Much is being said about the cryptocurrency phenomenon these days, but there are far-reaching ramifications that blockchain, which forms the technological platform for cryptocurrencies, may have on the real estate sector. Whether these implications have any negative fallout in the distant future when they become part of the system is a far-fetched thought right now.
However, at this point in time, what we need to concern ourselves with is how the degree of change and transparency related to blockchain can introduce reforms in the scenario. Let us have a look at how the real estate investors can benefit from the blockchain technology:
Centralized information bank
A real estate transaction does not conclude without both the parties, that means seller and buyer, agreeing to transfer the title and the payment to each other. The process also requires certain legal documents without which the whole process of the transaction remains incomplete.
In the present scenario, it is not possible to complete a real estate deal remotely if these two parties are based in different places, because those documents are all warehoused at different locations, and there is no synchronisation whatsoever in scrutinising them. With the help of the blockchain protocol, this can be done pretty swiftly as the information can be retrieved from a centralized source of data and updated in real time at different nodes.
Speeding up the process
At a time when the real estate sector is reviving, thanks to the government reforms, the lack of skilled professionals who do not hesitate in performing due diligence is lacking. Whilst this may remove the human factor further from the real estate transaction process cycle, it also seeks to eliminate the requirement of an individual who is competent enough to mediate the process.
Blockchain helps distribute information whenever required, without the necessity of any special privileges. Anyone with the necessary credentials for sifting and fetching the concerned data can pull out the information as long as they are permitted access. It also reduces the processing time usually required by government agencies. This also eliminates the need for a third-party mediator or escrow services.
This means that customers no longer need to be apprehensive about either the transaction getting held up without a third party professional stepping in or the fact that said the third party would charge their cut from the property sale value.
Stamping out fraudulent activities
The chances of fraudulent activities cannot be completely ruled out. Forging the ownership documents concerning property, or faking notary stamps, has become easy. However, blockchain eschews the need for a paper trail. With the help of blockchain, one can safely screen and verify ownership documents available in the blockchain network.
Thanks to blockchain network’s policy of distributed computing, it’s not possible for anyone to forge the document because traces of the original is scattered on multiple systems.
Blockchain does present strong, much-needed solutions for the real estate sector, especially in terms of land records and legal documentation. However, the technology has not come up as a potential framework, beyond its dubious distinction of having association with cryptocurrencies, as of yet. The scenario is changing sooner than later and we should be witnessing the wave of transformation in the coming quarters.
(By Aval Sethi, Chief Executive, Protaiga, a consultancy and advisory firm)