It has been shown that blockchain technology has the ability to revolutionise every industry. The new technology in real estate has made it abundantly evident that it has uses beyond cryptocurrency and may be the best tool for overcoming the current industrial issues.
This has had a knock-on effect in that many businesses, including the most conventional ones like real estate, have embraced blockchain technology.
The blockchain is the driving reason behind the disruptive transformation of real estate. What was once thought of as a “pen and pencil” business has started to extend to the international market with better and long-term results. Numerous business owners and modern investors are now curious to learn the procedure of Blockchain Real Estate Software Development that will be covered in depth in this post.
Issues Faced By The Real Estate Sector
Every so often, the real estate business faces new challenges brought on by changing economic conditions and expanding trends. Realtors monitor the obstacles that prevent sales while they are still in operation. In real estate, a number of aspects, including managing contact information, dealing with stakeholders, and listing properties, affect the revenue. Below are a few of the typical difficulties that realtors encounter:
1. A lack of openness
Due to the inclusion of several aspects including citizenship, financial requirements, qualifications, credit score, etc., the real estate market is not accessible to everyone. In addition, there is no market database or reliable method of getting access to the data needed to make purchasing and selling decisions.
Overall, this makes the industry hazy and murky for everyone.
2. Complicated paperwork
Every transaction in the conventional real estate market entails a long list of time-consuming, laborious paperwork. As a result, real estate businesses frequently lose money and potential clients while also becoming sidetracked from their primary objective.
3. Increased Fraud Risk
There is a higher danger of fraud in the real estate market because all property agreements are written on paper and the foundation of trust is human. The fact that there have been 404 publicly published data compromises in the United States, up 14% from Q1 2021, is evidence of this. For the third year in a row, Q1 2022 saw more breaches than Q1 of the prior year.
4. High Cost of Investment
Real estate investments become more expensive as a result of the engagement of more middlemen, who add a variety of fees to the real estate cost, such as broker fees, legal costs, exchange fees, taxes, etc.
5. There are a lot of intermediaries
The traditional real estate market’s reliance on human factors for trust is another issue. To establish confidence in the process, any two parties must include third parties at various levels of participation. This is another real estate issue that blockchain has resolved.
6. Rapid transaction times
Last but not least, because so many people are involved in real estate operations, transaction speeds are bad.
According to a Chinese global travel survey, 44% of tourists schedule a meeting with real estate brokers prior to leaving the country. In addition, 74% of them meet with two or more specialists to confirm their choice to buy a home in the destination city.
However, the wonderful advantages of blockchain technology are allowing it to infiltrate various processes and sections of the real estate sector and solve these issues.
Areas Transforming as Blockchain Technology Is Adopted in Real Estate
The real estate sector may leverage blockchain technology to its advantage in a number of different ways. Below are a few of the typical areas that are being updated with blockchain deployment.
1. Real Estate Search
Currently, to find any property information, brokers, owners, tenants, and purchasers go to multiple listing services like Zillow.
These platforms have expensive subscription prices. Additionally, they frequently present inaccurate, out-of-date, or partially distorted property data. This worsens process inefficiencies and frequently leads to disagreements.
However, all of this may be avoided by utilising a real estate software built on the Blockchain.
2. Financial analysis and exercise of due diligence
Prior to purchasing or renting any property, extensive effort is spent on due diligence tasks in the real estate industry. To avoid any future legal, technical, or financial concerns, a number of middlemen are involved in the process of checking property paperwork.
All of the property information is now held on paper, which anyone may readily alter or corrupt.
However, this niche can also be improved with the use of blockchain technology in real estate app development.
All property-related documents can be digitally kept in platforms powered by blockchain so that anyone can view them but they cannot be changed. This will automate, speed up, and improve the accuracy of the financial review and due diligence processes.
3. Documents and Payments
Blockchain has a large effect on real estate, particularly in the areas of files and payments.
At the moment, the process is time-consuming, difficult, and expensive due to the substantial documentation and the use of third-party intermediaries. And when there are mortgages for overseas transactions involved, this effect becomes more noticeable.
By offering verified digital identities for properties, blockchain, a new real estate technology, may now streamline the filing process and bring innovation to real estate procedures.
The arrival of cryptocurrencies can also make it easier to use multiple currencies in various locations. In addition to expediting the payment procedure, it can even reduce the applicable taxes and fees.
4. Property Administration
Property administration is a very complicated process in the traditional real estate market, especially when several stakeholders are involved.
Either offline manual paperwork is used to administer the property, or some independent software is employed. As a result, the information continues to be restricted to a specific database or individual.
