For the past few years, blockchain has beenon the rise. It has influenced major industries and the international economyon a huge scale. The real estate industry is no exception. Blockchain has takenthe real estate industry by storm by revolutionizing the payment system.
The digitalization of assets, securities,and financial contracts is referred to as tokenization. There are onlineplatforms specifically designed for the real estate industry. Blockchain offerstokenization which can be used to exchange stocks.
These tokens representing real estateproperty can be exchanged online. You can liquidate the assets into tokens andtrade these tokens for fiat money. Tokenization improves the regulation andcontrol over real estate assets.
Real estate purchases require severalintermediates, including lawyers, bankers, and brokers. Blockchain platformsfor real estate are flourishing at a great pace. These platforms can eliminatethe need for intermediates and assume charge of the legal documentation,payments, and listings.
Eliminating intermediates from the industrywill save a lot of time that goes into processing the purchases through them.It will also cut costs since these intermediates charge huge fees. It will alsosave the hassle of dealing with a number of people just for a single purchaseor sale.
In addition to the expenses charged byintermediates, blockchain platforms can also cut other costs like expenses ofinspection, loan fees, and registration fees. All this owes to thedecentralization and automation of the system.
Large corporations dominate the real estateindustry and are benefiting from the huge amount of money the industry offers.The real estate market is not directly accessible to a lot of people. Withblockchain, almost anyone can have access to the market and benefit from safe,impartial, and unambiguous transactions. These platforms will come up withtransactions between only two individuals.
Blockchain can decrease the occurrence offraud by cutting downtime and providing safety. In the real estate industry,there is a prevalence of corruption and lack of transparency, and oftenownership of the property is ambiguous. Blockchain provides transparency andprevents these frauds.
Peers can access the information providedby the blockchain platforms without any limitations by the sellers, buyers,banks, or real estate agencies. Blockchain delivers the present status andbackground history of the property. Considering the crash in the housing marketa decade ago, decentralization solves a major problem in the real estateindustry.
Managing property finances is hard forproperty developers. Taking a loan from a single bank costs a huge percentageof interest. Yes, they can loan money from multiple sources, but it getsdifficult to manage and keep an account of all the finances.
Blockchain simplifies investor managementfor developers by providing alternative finance models. It helps the investorskeep track of the Return on Investment. Blockchain can also help in globaldistribution. All these things will motivate the investors to invest theirmoney in the real estate industry.
Loan origination relies on paperdocumentation in the real estate industry. The process requires a great deal ofmindless and intricate paperwork. Outdated data is used for trading and assetservicing. Cash flow is highly affected by conventional methods.
Blockchain provides banks with a singleversion of the information that is verified, secure data transfer, real-timepayment settlement, and immutable transaction monitoring. Digitization ofmortgages or loans gives a choice to document relevant information like loanpayment status and ownership rights. Regulators can get an up-to-date report,and you can form smart contracts to distribute and receive payments frominvestors.
Land ownership is highly prone to fraud dueto its reliance on paper documentation. Moreover, the purchase and sale ofproperty require lengthy and frustrating paperwork, which costs a lot of moneyand wastes a lot of time.
Blockchain has replaced paperdocumentation. Any changes in property ownership or assets are documented in asingle online database. This online information is highly accessible toinvestors and buyers, and this helps them make decisions regarding propertydealing without having any trust issues.
Conventional methods of sale and purchaseof property do not provide any feedback from the community. Blockchain helps inurban planning by keeping a record of the inclinations of people and an inputflow from the community. This ensures engagement in the community and thesustainability of success for the developers.
Blockchain helps create smart contractsbetween peers, which abolish the requirement of a third party. This ensures thesecurity of the information and prevents any modifications by the third party.
Smart contracts have played a major role inthe automation of assets. All the virtual exchanges are recorded in theblockchain, and this record is transparent and unchangeable.
Doing business through blockchain requiresa concrete identity. This identity goes through the process of severalbackground checks. These identities are a means to proving your ownership ofthe property which can be shared with the relevant parties.
Blockchain records all the transactions andcash flow. This online record present in one place can help accountants createannual financial statements like income statements, statements of cash flow, orbalance sheets. This also reduces the chances of concealing any fraud in thefinal audit.
Blockchain has madeinvesting in the real estate industry easier with the use of fractionalownership. Normally, sellers ask for a large upfront sum if you want topurchase a property. With blockchain, you can buy or sell a fraction of tokensusing a trading app. Fractional ownership also helps with the management of theproperty.
Cryptocurrency is highly volatile, and itsvalue can change drastically in a short time. This can cause you a huge loss.You may have some problems with taxes since there are not any standard rulesfor taxing on cryptocurrency. You might get some tax benefits if you opt to useconventional methods for purchasing properties.
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