It’s challenging to identify a sector that hasn’t been impacted by blockchain, given the technology’s disruption of financial services and subsequent widespread deployment across industries. Payments, remittances, and foreign exchange have all been significantly impacted by cryptocurrencies. Initial coin offerings (ICOs) have put a strain on venture financing, startup loans, and stock investing. Blockchain has altered several industries, including the food supply chain.
The upheaval caused by blockchain has also reached web3 real estate app development. Prior to now, only using digital means to transact high-value assets like real estate was unusual. Offline real estate transactions frequently involve face-to-face interactions with numerous parties. However, the advent of blockchain made this possible to change. Now that blockchain systems have smart contracts, it is possible to tokenize and exchange assets like real estate and cryptocurrencies like ether and bitcoin.
This method of real estate trading differs. Following are six ways that blockchain has altered the real estate industry.
1. Marketplaces and Platforms
The main goals of real estate technology have historically been to connect buyers and sellers and to list properties. However, blockchain opens up new avenues for real estate dealing and can help trading platforms and online marketplaces provide more extensive real estate transaction assistance. For instance, ATLANT has created a platform that enables real estate and rental property transactions using blockchain technology. Real estate can be tokenized, and after that, it can be exchanged online, like equities on a stock exchange.
ATLANT enables sellers to tokenize assets, effectively treating them like a stock sale, and then liquidate that asset utilizing the platform through a token sale. With buyers owning a portion of the property, the accumulated tokens can be converted into fiat money.
2. Absence of Middlemen
The real estate ecosystem has traditionally included brokers, attorneys, and banks. According to a Deloitte analysis, blockchain may soon bring about a change in their participation and roles in real estate transactions. 1 Over time, new platforms may take over duties like listings, payments, and legal documents. By eliminating the middlemen, buyers and sellers will be able to receive more for their money because they will pay less in commissions and other costs. Additionally, by eliminating the back-and-forth between these intermediaries, the process is made considerably speedier.
The real estate sector has been touched by blockchain technology in a number of ways, notably by providing a new channel for connecting buyers and sellers.
By eliminating middlemen from real estate transactions, blockchain has the potential to save expenses.
Additionally, the practice of fractional real estate ownership might be codified with the use of this technology.
Because sales of real estate typically take time to complete, it has traditionally been thought of as an illiquid asset. Cryptocurrencies and tokens, on the other hand, can theoretically be easily exchanged for fiat money through exchanges; thus, this isn’t the case with them. Real estate, however, can be easily sold when used as tokens. A seller can receive some value out of their property without having to wait for a buyer who can purchase the entire property.
4. Shared Ownership
Blockchain also decreases the obstacles to real estate investing by permitting fractional ownership. Investments typically require a sizable down payment to purchase real estate. As an alternative, investors might combine their funds to buy more expensive properties. With blockchain, investors would only need to open a trading app and use it to purchase and sell tokens of any denomination as they saw appropriate. Additionally, fractional ownership would enable them to forgo managing the properties themselves, including leasing and maintenance.
Dealing with tenants can be difficult, and upkeep fees alone can be expensive. This has an impact on associated sectors as well, such as lending, where property owners frequently use their assets as collateral for loans in order to obtain quick cash. Property owners may also continue to use their property according to the terms.
Blockchain is a decentralized technology that inspires confidence and security. All peers in the network have access to the data stored on the blockchain, making it transparent and unchangeable. One only needs to go back to the 2008 housing bubble burst to realize how institutional greed and a lack of openness can have disastrous results. The system of a decentralized exchange is predicated on trust.
Buyers and sellers can make transactions with greater confidence knowing that information can be independently verified by peers. Additionally, fraud attempts would decline. With legislation for admissible records being passed in Vermont and Arizona, smart contracts are progressively becoming such documents. As a result, smart contracts would be easier to enforce in areas outside of technology.
Real estate transaction expenses can be reduced thanks to the transparency provided by a decentralized network. In addition to the savings realized by eliminating intermediaries’ professional fees and commissions, there are additional expenses related to real estates, such as taxes, registration fees, inspection fees, and loan fees. Even the jurisdictional territory affects how much these prices vary. As platforms automate these activities and integrate them into the system, these can be minimized or even removed from the equation, similar to how middlemen are.
Despite having value in the hundreds of trillions of dollars, wealthy individuals and major corporations dominate the global real estate market. More people might have access to the market where transactions can be made more transparent, safe, and equal thanks to blockchain technology. In the future, real estate transactions might genuinely be a peer-to-peer activity, with platforms powered by blockchains handling the bulk of the work.