How Blockchain Is Shaking Is Shaking Things Up in Real Estate in a Good Way
As a prospective homeowner, it’s exciting to start the hunt for the perfect home in the perfect neighborhood. There’s nothing quite like the thrill of walking through a potential fit and imagining how you would decorate the walls, how your furniture would look in the living room, and how great it would be to have your family walking through the halls.
If you’re in the market for a fixer-upper, you can take your imagination even further (and in some of the houses, you may have to). Instead of just imagining a new coat of paint and some decorations, you get to think of what it would look like as an entirely new home. After you knock down a few walls, rip up old flooring, lay down new materials over there, and add in a bathroom and a couple of skylights, it will basically be a new home, after all.
Once you’ve found the perfect fit, though, things get a lot less exciting. In fact, they can get downright stressful and frustrating. You may have to play the offer game, which is stressful enough on its own, but after an offer has been accepted, then begins all the paperwork and formalities.
As a buyer, you have to get approval from your lender, make sure everything comes back how it should on the inspection, hope the house appraises how it needs to, and make sure you get all of your documents sent in and ready to go for close. That’s not the end of it, either. After all that is said and done, and you’re finally ready to close the deal, you still have to go and meet with your agent and escrow company to finalize all of the paperwork, get it signed, and have everything transferred over to your name.
Even after all that, you may find there are additional fees or commissions that have to be paid to your realtor, or that your mortgage has to be adjusted because of an undercalculation, or that you’ll have to shell out even more money than you were told because of an error on someone else’s part. All of that is enough to make anyone go crazy.
Anyone who has purchased a home or is in the process of purchasing real estate can agree that the current model does not serve homeowners and buyers – in fact, it seems to make things more difficult than it does streamline the process. That’s all changing, though. Thanks to a technology some would never have guessed would affect real estate, the industry is being changed for the better.
Blockchain technology is a trending topic that is usually discussed in conjunction with cryptocurrency – one of the best-known being Bitcoin. Although some people may think of cryptocurrency and blockchain technology as more of a tech-related concept that seems more of a discussion topic than a reality, cryptocurrency and blockchain are already being implemented in a number of different ways across a wide variety of industries, and real estate is one of them.
Blockchain technology is basically a decentralized digital ledger that chronologically and securely records transactions of all kinds. Those transactions can then be accessed and viewed by anyone, but they cannot be altered or changed once they’ve been recorded. This means blockchain is secure but transparent. The technology can be used in many different ways, including as a contract, because it can uphold and enforce terms the different parties agree on.
One way that blockchain is set to shake up real estate is the way information is shared. The multiple listing service (MLS) system currently tracks agents, contracts, etc., but it is not easy for everyone to access and sometimes there are issues in the system. Because it can share data with anyone, blockchain would improve the MLS.
Blockchain could also help mitigate obscene commissions. Deedcoin is one company, in particular, that is using blockchain technology to provide buyers with the option to find agents and pay only a one percent commission rather than a six percent commission. Deedcoin promises benefits to buyers, such as rebates at closing, and promises benefits to sellers, such as more money from the sale in their pocket.
Providing clarity on property rights and making transactions transparent are some of the other ways blockchain technology is changing real estate, among many others.
The way these processes work right now is definitely not designed to make things easy for sellers or buyers. There’s a lot of room for improvement in the real estate industry, and it’s looking like blockchain is going to shake things up and make things better for everyone involved. It’s just a matter of time until it’s implemented across the board.
What other effects do you think blockchain will have on the real estate industry?
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