How blockchain is streamlining real estate transactions

Blockchain technology has the power and capabilities to transform the private real estate market, writes Kyle Hagerty.

In the world of Web3, it is hard to separate fact from fiction when it comes to blockchain.

Since breaking onto the scene, a litany of products and services based on blockchain technology have promised to transform every industry, but how has this technology changed the private real estate market? From prospecting to management, blockchain is being put to work throughout practically every facet of the industry. 

“Payments, settlement, real estate records, transactions and many other areas can all be touched by blockchain technology,” says John Sedunov, finance professor at Villanova University. “I think this is one reason you see central banks and large financial institutions investing time and resources into developing this type of technology.”

The blockchain makes finding listings and connecting buyers and sellers easier by using tokenization to facilitate real estate deals. NFT-backed platforms such as Propy and Fraction expand investment opportunities, offering a framework for fractional or outright ownership of traditional real estate assets through the blockchain. Blockchain’s near real-time data removes friction and reduces risk by presenting the most up-to-date information on the market without requiring a third-party broker to execute the deal. 

“Payments, settlement, real estate records, transactions and many other areas can all be touched by blockchain technology” 

John Sedunov,

Blockchain technology also assists in creating digital identities for individuals and assets based on an unfalsifiable, immutable record. Conducting background checks on digital identities to see a history of transactions, prior liens, or any other issue happens nearly instantly. Blockchain is creating new deal platforms to cut out costly brokerage, legal and financial expenses, according to Deloitte’s 2021 Global Blockchain Survey. 

Smart contracts enabled by the blockchain allow key parts of any real estate transition to be recorded on the blockchain, becoming a smart contract. Those smart contracts initiate deposits and payments through crypto wallets or traditional bank accounts throughout the length of the deal. Smart contracts ‘on the chain’ enable more efficient and transparent property management and related cash flows. 

Removing barriers

Blockchain technology has become a key component of commercial real estate markets, being leveraged to create more efficient financial processing, settle escrow faster,  enhance transparency and drive faster transactions to alleviate the industry’s issues with low liquidity.

Blockchain’s distributed, tamper-proof ledger makes committing fraud related to liens, easements, rights, titles or transfers increasingly difficult because the blockchain acts as a digital record both parties can track in real-time, improving transparency to fight corruption. 

Once the deal is complete, payments and money transfers for transactions still present a significant issue, especially if the deal is taking place across borders. Digital identities kept on the blockchain reduce the financial processing required for loan applications, documentation and services by offering an audit trail of ownership history, cash flows and payments. The blockchain acts as a common denominator to share information without intermediaries, connecting the buyer and seller ledgers on a common platform. 

Blockchain within the private real estate market is about establishing a common ledger that can be easily shared without worrying about data corruption. With all parties working off the same irrefutable ledger, major problems that can disrupt real estate deals are easier to flag and tackle. By creating a more transparent and efficient way to share data, the blockchain is creating cost savings by removing barriers and bottlenecks in critical transaction processes.