How Blockchain Technology Improves Liquidity In The Real Estate Industry?
The technology of blockchain has influenced almost all industries globally and in this scenario, it is extremely erroneous to find a sector that has not been affected by this incredible technology. If we consider cryptocurrencies, they have created a tremendous impact on payments, remittances, and foreign exchange. And Initial Coin Offerings (ICOs) have influenced stock investing, startup loans, and venture capital. The food chain supply industry has been also upturned by blockchain.
Hence, after thorough research, it is easy to comprehend the fact that blockchain has disrupted the entire industry, and there are no industries that haven’t been touched by this technology. The same fact applies to the real estate industry as well. In the earlier times, conducting high-value asset transactions completely through digital channels was extremely strenuous even to imagine, and it was not a norm that used to be.
On the contrary, real estate transactions often take place offline involving interpersonal engagements with several other individuals or enterprises. However, blockchain brought about an entirely new face to it. The introduction of smart contracts in every blockchain platform resulted in the tokenization of every asset including real estate which can be traded like bitcoin and Ether.
The trading of real estate using blockchain technology varies. These are some of the ways how blockchain has changed the real estate industry.
· Platforms and Marketplaces
In the earlier days, the prime concern of the real estate industry was with listings and with coordinating buyers and sellers. However, in order to do this effortlessly, blockchain commences an ideal way to trade real estate and it aids several trading platforms and online marketplaces to facilitate real estate transactions more effectively.
· No Involvement of a Third-person
Personals like brokers, lawyers, and banks were an indispensable part of the real-estate ecosystem. However, with the introduction of blockchain technology, the roles of such pupils got eliminated, and the blockchain-integrated platforms can do the functions such as listings, payments, and legal documentation. Eliminating intermediaries will result in the escalation of money with buyers and sellers as they don’t have to pay for any of the intermediaries in the name of the commission and fees that are imposed by them. Hence, the process will be faster as there is no involvement of these intermediaries.
· Liquidity
Everyone considered real estate as an illiquid asset because of the fact that it takes a long time for sales to be fully completed. With the introduction of blockchain technology, everything changed drastically. Since cryptocurrencies and tokens can be traded for fiat currencies for a seller there is no need to wait for a longer time in search of a buyer who can afford the property.
· Fractional Ownership
Basically, large investments would require a substantial amount of money upfront for owning the property. On the other hand, investors also pile up their money to achieve bigger ticket properties. Since the invention of blockchain, investors just have to access a trading app to buy and sell even small amounts of tokens as they see fit. Moreover, a fractional ownership will be extremely helpful for the investors as they do not want to manage the properties themselves such as maintenance and leasing. The expense of maintenance alone can be high, and managing renters can be difficult. This has an impact on associated sectors as well, such as lending, where property owners frequently use their assets as collateral for loans in order to obtain quick cash. Property can be used by property owners according to the terms.
· Decentralization
Blockchain assures trust and security, and it is the main feature of decentralization technology. Pieces of information that are stored in the blockchain can be accessed by anyone on the network, changing data transparent and immutable. A decentralized exchange has a well-built trust in the system. Since information can be verified by peers, buyers and sellers can transact with more assurance. Additionally, fraud attempts would decline. Smart contracts are gradually becoming into acceptable records as a result of legislation for such records being passed in Vermont and Arizona. As a result, smart contracts would be easier to enforce in areas outside of technology.
· Expenses
Due to the transparency, it got encompassed with a decentralized network, which will result in the alleviation of real estate cost transactions. There are several other costs other than what have been saved by eliminating intermediaries, professional fees, and commission fees related to real estate. These costs can have higher changes depending on the territory that has jurisdiction. As platforms automate these activities and integrate them into the system, these can be diminished or even removed from the equation, similar to how middlemen are.
Conclusion
To recapitulate, blockchain technology succors as a significant solution for several drawbacks associated with the real estate industry and it is the potential enough to transform the entire industry as a whole. To dwell in this today’s highly competitive world, tokenize your property rapidly to accelerate your profits and advantages that can be incurred from real estate platforms.
