Blockchain technology has thus far been the true star of the cryptocurrency revolution. Although the value of popular digital coins like Bitcoin and Ethereum have been in near-constant flux in recent months, the technology that powers them has been making headway into industries of all kinds all over the globe. Naturally, some of the earliest adopters of blockchain technology are in the fintech sector, but they’re far from alone.
There are already functional, blockchain-powered platforms bringing disruption to industries ranging from global shipping to diamond mining, and that’s just the beginning. Lately, though, blockchain technology has been making some visible inroads into another, enormously valuable market: real estate. Here’s what’s happening.
One of the primary friction points in global real estate markets is the complex and lengthy contract procedures that one must go through when a property changes hands. The existing legal frameworks that govern real estate transactions generally mean that the transaction itself must be reviewed and executed by a series of intermediaries such as real estate agents and lawyers that can not only interpret and verify the language of the legal documents, but also verify that the predetermined conditions have been met. That process does work, but it adds additional layers of costs and delays to the transaction.
By contrast, blockchain startup SMARTRealty aims to provide customizable, automated smart contracts to the real estate industry. The platform will enable buyers and sellers to access pre-defined, legally valid real estate contracts that can be modified to suit any specific property sale, and that execute when the named parties agree that the agreed-upon conditions are all satisfied. If the effort proves successful, they will have solved one of the major pain points of the real estate industry as a whole.
Smart contracts aren’t only being used to solve the headaches of real estate buyers and sellers, but of real estate agents, as well. In large real estate markets, it isn’t uncommon for several brokers and agents to be involved with each sale, owing to the interconnected nature of the business and the varied multiple listing services in use today. When that happens, though, all of the brokers involved get paid a portion of the overall commission for the eventual sale through pre-determined commission-splitting agreements.
In a high-volume market, the overhead involved in managing the payment of commissions alone adds significant costs to the average real estate transaction. Here, again, smart contracts are a natural fit. In New York, the Zap blockchain platform is already being employed to automate and secure the process of real estate commission payments. On the brokerage side of the transactions, the increased efficiency brought by removing cumbersome financial oversight procedures should allow for smoother, cheaper services offered to consumers.
Finally, we’re beginning to see blockchain systems that are capable of handling all aspects of real estate sales, from listings and auctions to settlement and transfer. One such system, known as Propy, aims to be a frictionless, cross-border facilitator of global real estate sales. The system is already responsible for the first property sale on the blockchain in California’s history, and they already have a range of other high-value properties listed for sale on the platform. Propy provides a glimpse into what is likely the future of the blockchain in the real estate industry, where it will continue to grow in usage and utility, upending the status quo in property sales worldwide.
Only the Beginning
Taken together, the examples cited here paint a picture of the speed with which blockchain technology is changing global real estate today. That’s no small feat in a market that’s not known for embracing change or new technologies with ease. It also represents a powerful reminder that the blockchain will likely be the enduring legacy of the cryptocurrency revolution, as it takes a bite of this multi-trillion dollar market and others in the years to come.