Challenges faced by the real estate industry
Lack of transparency
Low transparency leaves the industry vulnerable to criminal transactions and money-laundering. The UN Office on Drugs and Crimes estimates that US$1.6trn is laundered annually.
Ballooning administrative costs
Forbes states that non-core work takes 89% of the average agent’s workday. Admin costs grow rapidly, while record-keeping requirements hardly meet traditional techniques.
Payment processing
Processing for basic payments like surveyors’ fees is done slowly, with many systems relying on paper records and costly human work; stamp duties and taxes can be even more time-consuming.
Barriers to entry
Real estate involves big-ticket purchases, accessible to institutions and high net-worth individuals. The less-wealthy struggle to enter the market, while buildings stand empty for lack of a buyer.
Trust and reliability
Many developing countries suffer from low societal trust, or unreliable basic administrative services. Transactions usually require a trusted third party, which incurs costs, risks, and delays.
Lack of liquidity
A space characterized by large transactions often struggles with liquidity; transaction volumes fall while both vendors and purchasers suffer.
Inaccurate land ownership records
Many nations have unreliable or incomplete land ownership records. In nations with good basic record-keeping, intestacy and opaque transactions make owner identification fraught.
Commercial insights and analytics
Insights into everything from customer experience to financial patterns can help businesses excel. But it’s difficult to extract those insights from paper records stored in multiple locations.
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Get expert adviceBlockchain solutions for real estate from Aetsoft
Transparent records
Immutable, auditable records of transactions and entities establish transparency and compliance, eliminating the possibility of criminal activity.
Liquidity and access
Conversion into fungible tokens makes real estate markets more liquid without becoming more volatile. Lowered barriers to entry increase aggregate demand and stimulate supply.
Tokenization and fractionalization
Tokenization of the value of a real asset allows it to be traded on the blockchain through exchanges like any token, eliminating barriers to entry.
Smart contracts
for payments
Smart, self-executing contracts can be chained into workflows that automate payment of stamp duties, taxes, and agents’ fees, ensuring compliance and reducing administrative load.
Reliable proof
of ownership
Land ownership records kept on blockchain are accessible and immutable. Only authorized persons can change them, and each change is recorded.
Secure, accessible data for analysis
Easily analyse data and extract meaningful insights from it by using standard big data techniques on-chain with Turing-complete, blockchain-based dapps.
Self-administration
Common activities can be automated using smart contracts; record-keeping is automated as standard on the blockchain, setting employees free for higher-value tasks.
Trustless and immutable
No trusted third party is required; blockchain cryptology removes intermediaries, establishing a trustless environment between contracting parties and sharply reducing transaction risks.
Blockchain applications in real estate
Use case 1. Low-cost property purchasing
Currently
Property deals involve the whole army of lawyers, brokers, and insurance providers, each requiring a fee; otherwise, you won’t get a land title, and the deal will fail.
With blockchain
Blockchain-based smart contracts replace third parties, standing between property buyers and sellers, through autonomy and cryptography; more to it — they don’t require exorbitant fees!
Use case 2. Streamlined identity check
Currently
In modern real estate processes, landowners and tenants slowly make deals since both parties have to manually perform background checks before entering into an agreement.
With blockchain
Blockchain reduces the time and costs associated with property deals, guaranteeing regulatory compliance, low prices, and cryptographic protection to all agreement parties.
Use case 3. Real-time accounting
Currently
Manual accounting, taking place between investors and asset owners, is a redundant, inefficient process, implying a tedious check of piles of related documents.
With blockchain
Blockchain replaces manual checks with a real-time audit of real estate deliverables, thus making validations fast and efficient.
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