Blockchain Technology and Real Estate

How is blockchain technology relevant to real estate?

Blockchain technology and real estate will work well together in many ways, but the most straight-forward as described by Entrepreneur Magazine in the article titled Blockchain Technology is Revolutionizing the Real Estate Industry is as follows: “Blockchain can help streamline the process of buying and selling property, as well as make it more secure. For buyers, this means being able to track the history of a property and its ownership. For sellers, it means being able to provide more transparency around the sale process.”

With real estate deals that are completed on the blockchain, transactions are completed electronically which allows for the elimination of excess documentation and the need for physical contracts. With smart contracts, dates are pre-set, and if certain criteria are met, there is no verification needed by a third-party. This allows transactions to be completed once the electronic verification is done without needing a human to hit the send button to complete the process.

Another benefit of blockchain is security. Because of the structure of a blockchain, transactions are recorded on a decentralized ledger that cannot be deleted or altered, which in turn can give both buyers and sellers peace of mind about the validity of their transaction.

How is crypto applicable to real estate?

Let’s look at this excerpt from the Forbes Magazine article Crypto Just Became Real Estate’s Hottest New Thing. Here’s What That Means For Buyers, Sellers, And Developers

“For everyone wondering what that ‘solution’ actually looks like from a transactional standpoint, here’s how it works:

FTX, thanks to its leading crypto trading platform (think NASDAQ for digital currencies), is able to convert Bitcoin or Ethereum or any other cryptocurrency into U.S. dollars in a fraction of a second through its online exchange regardless of what that transaction is based on from a value standpoint e.g., a Picasso-backed NFT (non-fungible token), the lyrics to a Bob Dylan song, or the penthouse one floor down from David Beckham.

In purely real estate terms, that means a buyer from anywhere in the world can put a pre-construction deposit down on a condominium in Miami in any cryptocurrency that moves from their digital wallet to a traditional American escrow account in equivalent U.S. dollars with the swipe of an app virtually instantaneously—all while meeting AML (‘anti-money laundering’) and KYC (‘know your customer’) SEC regulations that make the transaction street legal and compliant in the first place.

For the real estate developers on the selling side of things, FTX’s warp speed conversioning also mitigates crypto’s infamous market volatility swings like what’s happened recently with Bitcoin, ensuring that $22.5 million for a penthouse actually means $22.5 million when it comes to money in the bank at the time of transaction.”

How are smart contracts used in real estate?

This explanation in the article Beyond Bitcoin: The Role Of Blockchain Smart Contracts In Real Estate Transactions by PropLogix sums it up nicely.

“A smart contract can be used to deliver any sort of goods or services from one party to another. Smart contracts not only define the rules and penalties of the transfer but also automatically enforces those obligations.

For the real estate industry, this means that smart contracts could be used in a plethora of ways. Lenders might use smart contracts to approve mortgage applications, title insurance companies could use it to search a property’s title and instantly issue policies and closing officers might set up automatic escrow accounts after a deal is completed.”

Watch for our next post where we dive deeper into ideas for blockchain technology and the commercial real estate industry. In case you missed it, check out our Web3 tool guide here

About the author

Tracy Kohn is a commercial real estate broker and partner with Kohn Commercial Real Estate, Inc. and current CCIM Candidate; she is not a financial advisor, nor in the tech industry, and is not a software developer. All statements made in this blog are her personal opinions and have been compiled through her own research and trial and error. It is strongly recommended that you do your own research and make sure you are comfortable with your decisions prior to making them regarding your own Web3, crypto and blockchain journey.

Tracy has used computers since around 1986 and built her first computer from scratch using individual parts in 1999.  She is a tech user and has worked with software & web developers and digital designers since the early 2000s.

Beginning in the early 1990s, she spent almost 30 years working in restaurant operations and large-scale event production. She has worked with brands such as the Food Network + Cooking Channel’s South Beach Wine & Food Festival, the City of Miami Beach, CAA Sports, AMEX Latin America, Sony Tennis Tournament and A Joy Wallace Catering & Design. She has collaborated with over 300 chefs such as Anthony Bourdain, Martha Stewart, and Daniel Boulud and with over 50 venues the likes of The Biltmore Hotel, Vizcaya, The Faena Hotel, and the sands of South Beach.

Tracy has been practicing commercial real estate since 2014 and focuses on working with property owners, investors and developers in the industrial sector. She is new to the Web3 space and is giving you her insights as a user who is working towards developing her own commercial real estate platform using blockchain technology. The goal is for Kohn Commercial Real Estate to be one of the pioneers in the commercial real estate space moving into the future. We aim to provide a complete digital and physical brokerage experience that allows for the smooth and transparent connection and completion of real estate transactions across the world.