The real estate industry has seen significant growth since the recession. With market prices predicted to increase along with millennial demand in 2019, the industry is as welcoming as ever. Although the market is improving, it is still plagued by issues that make the investment process less convenient than it should be.
Major drawbacks of the real estate industry
Real estate investment has three major drawbacks: the presence of intermediaries, the lack of affordable funding options, and fraud.
Agents take up to six percent of the total payment made on a real estate asset. This means that intermediary fees would account for over $23,000 for a house that costs $400,000. Unfortunately, up to 80 percent of home buyers still use an intermediary and continue to pay these fees according to a report by the National Association of Realtors.
Real estate is also expensive and the prices continue to climb, limiting access for a greater part of the population. According to research by CNBC, an investment of $1 million will most likely buy about 270 square feet of prime property in New York. However, only about 10 percent of US residents can afford such a price tag.
Finally, the commercial real estate industry is rife with fraud, not just in the United States, but globally as well. According to a statement by the FBI, the internet crime complaint center saw a 480 percent increase in real estate fraud complaints filed in 2016. These crimes, including title fraud and online sale scams are aided by the rarity of trusted platforms where real estate documents can be verified.
How exactly can blockchain fix these issues?
A blockchain is an immutable ledger in which transaction data can be recorded. Its benefits include transparency, traceability, accessibility, and enhanced security. When implemented in the real estate industry, these properties can solve its major issues.
Blockchain real estate platforms eliminate the need for intermediaries like lawyers and agents by providing a means of property verification and payment to buyers. Paying for property using cryptocurrencies can also help buyers bypass bank fees. It cuts the fees associated with escrow by offering smart contracts that can be customized according to a users’ needs.
The tokenized nature of cryptocurrencies like Bitcoin and Ethereum makes crowd ownership of real estate possible. Those who cannot afford to purchase the whole property can simply buy a part of it, like buying shares in a company. Such investors would receive transferrable tokens that represent their shares and can be verified easily on a blockchain. This makes real estate investment accessible to more people.
Blockchain can also prevent fraud in the industry by providing a way to easily authenticate property documents. As these properties are transferred, their records are added to the blockchain and a comprehensive history is formed. In the event of a sale, buyers can easily check if property is fraudulent.
Bringing blockchain innovation to real estate
Several companies are working to bring these solutions to the commercial real estate industry. One such company is i-House.com, which implemented a series of ATO (Asset Tokenization Offering) projects in less than a one- year span. These projects allow users to crowdfund real estate development projects using IHT, the company’s cryptocurrency. So far, their reach has extended to the U.S., Japan, Thailand, and the Philippines.
The i-House ATO model provides real estate accessibility and a verifiable platform for related transactions. By Implementing such a concept in the industry, the i-House ATO platform is positioned to disrupt it positively. i-House.com Chairman and Founder, Ricky Ng., said:
“We aim to create a shared economy asset management ecosystem that spans across the globe, i-House ATO provides real estate owners, developers, and end users the means to own and share assets easily”
Cryptocurrency that empowers real estate investors worldwide
IHT was recently listed on the Bittrex exchange and South Korea’s largest exchange, UPbit. IHT is currently listed on nine other exchanges including Cashierest, KuCoin, Gate.io, Coinw, LBank, HitBTC, CoinBene, CoinTiger and Allbit. The company stated that it hopes to get listed on more top global exchanges in the future.
The future of blockchain real estate
Blockchain presents an opportunity to change how real estate transactions are handled. Everything from land registry to provenance and payment systems currently have a lot of room for improvement. With better systems in place, there will be more incentive to invest in the industry and further bolster economic growth.
As companies like i-House.com make these changes to the industry, the real question lies in how quickly others will follow suit. Will this be one of those things that don’t become mainstream until there is a crisis in the industry? We may have to sit back and watch.
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Author: Cointelegraph By Hazel Agoni