Aviva is the managing broker of The Warehouse Hotline and a broker, owner, and investor in Denver, Colorado.
Blockchain technology is changing the landscape of the world and, as a result, the future of the commercial real estate. The capabilities of blockchain technology lend themselves quite nicely to the needs of the real estate industry as a whole. Instead of having to be hunkered down by escrow companies and extensive paperwork, the blockchain allows transactions to be conducted swiftly and securely.
Here are a few of the ways that I believe blockchain is sure to change commercial real estate in the coming years.
Blockchain technology will eliminate the need for all parties to be physically present for real estate transactions. The inherent security needs of a commercial real estate transaction usually require frequent in-person meetings, which slows down the process extensively. Using a secure blockchain, investors can sign contracts, fill out paperwork and transfer funds from wherever they are in the world. This will expedite transactions considerably and make acquiring real estate more conducive to frequent travelers.
Due to blockchain technology, transactions are public, which would allow anyone in the commercial real estate industry to see what’s being sold. This allows buyers and sellers to keep track of trends and transactions in the industry. This wasn’t previously possible when dealing with private real estate transactions. Not only could this help them make better decisions, but it also better equips newcomers to residential and commercial real estate to learn more about the industry.
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The problem with online transactions has always been their susceptibility to cybercriminals and hacking. The blockchain, however, can be incredibly impervious to hacking thanks to its decentralized technology. This means that commercial real estate transactions conducted on the blockchain won’t fall victim to data breaches or cyber fraud as easily as non-blockchain digital transactions.
No More Third Parties
Because blockchain companies run on a peer-to-peer network, every transaction is instantly and publicly recorded on every user’s computer. This keeps everyone up-to-date every step of the way, eliminating the need for third-party escrow companies to manage the transaction. With this step of the process no longer necessary, commercial real estate transactions will become less expensive and much faster.
Easier To Micro-Invest
Many residential and commercial real estate buyers nowadays are not buying entire properties by themselves but are instead working with other investors to syndicate property together. While the cost of transferring money currently presents a hurdle to micro-investors, these transaction fees are almost nonexistent with blockchain. This makes the blockchain incredibly conducive to anyone looking to get started making micro-investments.
Easier To Invest Internationally
Transaction fees also present a hurdle to investing internationally in commercial real estate. Wait times and expedition fees can make it not worth the risk or effort. By using blockchain, parties can bypass the risk of currency exchange and purchase property anywhere in the world.
The widespread use of the blockchain in real estate is still some ways away. However, as its use becomes more widely adopted, blockchain is almost certain to become a major player in the commercial real estate industry.