Blockchain & Real Estate Cross Paths to Disrupt Industry
Emerging technologies have always reshaped the way industry titans do business and real estate is certainly no exception. Ever since the blockchain started making waves on the financial scene - investors and business owners alike have been looking for ways to use it to disrupt existing industries and bring new opportunities to the public. Most of you know by now what the blockchain is, but for those of you just coming on board - here is a good primer on the subject.
Industry Disruption
If you get the basics of how the open ledger system works - you don't have to be a computer scientist or have an MBA to understand that there are a lot of industries that could change entirely as a result of such a technology. Just like email changed the way we communicate and made the telegraph practically obsolete - blockchain can help make existing applications obsolete , while providing superior trustless transactions that make doing business on a global scale faster and more secure.
One example that comes to mind is one that I have talked about a few times. One application of blockchain which could completely upset the real estate industry is "title search". Currently , it takes time for a title company to do a title search which is basically a chain of title that shows who has owned the property since it was built ( or added to public records. So a proper chain of title would show when a house was built and who the first person to buy it was, as well as how they paid for it - either with cash, financing , or private lending - either way - it shows who owns the property and who has any liens on it. It can also determine if there are unpaid taxes whether or not and if the property is in about to go into foreclosure or not. This information is extremely important for home buyers - because it allows them be sure that the person selling the property has the right to covey title, as well as to insure that there are no liens on the property that were not disclosed - after all you don't want to buy a house and then have to pay off four years of back taxes for it- right?
Smart Contracts
So situations like this lend themselves to blockchain technology . I think it is easy to see how we can apply it to this industry. The block chain and its unblinking eye remembers everything and if you uploaded the entire chain of title to the public ledger- then it would be available for everyone to review. If they implement the use of "smart contracts" to automaticlly update the system of any transactions - then no longer would you need to pay a title company to request the chain of title. You would be able to simply look up the property and see the entire history of it for free.
The end of title insurance?
Unlikely. As of now,banks and mortgage lenders insist on either the buyer or seller paying for "title insurance" as a way to protect them from a fraudulent transaction during the purchase of a property. With the blockchain, it may possibly negate the need for title insurance if the entire chain of title is a public record that cannot be changed without leaving evidence of tampering. If such was the case - then mortgage companies should be able to trust that the title is clear and not require insurance on the title - however, with older properties there may be a reluctance because of the human error factor and not entering everything onto the blockchain initially.
New construction however, should be able to be put on the blockchain and then everything after that could happen on auto-pilot with smart contracts that automatically update the chain as soon as any amendments are made to the property title. They can also make it so that anything not recorded on the blockchain is not a valid claim since it cannot be verified. Personally - I see the bankers finding a way to justify title insurance either way - but there is no denying that at the very least - we should be able to access the public blockchain and see the entire history on our won with out having to use a title company.
Brokerages recognize the benefits
Still, we are starting to see the emergence of the technology as real estate brokerages start taking on the challenge to see if they can implement the blockchain into there own business model. One such example is Propy, Inc - a Palo Alto based company that is launching a new pilot program in the "blockchain freindly" state of Vermont. They have the full support of the state which according to the following article has been already prepared for it for some time now.
In 2015, Vermont had passed a law related to economic development that contained a section on Blockchain technology. The law mandated that a report be made on the possible uses of Blockchain for the government, such as its potential for the verification of state records and the use of smart contracts.
Read more about it here -
Vermont Proves ‘Blockchain-Friendly’, Hosts Real Estate Pilot Program
Do you think blockchain will disrupt the real estate and title industry? Let me know what you think in the comments
Please be sure to check out my others articles on real estate, investing , and cryptocurrency ( and some other random dog stuff)
I always upvote comments to my blog posts
I concur, realestate is an area that will face major disruption with blockchain technology.
Some interesting projects out there:
Rex - http://rexmls.com
Rentberry - https://rentberry.cryptonomos.com
excellent find! I have looked at REX before - and rentberry sounds familiar but I dont know about about it - Ive heard of ManageGo to pay your rent with bitcoin .. I did a story on it previously - Pay Your Rent in Bitcoin - it's nice to see other companies coming onboard - it wont be long before we have mass adaption.
Disrupting all industries! lol love it. Have you heard of Habibi coin?
I hadn't heard of it - but I looked it up - sounds interesting. One thing about it that makes sense in the ability to use it to bypass traditional funding methods because they cannot charge interest as it is a violation of the Muslim faith. I have some Muslim investors that I work with and they tell me that we need to structure deals in a way that they are receiving " salaries" not "interest" so I can see how this may really take off. I will have to keep my eye on the ICO. There could be a large consumer base for such a coin.
Never actually knew that. I caught his interview recently with Tai Lopez. It backs with real estate which I found interesting. Successful guy running it and putting himself out there. Will see what happens! :)
The world is about to change in a way that has never happened and things will never be the same again. How lucky that we get to live through these times, eh?
yes - the future is exciting - we have already been blessed to live in the era of space travel, advanced robotics, nanotechnolgy , and artificial intelligence - it's amazing to watch the future unfold right before us
I think society has to adopt blockchain first before the real estate industry will follow. Although buyers are not obligated to go through the agent’s preferred closing company, most do. It’s convenient. They pay the conveyance fee, which includes a title search. Agents receive a share of that conveyance fee. Moving to a blockchain platform where users do a title search themselves would definitely disrupt the real estate industry. I’m sure agents would have a big disclosure on their documents stating “they are not responsible for any title search done independently.” They will also warn buyers that they will not be responsible for closing delays if title becomes an issue at settlement. Most uninformed buyers would simply let the agent handle the search. That’s just life for many, taking the path of least resistance.
Great points Beeyou! - I think clients will still allow their agents to handle a lot of the footwork I agree -but that could still equate to lower fees for clients ( as the agent can look it up for free) and likely faster results as good agents are eager to please with timely information.) I also agree that new disclosures are likely to be written to release liability - the people may have a choice to pay for the service or to trust the blockchain and get it for free from their agent - so it will put a certain premium on title company searches -at least until blockchain has total adoption and then they will have to discount their services - and likely be using the blockchain to obtain their data! As far complete adaption of the blockchain - i think we will see it sooner than we think - when the large companies and industries see the value in it and start using it -then the rest of us will be forced to go along with it whether we understand it or not - and chances are 0 it will invisible to the basic consumer - much like no one understands facebook algorithms - but they know how to use it all day ... being decentralized might pose a problem for most large companies though... since centralization is how they control their market - peer to peer transactions upsetting lots of industries could have negative effects also - how many industries do he have that we can cut out the middle man? lots. between that and AI / robots taking over manual labor jobs - this whole Universal Basic Income might become a real thing
Makes me wonder what life will be like for our next generation. The www changed life for all of us. Blockchain is this generation's www. I agree, many industries will be disrupted. The real estate industry will change along with it (when forcced). It's starting already with accepting Bitcoin for real estate transactions. There is just so much to learn in this blockchain world. Now I understand the angst that seniors went through when transitioning from paper to digital.
Thank you for this article. I genuinely like it, the subject and the text are both very good. This industry actually needs disruption, and I hope there will emerge many strong teams with a good vision and proper products.
I found your while was looking for Habibicoin mentions, and not for a positive reason, but to warn against possible scam. Currently we are conduction an investigation into this project and have already found some very disturbing information about founders. Check out this brief review to find out the background problems with Habibicoin: https://steemit.com/ico/@evp/habibicoin-background-check-and-a-review