Blockchain, in simple words, is a technology that allows the secure and permanent storage of a digital ledger of contracts, transactions, agreements, and other information collected by a network of users. The blockchain technology ledger is a complete record of all transactions that have occurred since the inception of the ledger. It is almost impossible that a person can remove or alter the data. Blockchain is designed for the data to stay secure and immutable.
In the past, the documentation required for purchasing a real estate asset, like finance agreements, property valuations, title deeds surveys, searches, and so on, remained in possession of diverse stakeholders. Hence, sharing information was a time-consuming practice.
With blockchain, you can assemble all the information into one distributed ledger and authenticate at the point of creation by consensus mechanisms that govern the data. Every single stakeholder has instant access to all the information and can conveniently track the live progress of the transaction. All the participants can provide a digital confirmation that their element of the transaction got complete so that the transaction might proceed flawlessly to the next phase until it is finished.
Smart contracts can mechanically monitor and execute transactions when certain conditions get satisfied. Hence, they reduce the chance of manual errors. They can even lessen the number of intermediaries required and allows automatic payment. It is either directly from the bank account of the buyer or the account of the escrow.
Efficiency and Transparency in Management Process
The powerful benefit blockchain on commercial real estate can be a smoother, faster, efficient management process that accelerates deals. With smart contracts, every segment of a sale agreement or lease can get automated.
With blockchain, it is possible to form, authenticate and audit contracts immediately across the entire globe and in the absence of intervention from a middle man. These smart contracts have instructions that are entrenched in the transaction. It is so that payment can just be taken as long as the instructions get fulfilled. It provides complete transparency to all parties and diminishes the probability of payment disputes.
Quicker Background Check and Financial Evaluation
With smart contracts, you can speed up pre-lease due diligence. With Blockchain procedure, it is possible to verify identities, making the background check process efficient. The involved parties in a contract can easily access it with a personal digital key, debatable lessening the probability of fraud.
In the Real estate sector, a huge time is spent on diligence activities before purchasing or renting any property. Different intermediaries are engaged in reviewing property documents to avert any technical, legal, or financial issues in the future. Currently, most of the property data is saved in papers that anyone can easily change or corrupt. However, once you adopt blockchain in real estate, you can improve all this.
You can keep and store all the property-related papers digitally in blockchain-powered platforms. In this way, one can access these papers publicly, but nobody can alter them. It will make a background check, due diligence, and financial assessment process automated, swift, and less inaccurate.
Moreover, you can also use a blockchain-based secure QR code and embed it on the documents that you share. The QR code would have a unique hash value connected with another hash value on the blockchain network. Nobody can tamper or change the information saved in the secure QR code. One can scan the QR code to access the data; it would open only if the hash value in the QR code matches with the hash value of the QR code on the blockchain network.
Real Estate Investing
With a blockchain-based real estate platform, you can streamline your investing process. You use the concept of tokenization and fractional ownership. Tokenization is a procedure in which the owner may give digital tokens to the ones with a share in the property. Hence, they all can easily and efficiently track their investment by using blockchain. Here, each transaction would be immutable and time-stamped.
This concept of tokenized real estate makes it possible to lessen the danger of fraud in this real-estate industry. Similarly, Fractional Ownership is going to redesign the future of the conventional real estate economy. The process of forming unrelated parties to get together to share and remove the dangers associated with the ownership of a high-value tangible asset may help small investors enjoy ROI. They would not even need to wait for months or years.
The Bottom Line
So, it appears that the real estate sector is starting to tap into the force that blockchain can provide. If you are doubtful about where to start, we at ProofEasy can help you get started on your Blockchain journey for real estate.