A recent poll found that around 48% of Americans would be willing to invest in real estate if the relevant technology was available to make doing so more manageable. With a global market value of $217 trillion, 71% of Americans wish that they had the ability to invest in real estate, but it requires a considerable sum of money.
The new buzzword in town is “blockchain” which has become increasingly popular purely because of the cryptocurrencies, especially bitcoin. People only see it as an underlying technology for digital currencies, but they fail to realize that it is an entire system of distributed ledgers carrying immense utility, especially in the real estate space.
Government agencies and for-profit companies are devising different ways of understanding and using this technology for the facilitation of mankind. Its latest influence is real estate where it is helping in making transactions easier and less expensive, tracking the ownership of properties, and providing investment opportunities to average investors; not just the social elite.
The Issues With Real Estate
Residential real estate accounts for 80% of the non-financial assets, thus, having accurate records is extremely important for such high investments. This helps in identifying the real owner of the property and proving his rights over it. These records are also helpful in protecting the rights of the owner in case of fraud or when the property is sold.
Usually, there is a third party involved in transactions that holds the amount until the completion of the process. The major problem is that these transactions take up a lot of time and require tedious manual work to be done at a high cost.
Enters The Blockchain
Blockchain has made its way to all the industries but its appearance in the real estate market was nothing less than a miracle. The market is huge and was the most difficult of any for the technology to penetrate, but blockchain has given it a boost of $28 million so far.
However, combining the future of technology with the most robust market in the world is one of the most successful achievements during current times. Despite the market crash in 2008, we saw property bouncing back to decent prices soon enough; the value of houses increasing as much as 60% in San Francisco.
Let alone dealing with the local market, the blockchain technology will help you in synchronizing the international real estate industry through its mechanism. It is the solution to problems like transparency, time, security, cross-border payments, and contractual costs.
Understanding Smart Contracts
The most dynamic application of the technology is in the form of “smart contracts.” They can be used in transactions, transferring the rights of property in a single step, managing the registries of property, and to improve low-cost investment opportunities for the potential investors.
The most convenient way to raise funds in blockchain is through an ICO (initial coin offering) and the same is applied by i-House.com to garner the attention of everyday investors. The idea is to divide huge properties into smaller chunks and sell them as tokens to smaller investors, letting them enjoy a premium investment vehicle such as real estate.
The process starts with IHT 1.0, which provides the tokenization of assets through its i-House ATO program (Asset Tokenization Offering). Later this year, IHT 2.0 will offer asset management and segmentation on their platform. Lastly, IHT 3.0 will create a secondary market within the platform; in which to create liquidity for their investors.
The Future Real Estate
These blockchain-based certificates can be tested and verified without the need for third-parties such as land registries or notaries. Thus, the decentralization provided by this technology will cut out almost all the middle-men, facilitating smoother transactions, better rates, and all the while ensuring the utmost safety of all the sensitive data against hackers and fraud. ATO's will "The Little Guys" an opportunity to enter into a premium investment vehicle that would normally be reserved for the social elite, thus injecting more vitality into the modern real estate market.