“Bitcoin gives us, for the first time, a way for one Internet user to transfer a unique piece of digital property to another Internet user, such that the transfer is guaranteed to be safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer. The consequences of this breakthrough are hard to overstate.” —Marc Andreessen, Silicon Valley venture capitalist
Over the last 6 months, the buzzword has been cryptocurrencies, so when we started hearing that our agents wanted to get their commissions paid in cryptocurrencies – we had to look at the possibility of giving that option to our agents in California and Nevada.
The advent of cryptocurrencies, such as Bitcoin, has made quite a splash in the financial world and is generating enormous amounts of speculation, controversy, and discussion. Some argue it’s the currency of the future, while other experts question why virtual money holds any value at all. But whatever your views on these cryptocurrencies, the technology behind them holds immense promise for real estate transactions.
For us at Movoto Real Estate, we think that the real estate transaction is ready for a change because the process is about the same as it was 20 years ago. The evolution of the way we buy and sell real estate could mean that we use new technology to establish, review and convey real estate. Enter Blockchain.
What The Heck is a Blockchain?
The blockchain is the technology that makes cryptocurrencies possible. Digital bits of information (in Bitcoin’s case, payments, but in real estate, it could be deeds, titles, payments, etc.) are exchanged through a distributed network that doesn’t rely on a single entity to manage or administer it. It’s designed in such a way that only the owner of an asset can send that asset, only the intended recipient can receive it, it only exists in one place at a time, and transactions are public and easily validated. In short, the blockchain virtually eliminates fraud—especially the types of fraud common in the real estate industry like fake house listings, forged titles, and loan modification and rental scams. Even in today’s day and age of technology these scams are all still happening. How about if blockchain prevented these scams from happening?
Potential Effects in Real Estate
If nothing else blockchain holds tremendous potential for real estate and related transactions. For example: “With the blockchain tokens, there would be no need for title searches or a middle man to secure the title transfer. By using a blockchain-distributed database to prove the authenticity of the transaction, a homeowner could transfer title quickly without the need for a third-party verification. This technology could very well disrupt the real estate industry by making the escrow companies obsolete,” Hillary Hobson, Chief Marketing Officer of Highest Cash Offer, told Forbes.com.
Another way the blockchain would facilitate home sales is by assigning a digital ID to real property and transacting that digital ID on the chain. It could never be duplicated or transferred to someone who has no rightful claim to it. Say goodbye to that pricey title insurance.
Because it’s digital and decentralized, blockchain transactions can be completed in record time—a major plus when it comes to snapping up a great deal on a home. Ultra-fast transaction speeds would allow mortgage lenders to instantly assess the credit-worthiness of their borrowers and allow mortgages to be funded in hours instead of weeks. It would also ensure rapid payment from buyers who are paying for their homes without borrowing, using digital currency which is easily converted to cash. And all of these transactions are free or nearly free—a far cry from the steep fees and costs currently associated with home buying.
Though it’s relatively new and not well understood by non-technically minded people, blockchain promises to simplify and speed up buying or selling a home, applying for a mortgage, validating a title, and making and receiving payments. Instead of jumping through multiple hoops and waiting for weeks or even months, buyers, sellers, and agents can focus on the important part: the sale. Just know that Movoto real estate will be realistically looking at ways to incorporate new technology to make the real estate transaction easier and safer.