Home buying is one of the most important purchases a person will ever make.
That’s why, in the process of buying a home, many of us depend on the guidance and the handholding that real estate agents provide. The human element can make it easier to make these big transitions and receive the right advice to feel confident in our decisions.
It might be scary to think that in the future, the real estate industry will soon be dominated by a new-age technology, the blockchain. Even scarier, is the fact that we don’t really understand what the blockchain is, does, and why everyone claims it is about to take over the world. This “Godzilla” technology might sound daunting to even the most tech-savvy real estate agent or the traditional homebuyer, but understanding how it works, will not destroy the very industries we have grown accustomed to. Instead, we will become quick to welcome its many possibilities.
In its simplest form, the blockchain is a medium of record keeping. Here are the basics of how it works:
- Decentralized – Data is distributed across a complex network of servers. No longer is ownership placed in the hands of one centralized authority, creating greater vulnerability to hackers and cyber-attacks.
- Immutable – Records of information are placed in “blocks” that may not be manipulated and altered to carry out fraudulent activities. Instead, new information must be updated in the creation of a new block.
- Transparent – Now we know that the blockchain is built upon with each new “block” of information. The glue that holds it all together is a string of hash numbers, each referencing the previous block. Hash numbers can then be used to refer back to information with complete transparency, allowing you to follow your transactions from start to finish.
- Smart – With the blockchain comes an endless possibility for what we call smart contracts. With these contracts, we are able to program specified rules, ones agreed upon by all parties involved, so we may then automate activities, saving time, money, and a lot of headaches.
What Does This Mean for Real Estate?
1. No More Digging
As a real estate agent, many times, you will find yourself frantically digging through paperwork, brushing up on the terms agreed upon, so you can close the sale. According to Piper at Crypto Realty Group, “We’ll be able to program the rules of each property transaction including disclosures, contingency periods, loan information and escrow instructions, drastically cutting down the time and energy it takes to gather the information and generate the documents.” With smart contracts, the blockchain will do the busy work for us, giving us more time to do what we do best, close the sale.
2. Transparent Transactions
It takes a village to raise a child, but it also takes a village to house that child. Buyers and sellers, along with their agents, escrow officers, inspection and termite vendors, lenders, and title representatives are all involved in the process. Luckily, everyone on that list can track the progress of the smart contract, staying informed when a new process has been executed, in order to avoid wasted follow-up and the unsettling feeling of being in the dark.
3. Chaining Up Fraud
You’ve all probably heard of and worried about title fraud at some point in your homeownership experience. In your head, it goes like this. The con artist first takes your identity, then goes on to forge your documents, to sell or re-mortgage your house, with just the stroke of a pen. This damage can all be avoided on the blockchain, where transparency to everyone involved provides visibility to any breakpoints along the way. It is now possible to convey title on the blockchain; transforming the ways we will express title in secure and stable formats.
4. Faster, Faster, Faster
Wouldn’t it be nice if we could prequalify buyers before they even stepped foot in a showing? How about prequalifying clients with their financial backgrounds and attaining a simple hash number to reference and verify their qualifications soon after? Loan transfers would then take 48 hours or less, pairing clients with lenders that suit their particular needs. This all becomes possible on the blockchain.
And while the blockchain will make the real estate agent’s life a lot easier, it will most importantly, make the quality of life better and safer for the buyer.“We as agents still have a fiduciary duty to our clients to keep their sensitive information safe and secure. We can choose what information gets disseminated on the blockchain; social security numbers, bank statements, and other private documents can be referenced with another hash number, letting the trusted user know where the physical information is stored,” says Piper.
While blockchain users pride this technology on removing the middleman, in real estate, this process likely will maintain its human-centric approach. Everyone involved in this industry will benefit from more transparency, security, and quick turnaround time. With the peace of mind that the blockchain provides, buyers can now begin to make their house a home.