We’ve often heard blockchain will change every aspect of our lives—and it’s honestly not far from the truth—especially if we view it from a transactional or processing perspective.
This transformation is particularly taking an exponential curve in commercial real estate, which has, for the longest time, been considered a “pen and paper” industry.
Distributed Ledger Technology (DLT) continues to prove its potential to increase transparency, save time, digitize illiquid assets, and create a real estate ecosystem that accommodates all investors.
Automating processes such as payments, property listings, and legal documentation will adversely disrupt key industry players like banks, brokers, and mortgage lenders. But the beauty of it is that the ultimate impact will benefit everyone in one way or another.
What’s the Difference Between DLT and Blockchain? A Quick Primer
While most people use these two modern vocabularies interchangeably, it’s good to note they are different.
DLT uses a decentralized database where recorded transactions are replicated at different nodes simultaneously.
Blockchain falls under the DLT umbrella, where transactions are recorded and grouped in blocks. These blocks are then assigned unique cryptographic signatures called hashes, with each block containing a hash of the previous block, hence forming a chain.
This close relationship is the reason both are used interchangeably.
Key Use Cases of DLT (Blockchain) In Real Estate
Property Listing
The US and Canadian real estate markets are segmented—with many Multiple Listing Service (MLS) providers, each of which covers a specific region. But there is no central regulatory authority.
These associations maintain a local database where brokers and real estate agents can access the property. The downside of this is that agents have to be licensed, plus they charge hefty fees to access the information.
But now that DLT is focused on disintermediating systems, this is a significant breakthrough for the real estate industry. Property agents can finally connect with listing agents directly to save time and cost more transparently. It’s one of the primary goals of decentralization.
Real Estate Accounting
We are in the 21st century. Who wants to make mistakes like duplicating records, omissions, excessive documentation, or pumping all their funds into labour?
Blockchain integrates the entire manual accounting process into a digital system that keeps track of all transactions securely. For instance, real estate investors like mortgage lenders can finally say goodbye to mortgage underwriters and auditors because the algorithms behind blockchain only execute when certain predefined conditions are met—the basis of smart contracts.
Property Management and Land Registries
Land and property ownership issues have been a global concern since time immemorial. While every government is striving to curb the root of it all—title deed forgery, the blockchain space is equally making strides in alleviating the skepticism that most real estate buyers have.
Seeing governments like the republic of Georgia embrace land ownership using blockchain gives us an image of how much we can expect from DLT. Public land registries restore trust to homebuyers using blockchain by providing digital certificates with a cryptographic hash key for access and proof of ownership.
Also, all transactions on a particular property are recorded on the distributed ledger and can be accessed by everyone on the public blockchain.
Supply Chain Management in Real Estate
Blockchain in the supply chain mainly comes in handy when dealing with large companies that engage many contractors and other third parties. For instance, a construction firm may consider building a blockchain system that keeps track of everything contractors supply, reinforce contract agreements, automate payments, and ultimately boost performance.
The good thing is—all transactions are recorded alongside timestamps and replicated to everyone on the distributed ledger. Also, its append-only feature makes the records more secure and trustworthy.
Streamlined Mortgage Management
Traditionally, acquiring mortgages has always been a lengthy and tiresome process for mortgage lenders and borrowers.
Going through the entire loan life cycle—from pre-qualification and application to loan processing, underwriting, and eventually, settlement is not an overnight endeavour. It can take up to 25 days or even more. And that’s only for primary mortgage markets. It only gets more complex as we advance to secondary mortgage markets.
Such a long and manual process is prone to errors, translating to substantial losses, breach of contract, and many other inconveniences. Fortunately, DLT is already automating the whole process.
DLT for All Real Estate Stakeholders; Fundmore.AI for Mortgage Lenders
Whether you are a property owner, buyer, investor, or financier in real estate, there’s still so much in DLT you haven’t experienced. Even though the technology is still in its early stages, the impact is already notable. From the projections we have discussed, specific future real estate systems will be more efficient, secure, cost-efficient, and reliable for everyone.
What’s even more interesting for mortgage lenders is that the underwriting process doesn’t have to be hectic anymore. AI, ML, and RPA technologies that Fundmore.ai uses already took over—the process can now be completed in minutes!
But how can you integrate these functionalities into your business to realize tangible results? Well, we have it all set for you. Book an online appointment with us today or send us a message, and our team will guide you step by step.