to complete deals.
Blockchain Technology Can Improve The Transparency And Trust In The Real Estate industry
The most significant benefit of using blockchain technology in the real estate industry is an improvement of transparency and trust. In an era of paper-based transactions where errors are common and little trust existing between property owners and tenants, using a distributed database that cannot be tampered with as opposed to a centralized database is a godsend technology.
Property owners and managers could use blockchain technologies to improve trust by having digital identities which induce transparent record keeping, thereby doing away with data integrity concerns. For instance, the use of a distributed database can store real estate titles, liens, entitlements, tenancy, and financing, making everything transparent for all parties involved.
A blockchain-based database can allow various parties involved to access and or modify the information in the database according to their access-level status on the network. As such, there is no need to have one centralized database that has to be shared by the various players in the industries such as the broker, the property owner, the various listing services, lenders, tenants, buyers, and any other party. This inherently induces ample transparency in the system, something that improves the trust that every party in the network has of the other parties.