Buying Real Estate in a Truly Open World

Photo by CHUTTERSNAP on Unsplash

The real estate industry is one of the largest asset classes in the world. According to London-based firm Savills, in 2016, there was over $216 trillion of global real estate on the market (this figure includes commercial, residential property, forestry, and agricultural land). It’s pretty clear that the real estate industry is vulnerable to changing global economies and monetary conditions, so our question is, how could Blockchain affect real estate? In this article, we’re going to go through the pitfalls of real estate in the modern world and how Blockchain could provide an elaborate solution to these problems.

What Are the Current Pitfalls or Real Estate?

So we know real estate is a vast market, but it’s not without its pitfalls. Let’s take a look at some of the glaring problems with the real estate industry today:

A Closed Market

One of the biggest issues with real estate is that it’s not open to everyone. Investing in property has long been a passion project of the rich, and once you’re on the ladder and purchasing properties, it’s one of the quickest ways to make a passive income. Citizenship, international bank accounts, financing, and accreditation are just some of the things stopping the average person from making money from real estate or purchasing a property altogether.

How Blockchain Can Help: Blockchain could allow the concept of Fractional Ownership to dominate the market. In turn, this could remove the barriers to real estate. Fractional ownership means large upfront investments are no longer required. Instead, the fee is split between multiple parties who could purchase tokens and own part of the property.

Extortionate Fees

If you’re looking to invest in real estate overseas, you’re going to be looking at some hefty fees, including broker, exchange, transfer, and attorney fees. That’s before you’ve even stepped into the whirlwind that is international tax. Your money will be passed between plenty of intermediaries, and you’ll be paying a premium to have these people involved in the transaction. However, they’re not actually beneficial to your purchase.

How Blockchain Can Help: by decentralising the real estate market and making the data transparent, we can cut out the middleman (or multiple intermediaries in the case of real estate). Cutting out intermediaries and their extortionate professional fees will help reduce the cost of purchasing real estate.

A Lack of Transparency

Tax evasion, money laundering, and corporate corruption are just some of the evils of real estate that pass under the radar due to a lack of transparency. The UN Office on Drugs and Crime estimated that roughly $1.6 trillion is laundered through real estate every single year. A higher level of transparency in the industry is needed to provide a visible paper trail and a reduction in illegal activity.

How Blockchain Can Help: Decentralising real estate data could allow for a transparent market. Both buyers and sellers can have confidence in the market if the paper trail is visible. This would also reduce the number of illegal transactions as liability would be at the forefront.

It’s Time Consuming

The time it takes to find a property, align your finances, make an offer, and process the transaction on average takes around one year. That’s a heck of a lot of wasted time.

How Blockchain Can Help: If real estate transactions were peer-to-peer, and the middlemen were cut out, and money was saved, the process of purchasing and selling real estate could be far quicker. Whats more, Blockchain could take an illiquid market such as real estate and make it a liquid market. Instead of waiting for a buyer to have the full funds to purchase property, a seller can trade parts of the property sooner.

Is Blockchain the answer?

Blockchain as a whole aims to achieve three things. First, to decentralise data so that it can’t be owned by one single entity. Second, to ensure all the stored data is transparent to everyone inside the network. Finally, to ensure that the data is protected from corruption. As you can see, it’s clear that the very core of Blockchain serves the real estate market well. Whether it’ll take off, and whether fractional ownership is a desirable concept in the 21st century is a different question.

--

--

--

Product Engineer💻….Global Citizen🛩Blockchain Enthusiast🔗….Stoic….Founder of Unpluggd Media Group. I build things and tell stories….https://kareempjackson.com

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

“Electric vehicles + block chain”, Ex Tesla Exec brought you into the world of EVA.IO.

(EN) Mad’s Crypto Corner #AMArathon with Alkimi Exchange Recap

Launching the First gynarchy.io NFT Collection Amidst Concerns

ICAC Interview -issue 14| BlockDevs Asia: empower the developer IOST Community with education and…

What Faiver, an NFT marketplace, offers as a platform?

UK GOV & BLOCKCHAIN

Interview with the Nerd: NODE A-TEAM

Blockchain Live London: Report

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Kareem P. Jackson

Kareem P. Jackson

Product Engineer💻….Global Citizen🛩Blockchain Enthusiast🔗….Stoic….Founder of Unpluggd Media Group. I build things and tell stories….https://kareempjackson.com

More from Medium

The Emergence of Crypto Banking

10 Things I Wish I Knew Before I Started Investing In Crypto

What is Metaverse and Why You Should Consider Investing Now

What’s Web3 & Why You Shouldn’t Care