Blockchain technology has set in its sights another big institution to disrupt. The real estate market still forms a substantial part of the financial foundation of many countries. And it’s here that blockchain could change things.
In Chicago in 2016, a preliminary test of such a technology proved highly successful. With the transfer of property from one owner to another, the buyer was given a digital token along with the old-school paper deed. Perhaps in the near future, these digital tokens will take the place of paper deeds.
The method of sharing information is, as ever, the fulcrum around which blockchain’s functionality pivots. Currently, real-estate transactions go through the MLS system, or Multiple Listing Service. It is a highly fragmented service, and not easy to navigate for those outside the real-estate industry.
Blockchain will change how companies share data. Through a blockchain-backed MLS, companies will be able to share data with clients with real-time access to property information. All parties involved in the sale of real-estate will be able to access and edit the data to build a complete picture of the property.
The digitization of title records will also provide some distance from the current method of recording who owns what property around the United States, which is done on a local-level and on paper. Putting the deeds on blockchain will allow for a nationwide database of the status of various properties around the country.
This change from analog to digital would save time and money for all parties, as currently, title deed transfers involve a tangled web of bureaucracy. According to Goldman Sachs, the average title premium could be reduced by as much as 30 percent by blockchain technology. It will also eliminate much real-estate fraud, as blockchain contains failsafe security measures.
There are those who are skeptical, however. “I don’t see any advantage to it,” Rick Stacey, an Idaho real-estate lawyer, told Inc, he eluded to the fact that there may “potentially [be] some downsides.” Procuring title insurance may be more difficult.
“You can do the exact same thing with a trust without using blockchain,” Stacey elaborated.
The bottom-line is that blockchain will be a more efficient way to transfer data in the real-estate world. This is attractive for both buyers and sellers. The melding of real-estate data with blockchain technology is still in its infancy – the jury is still out, but this compelling development should be closely monitored over the next few years.