Smart contracts and the adoption of blockchain is rapidly rising in the commercial real estate sector. I hold that blockchain’s benefits for real estate derived from the smart contracts that can drive transparency, cost-efficiency, and savings in core real estate ops. Property transaction processes involve leasing, sales and purchases are specially set to benefit from smart contracts. Here’s how real estate and smart contracts are a perfect match, in my opinion.
#1 Greater Transparency and Cheaper Property Title Management
High-title insurance and related costs on account of the chain of title and lien recording problems, the risk of fraud, the cumbersome diligence and clearance requirements are a real issue. Title defects can impact buyer ownership in a majority of the transactions. Smart contract based digital identity of the property includes location, history and title details. Buyers and banks can rely on the tamper-proof and encrypted nature of the blockchain. Blockchain, in general, and smart contracts, in particular, lead to increased transparency and security, mitigating title fraud risk and lowering costs through simplification of the title check process.
#2 Easy Property Search Processes
MLS or multiple listings to access property level data are there such as location, rentals, capital values and property features. I find real estate buyers and sellers suffer due to subscription-based platforms with poor accuracy and lack of detail. A blockchain-based MLS could provide more data at a reliable cost.
#3 Enhance Speed of Real Estate Transactions
Real estate transactions are not fast, or even real time. While smart contracts and block-chain eliminates local government regulations based on housing, the process of verification, search for homes and ownership processing. Further, smart contracts can prevent fraud such as forged documents and rental scams. Every transaction of the digital property is further recorded, so everyone on the network can know.
#4 Affordable Investing
One of the areas that will see a major disruption is the advent of affordable investing, with smart contracts. Blockchain and smart contracts give power to every income level to own properties and buildings. Property owners can also sell to smaller investors. Cut down on lawyers, brokers, and banks among others. Presently, many real estate systems and processes are siloed, and the information is dispersed across different point solutions.
This makes real estate management tough due to opacity, duplication of records and data redundancies among others. So, whether it is for the buyers, sellers, brokers or real estate firms, smart contracts are a real boon. Building blocks of real estate, smart contracts have the potential to transform the real industry, according to me.