However, the future of real estate could change as blockchain plays a bigger role in property transactions.
From signing lease agreements to managing cash flow and submitting maintenance requests, a blockchain-based property management system that leverages smart contracts for real estate can streamline the entire process.
Lease payments between a landlord and a tenant can be established automatically using a smart contract. The smart contract can give a seamless experience to both parties by automatically transferring the security deposit back to the tenant’s account after the lease expires.
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5. Management of Deeds
Deed management is another area where you can observe how blockchain is affecting the market for real estate software.
Property titles are currently on paper. As a result, there is a greater possibility of mistakes and fraud situations. In fact, the American Land Title Association has disclosed that during the transaction process, 25% of all titles are found to be flawed.
Any flaw renders it illegal to continue the deed management procedure until the problem has been fixed. Due to this, it is essential for property owners to pay expensive legal fees to guarantee the veracity and accuracy of their property titles.
With the use of blockchain technology in the real estate sector, as immutable digital records, this problem may be readily handled, making the entire process transparent and secure.
6. Investing in real estate
Using the ideas of tokenization and fractional ownership, a blockchain-based real estate platform can also simplify the investing process. The majority of organisations are unsure of how to tokenize real estate, while some are doing it on a far greater scale.
Tokenization is the method through which the property’s owner can distribute digital tokens to individuals who own a stake in it. Using blockchain, they can all keep track of their investments, with each transaction being immutable and time-stamped.
By leveraging blockchain technology to tokenize real estate, it may be able to lower the fraud risk that currently exists in the sector.
The traditional real estate industry will change in the future due to fractional ownership. Small investors can benefit from ROI without having to wait months or years if unconnected parties work together to share and eliminate the risks attached to ownership of a valuable tangible asset. Eventually, make trade in real estate assets possible across international borders.
While this would have given you a general understanding of the countless possibilities presented by blockchain technology in the real estate sector, let’s look at some actual examples to help you grasp it.
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How Can Blockchain Technology Be Integrated Into Real Estate Business Apps?
There are essentially two routes you may take when investing in Blockchain app development for real estate:
1. Construct a smart contract with LISK
A PaaS, LISK is a platform for creating Blockchain applications (Platform-as-a-Service). It provides programming language runtime environments, databases, cloud infrastructure, and operating systems. This aids in bringing your own code to produce a crypto token or side chain.
2. Create a real estate platform backed by Ethereum
In this method, a real estate blockchain platform can be created using the Ethereum platform, which has attained Ethereum 2.0 level.
While both strategies for creating a real estate app on the blockchain are advantageous, it is recommended to get in touch with a reputable Blockchain software development company to benefit from a higher return on investment.
Even though we are already familiar with the applications of blockchain technology in real estate and the businesses that are using it, it is still important to be aware of the obstacles that the development of the blockchain-based real estate market faces. Something with which we’ll wrap up this piece.
The difficulties you could encounter when implementing blockchain in your processes
Every developing technology, including blockchain, experiences a hype phase. It takes a long time to overcome the difficulties and use it to fuel contemporary solutions. The obstacles that you may run into when integrating blockchain into your business processes are listed below.
1. Prominent Adoption
It is true that one of the most popular technological advancements in the real estate industry is blockchain. The technology is still developing, though. Because of this, it is difficult for many entrepreneurs to fully see its potential. This is functioning as a roadblock to the real estate industry’s adoption of Blockchain technology.
Global real estate sales total in the billions per year. A network with the capacity to handle a high volume of transactions is required. To satisfy this need, there are still not many solutions in the blockchain space.
Ethereum offers the chance to manage 15 transactions per second, compared to Bitcoin’s 5 transactions per second. Similar to this, Ripple’s XRP, one of the cryptocurrencies in vogue, aims to process 1,500 transactions per second.
However, this still falls far short of what huge corporations need, which is real-time, ultra-speedy computing.
3. Chain Compatibility
Chain interoperability is a problem that real estate companies are encountering when they use blockchain technology.
The digital market is home to numerous different blockchains, many of which are unable to communicate or cooperate with one another. Real estate businesses find it challenging to leverage various data sources on a public and private Ethereum blockchain simultaneously and streamline their processes due to this lack of interoperability.
In the real estate sector, blockchain offers a new level of transparency, security, and eases the entire purchasing and selling process. Due to the exploration and adoption of blockchain technology into applications by industry leaders and governments, real estate is making a significant leap into a decentralised digital world. In addition to blockchain, the future of real estate will combine other cutting-edge technologies like big data and artificial intelligence. This will fundamentally alter how the industry operates today.