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December 12, 2024
The real estate industry is among the leading industries that have opened up extensive opportunities for entrepreneurs to establish successful businesses. However, the transformative power of innovative technologies like blockchain has changed the overall shift in the competitive market. This technology has generally improved efficiency, security, and privacy in asset leasing, purchase and sale, and management.
Yes! Blockchain in Real Estate has become more than just a novelty; in other words, it has become a practical solution with several use cases in the industry.
Do you want to know about those use cases? If so, stay connected on our blog! Below, we have shared detailed information about the benefits and real estate blockchain use cases.
Keep reading!
How Blockchain Works for Real Estate
Blockchain is a super smart digital ledger. Pitcher is a giant book that records every transaction in a tamper-proof and transparent way. Now, let’s blend technology with real estate. With blockchain, the struggle of buying and selling has smoothened. However, if you are thinking of investing in a custom blockchain app development for your real estate business, consider understanding how blockchain works for real estate.
Here is how it works:
Step 1: Tokenization
Initially, the property undergoes tokenization, which converts it into a digital asset like digital currency and facilitates its representation on the blockchain network.
Step 2: Smart Contract
Next, smart contracts come into play. This digital agreement aims to execute automatically when pre-determined conditions are met. In real estate transactions, smart contracts ensure the seamless transfer of ownership and assets without intermediaries.
Step 3: Execution
The smart contract is triggered when a buyer wishes to acquire the property. It verifies the terms of the agreement and executes the transaction, automatically transferring ownership from the seller to the buyer.
Blockchain in real estate’s decentralized nature eliminates the need for intermediaries. The technology enables the transactions to occur directly between the involved parties, streamlining the process and reducing associated costs.
Although, every transaction is securely recorded on the blockchain to ensure transparency and reduce the risk of fraud or tampering.
Real Estate Blockchain Use Cases
There isn’t just one, but blockchain app development has solved many concerns within the industry, ensuring connectivity and security like never before. Want to explore how?
Here, we have listed some of thereal estate blockchain use cases:
Use Case 1— Blockchain-Based Smart Contracts
Smart contracts are digital, self-enforced contracts between a vendor and a customer. Examples of blockchain-based smart contracts are offer sheets, letters of intent, and listing agreements. Smart contract development defines the terms, stores them in the blockchain network, and monitors their execution. Software for real estate can immediately annul itself if one party violates the terms.
Compared to the old way, smart contracts speed up transactions and eliminate the need to negotiate with lawyers, brokers, and bankers. More real estate blockchain use cases exist, such as automated purchase and lease agreements.
Use Case 2— Automated Rent Payments
Here comes the other use case of blockchain in real estate. Blockchain allows you to sign and pay real estate lease agreements. There is no need to do manual reconciliations and pay rent/dividends.
With RPA bot development and custom AI integration in real estate, owners and renters can calculate rent automatically based on data devices and utility bills. Real estate platforms can promote good behavior from residents, service providers, and proprietors by automating different payments.
Let’s understand this use case via an example rental app that recently opened a cryptocurrency platform. The startup automates every rental process step, from looking for a suitable home to inking the deal. Renters can pay, for example, in bitcoin, while landlords will receive a payment in fiat currency. With the new blockchain option, apps create a future of secure and affordable cross-border rent for those looking for a home.
Use Case 3— Accessible Blockchain Real Estate Investment
Users have always found investments in real estate, yet it has always been unavailable for ordinary people. And why not? Acceleration requires lengthy due diligence, and the vast amount of money the audience needs to invest could lead to huge barriers. But now, blockchain has made crowdfunding more accessible. Tokenization blockchain development has converted the property into digital assets, each sharing residential and commercial ownership. It allows several multiple owners to buy and sell property without any intermediaries.
Blockchain technology helps save, store, and verify tokens. Multiple individuals backing a real estate project speed up its funding and increase its efficiency. Moreover, it allows property developers to involve investors outside their immediate network and vet them without paperwork.
Use Case 4— Simpler Construction And Supply Chain Management
Blockchain is an evolving technology for contractor and supply chain management. Logistics management software with blockchain can enhance performance. For example, huge real estate projects are difficult to manage due to fractured subcontracting and procurement practices and a lack of supply chain transparency.
It is no wonder blockchain platforms simplify procurement with reputation management for suppliers and subcontractors, incentivizing high performance. Smart contract development in real estate automates contract agreements and payment terms to enhance financial management. Also, blockchain proves the authenticity of premium goods at their point of origin by associating products with non-fungible tokens and using these as digital blockchain certificates.
Use Case 5— Streamlined Mortgage Management
Taking a mortgage is a lengthy process, for example, pre-qualification – background & credit history check, Application for a mortgage, loan processing & information verification, and underwriting – evaluation of risks. Settlement – mortgage finalization.
These steps take, on average, 1-2 months. However, blockchain can speed up considerably at this time. As all parties involved in the transaction get access to the applicant’s information, it can be verified almost instantly. In a best-case scenario, approving the mortgage and transferring the funds takes just a few days instead of a month.
As blockchain removes intermediaries, it can lower mortgage costs, allowing you to undercut competitors. It can also help you keep track of payments, verify ownership rights for refinancing, or easily sell the mortgage to another company.
Use Case 6 —Automated Real Estate Accounting
Duplicate actions, excessive documentation, and periodic controls are all manual, labor-intensive tasks that cost real estate companies money. Each audit is a lengthy and costly endeavor that wastes your accountant’s time.
That’s when blockchain ensures the maintenance of separate records directly coming from transaction receipts for real estate firms. With blockchain in real estate, tampering with your accounting records is impossible. The inherent trust behind the technology allows auditors to check huge amounts of data in record time, decreasing audit costs.
