Living in a world where virtuality and online connectivity is taking the pedestal of human existence, it becomes perfectly reasonable that different worlds of spheres build a reciprocal link. One of them is the link between blockchain technology and real estate. Even though in the past, real estate meant cash, money and smooth transactions in real-time, today, the appearance and impact of the blockchain technology have changed the way real estate functions. Let’s have a closer look at how these two have established their mutuality.
From No Connection at All to Breaking the Norm
Real estate has always done transactions of high-value assets avoiding digital assets. Face-to-face deals were the norm due to the fact that big money was still in the question. However, the appearance of Blockchain has changed all this. The first and most crucial step was the introduction of smart contracts in the platforms of Blockchain, which allowed real estate to be tokenized. As a result, real estate deals could now be traded like cryptocurrencies including bitcoin and ether.
Platform and Selling
As the primary purpose of real estate is to connect the buyers of homes with sellers of homes, the blockchain technology had to come up with ideas on how to facilitate this process and bring novelty in it. For that purpose, several trading platforms and online marketplaces were established that ensured more comprehensive real estate transactions. Now, the real estate assets can be traded the same way stocks are traded, and all of it can be done online.
How it works: The platform allows the home sellers to tokenize assets by liquidating the asset via a token sale. Then, the tokens that are collected can be exchanged for fiat currency giving the buyers a percentage stale of the property
No Middle Man
In the case with real estate, real estate agents were the ones that conducted the process of selling and buying homes. Also, the lawyers and banks had an important role in the process. But today, with the blockchain technology, these roles could be significantly decreased. What is in the process of happening is that the new platforms of the blockchain technology will take over the listings, payments and legal documentation. This singles out the middlemen and leaves a vast space for the home buyers and sellers to get more out of their money. This will be merely possible because no money will be paid on commissions and fees.
Illiquid Assets Turn into Liquid
In the past (and, still today) real estate was considered an illiquid asset because a lot of time is spent on closing a deal. However, today, with blockchain technology and tokens, this changes since they can be readily traded. The result is – the buyers can get some value of the property of the seller even if they can’t afford the whole property at once. Which leads us to…
Claiming Ownership Fraction by Fraction
With the blockchain technology, investors will be able to buy and sell fractions of tokens, and also, they will be able to manage maintenance and leasing. This facilitates the overall process of real estate investing and makes it far more tangible than before.
The Benefit of Saving Money
As mentioned before, all the fees including professional fees and commissions as well as inspection costs, registration fees, loan fees and taxes will be eliminated thus enabling the opportunity for both parties to save a lot of money.
Real Estate’s Not First Experience with Technology
The blockchain technology won’t be the first experience of the real estate industry dealing with technology. Real estate is already thriving off the benefits of technology. For example, virtual staging for real estate has completely changed the way of real estate online marketing. This new way of advertising the homemade traditional staging redundant when it comes to internet marketing – no longer empty spaces or ridiculously overpriced traditionally staged homes were advertised online. Instead, the homebuyer has the chance to see the full potential of the home before deciding to see it live or bye the place.
The Bottom Line
Believe it or not, the blockchain technology is taking the world by storm. The real estate industry is not immune to its convenience, and it is slowly but steadily getting used to the changes, for its own benefit.