Blockchain Benefits for Real Estate Sector
Supply chains across the world, be it healthcare, financial services, government, food industry and many other industries, inventors and trailblazers are discovering new ways to utilize blockchain to dramatically change and transform typical business models.
Several outstanding business benefits have already been achieved by leaders in various industries. They largely include enhanced security, improved traceability, increased speed of transactions and most importantly greater transparency. All components integral to real estate.
Primarily, it promotes trust through improved transparency by using Distributed Ledger Technology (DLT). With real estate, establishing trust is extremely important. Be it with a website, an agent or a listing. Moreover, blockchain technology accelerates contract processes, saves up time and helps in bringing down the costs attached.
The general volume of real estate proceedings and exchanges is very high on a day to day basis. Therefore a consolidated database of leases and acquisitions is of extreme importance. And that is something only blockchain deliver.
Reforming the current Multiple Listing Service database to a blockchain based ledger will yeild in a prominently more transparent ledger system. Therefore allowing brokers and agents to view a property's complete transactional history.
Real estate industry key players have begun to acknowledge how big a role blockchain based smart contracts will play in CRE, probably causing change in basic CRE activities such as property purchase, sale, financial, management and leasing.
The adoption of blockchain technology will likely cause a huge influence over time, since it can be smartly integrated in public utility services like electricity bills, smart parking, water, and as well as assisting data driven municipal administration.
Here are some benefits of blockchain in real estate sector:
The process of loan underwriting and origination remains paper based and non-standard. Therefore the structure of security relies on interpretation. And protection against asset double - pledging takes considerable amount of work. Resolution for trading and asset servicing are frequently based on data that is obselete. Therefore often financial reconciliations between lifecycle events often end up in delays of settlement, this influences cash flow of investor negatively.
Financial institutions can take assistance from blockchain because it supplies a single version of verified data and unchangeable transaction monitoring. More importantly real time payment settlement.
The loan can be instructed to carry vital data such as ownership rights and loan payment history in order to assist servicing choices of future by digitising it.
This process makes way for an effective asset lifecycle management and improves market confidence by providing investors with documentation of asset performance.
To keep up with the increasing demand for digital transactions, CRE market participants should look into creating digital profiles for their properties. This basically means a digital identity with the context of real estate property refere to a digital identification that holds information in digital forms such as tenancy profile, vacancy, financial and legal status and performance indicators.
A certain mixture of blockchain technology with digital identification can solve many problems as well as accelerate pre-transaction processes which include underwriting, financial evaluation and getting a loan commitment.
Digital identities of real estate property which are connected with digital identities of transacting participants can help a property generate purposeful and secure online record, improve lease information management and considerably simplify the due diligence process.
The honesty and directness provided by a non-centralized network can enable to reduce the costs attached with real estate transactions. Other costs attached with real estate such as registration fees, loan fees, inspections and taxes, even savings can be obtained by omitting mediators' professional charges and commissions.
Charges for these vary significantly depending on the jurisdictional region. Just like intermediaries, these can be removed or reduced from the equation as more platforms mechanize and integrate these activities.
Real estate arrangements might become solely peer to peer in the near future, with blockchain empowered platforms doing most of the labour.
All things considered the future looks better and more transparent with utilization of blockchain technology integrated into every segment of the society.