In addition to reducing costs, businesses can automate many accounting jobs to eliminate human errors while hiring only reputable blockchain developers. This makes software development incredibly attractive to startups using blockchain to enable real-time auditing and decentralized accounting.
Use Case 7—Digitalized Property And Land Registries
Land registers have a huge problem. So proving that the land is yours for ages could be complex? These ownership rights are likely recorded on a paper document that is incredibly easy to lose or forge.
All registrations are recorded on a private ledger and later validated using the NFT blockchain. This provides an immutable history of transactions that simplifies auditing and offers great transparency.
Moreover, the technology can reduce the time to register a real estate deal from 3-6 months to just one hour.
Benefits of Blockchain in Real Estate
So, after a detailed understanding of real estate blockchain use cases, it’s time to explore its benefits. Blockchain brings versatile benefits to the real estate industry, providing high-end security in property exchange, payment, and management.
- Transparent Data Tracking
Blockchain uses ledger technology that lasts as long as the network is running. As a result to this, overall data on the property, transactions, or the history of the project is recorded, making it available for future owners and investors. Blockchain enables both parties to agree on terms based on data.
In addition, some companies have combined blockchain and big data, which allows for accurately tracking client and owner histories within borders and banks. It minimizes the fraud and default chances.
- Enhanced Liquidity
Real estate is typically considered an illiquid asset, as it cannot be easily liquidated without a significant loss in value. However, blockchain technology can substantially level up the liquidity of real estate through real estate tokenization and fractional ownership. This makes the property easier to purchase and attracts more organic investors.
Blockchain in real estate provides transparent and reliable records for any property, enables and secures multi-signature contracts, and eliminates extensive paperwork.
Blockchain enhances liquidity via cross-border transactions and mitigates issues related to international payment systems and currency exchange rates. This way, properties that might otherwise be limited to local or national markets align with global exposure and interest.
- Elimination of Intermediaries
Real estate has always had multiple mediators – brokers, agents, property managers, lenders, attorneys, assessment experts, etc. Blockchain-powered platforms directly connect investors and sellers of property to eliminate real estate intermediaries and their commission charges for services.
Blockchain-based systems automatically verify the legitimacy of the title transfer. The technology knock out third-party transaction validators while saving time, money, and energy spent on transaction closing.
Although blockchain, along with intermediaries, wipes out high additional charges, encompassing expenses on property evaluation, applications, lawyers, etc.
Blockchain implementation will eliminate mediators, manage a secure database of property records, automate the payment process, and increase transparency and accountability.
- Fractional Ownership
Blockchain enables fractional ownership, meaning multiple parties share a property’s expenses and ownership. In this way, several investors can pool their resources and invest in a property share they wouldn’t have been able to buy solely.
Blockchain technology contributes to decentralizing and democratizing the real estate investment process. Blockchain boosts transparency and accountability for all parties involved. Fractional ownership and blockchain enable easy and quick transfer of ownership and property to new owners. Investors can sell their ownership share anytime.
- Security and Control Over Transactions
Blockchain in real estate leads to fraud reduction. It is a common practice that includes the property sale to an unknown person, so there is no reason for you to trust them blindly. Luckily, blockchain in real estate reduces the need for third parties to participate and ensures all transactions are done securely.
The technology has eliminated the need for extensive documentation and various intermediaries and has effectively changed the overall situation. Since the industry started to realise that all the traditional factors lead to slow, expensive, and opaque modes of financing for property transactions, the blockchain industry became the primary choice for them. Blockchain in real estate allows streamlining payments and increases the security of real estate transactions.
- Easy Property Management
Here comes the other advantage of blockchain in real estate—easy property management. The evolution of blockchain in the real estate industry simplifies the paperwork for property management, which almost takes the time of many other tasks. The tools and software used traditionally are now being replaced with betterment and upgradation.
One decentralized software containing blockchain-based smart contracts for real estate improves the property management process, bringing efficiency and automation. It also enables for cost reduction and less time needed for administrative tasks
So these are some of the benefits of blockchain in real estate, and there are many more. It expands investment opportunities and provides various sources of investment.
Develop An Effective Real Estate Blockchain App With RichestSoft
It’s no longer a surprise that blockchain has huge opportunities in real estate software development. The industry’s future will incorporate an amalgamation of other emerging technologies, such as big data and the integration of artificial intelligence, which will drastically change the workflow of real estate tasks.
Blockchain integration isn’t something that can be prepared overnight. Real estate businesses need the right expertise. And let us tell you that RichestSoft is the ideal choice for you. An esteemed blockchain app development company, we specialize in building top-rated blockchain-based software.
We have more than 12+ years of experience helping real estate businesses get a high-end software backend with emerging technologies like blockchain, AI integration, we boast an extensive expertise.
We offer well-thought-out blockchain app development services for various industries, including real estate. Thanks to our expertise in the field and a team of developers with trending skills, we always deliver the expected results and help real estate organizations power up their businesses.
Since we always stay informed regarding trends in this domain, we were among the first companies offering real estate tokenization services, allowing clients to tokenize their properties for higher liquidity and easier transactions.
Our partnership for blockchain-based app development for the real estate industry offers complete services, from ideation to design and development.
Conclusion
Overall, blockchain in real estate holds transformative potential and has several real estate blockchain use cases. It promises smoother transaction procedures, enhanced security protocols, and broader market access through innovations like tokenization.
With the evolution of this technology, real estate professionals and investors stand to gain from streamlined operations and new investment opportunities. Adopting blockchain in the real estate sector can leverage these advancements to foster a healthier, more powerful market environment. So don’t let a second go by in decision-making, and contact RichestSoft to get a productive and effective blockchain-based real estate app.
