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The Benefits of Blockchain in Real Estate

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When blockchain first peeked into the public consciousness 14 years ago, people didn’t really understand its potential. Mostly, early adopters used it for crypto trading (in particular, bitcoin, which shares its origin story with blockchain technology). It would be nearly a decade before enterprising thinkers in various industries boldly applied the technology to other areas.

Blockchain is notable for a few reasons: it’s immutable, tamperproof, decentralized, shared, and immediate. Transactions stored on the ledger, therefore, are fixed and instantaneous, secure, and publicly visible. In retrospect, it was a perfect fit for the real estate industry.

In this article, let’s explore how blockchain is revolutionizing real estate by tracking the advantages it offers consumers and investors. Here are the benefits of blockchain in real estate.

Fewer Intermediaries, Fewer Expenses, More Convenience

Real estate is often the largest purchase a person makes in their lifetime. So it’s easy to push through ancillary costs surrounding the purchase without buyers putting up much of a fight. Next to the cost of the house (let’s assume a median cost of $700,000), the closing costs and additional expenses (property transfer, title search, title insurance, legal fees, etc.) seem like a pittance. But they can run upwards of $8,000. That’s a lot of money.

Blockchain allows real estate buyers to circumvent several of these additional costs. Because transactions on the blockchain are transparent, buyers can do away with loan fees, registration costs, and intermediary commissions – potentially saving thousands.

And it isn’t just costs that consumers save; it’s an effort too. The complex web of contracts associated with traditional real estate transactions can be a mental minefield for consumers. That’s why consumer-centric real estate digital marketplaces like Nobul are embracing blockchain. “At Nobul, we plan to make the entire real estate journey for home buyers, sellers, and their agents as simple and easy as possible,” says CEO and founder Regan McGee “and we believe that blockchain is part of the solution.”

Tokenization and Market Accessibility

Blockchain facilitates fractional trading and ownership – essentially, the ability to buy, sell and hold shares of a property. These shares can be as large or small, localized or diverse as an investor wants. Because blockchain records transactions immediately and immutably, an investor can treat a property like any other investment.

This is sometimes called “tokenization,” a hallmark quality of blockchain and crypto trading. Beyond simplifying the real estate transaction process, tokenization also lowers the bar for market entry, allowing small-capital investors to access.  

Liquidity, Transparency, and Fraud Mitigation

With blockchain, real estate is no longer an illiquid asset – that is, an asset that can’t be readily sold or exchanged for cash without the risk of value loss. Because blockchain takes a traditionally tangible asset and makes it available to investor groups, it transforms real estate assets into liquid assets, which are important safeguards for investors.

Finally, the inherent transparency of blockchain transactions goes a long way toward mitigating fraud. Fraud has been a hot-button issue in real estate for decades (probably centuries) and has seen an uptick since the beginning of the pandemic. As more investors and buyers move to embrace blockchain technology, you can expect to see real estate fraud become a risk of the past.

It may still be a while before blockchain transactions are widely adopted in real estate. As with any new, fundamentally different way of operating, it will take some time for people to accustom themselves. In the meantime, hopefully, this article has inspired and engaged readers to consider blockchain as a real estate option.

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