What role will blockchain play in the real estate sector of tomorrow?

Digital is gradually infiltrating the real estate sector. From now on tenants look for an apartment on virtual or 3D maps, future buyers carry out their procedures online on specialized sites, for example their credit simulation with Cafpi or their insurance contract on dedicated platforms.

In recent years, a new technology has joined these innovations: the blockchain. It allows you to store and transmit information in a secure and transparent way. It is comparable to a register in which the entire history of the exchanges made is kept. The blockchain is useful both for making transactions and for certifying information. Its role is gradually taking shape in the real estate sector.

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The blockchain, a way to simplify and protect real estate transactions

Real estate transactions are marked by many steps, which require the presence of multiple actors: real estate agents, notaries, bankers, insurance consultants … This can be a real obstacle to the correct transmission of information. It is therefore not uncommon to have to review your sales contract or lease several times. Sometimes new administrative procedures are added. This turns the transactions into a long process.

It is this type of problem that the blockchain responds to. It allows you to carry out real estate transactions automatically, transparently and securely, in particular thanks to the Smart Contract. Specifically, it is an IT protocol that defines and freezes the rules of the various parts of an agreement. When one of the conditions is satisfied, it automatically guarantees the transfer of an asset to the interested party. The entire procurement process is therefore automated and streamlined, from the drafting to the conclusion of the contract.

These smart contracts would be a solution as much to reduce the costs and delays of real estate transactions as to ensure their progress. Their automatic nature, in fact, could lead to the termination of the contract in case of violation of the pre-established terms. They would thus make it possible to ensure compliance with mutual obligations. Otherwise, Smart Contracts could make an automatic refund or suspend a payment and notify the bank.

Note that this technology is also useful for automating certain operations, such as information verification and certification, in order to improve document controls and reduce the risk of fraud. Blockchain could therefore inject more transparency and security. Smart contracts have already been adopted in several countries, including Sweden.

Democratize real estate investments

Many people are turning to real estate to invest their money. However, the constant rise in house prices complicates this process. In the third quarter of 2021, the price per square meter reached € 2,355 for houses and € 3,878 for apartments in France (Insee study on old buildings). This marks an increase of 7.4% for homes and 5.3% for apartments. For a large part of the population, the acquisition of property becomes more and more complex. This is all the more complicated when you are self-employed or hired with a fixed-term contract, because banks have difficulty in granting a loan due to the characteristics of these conditions.

The blockchain could therefore play a central role in the democratization of real estate investments. This technology is based on cryptocurrencies or exchangeable tokens (such as the token). These can be bought, resold, exchanged or transferred between two parties without the intervention of third parties, including banks.

It is on these tokens that the real estate sector is betting to open up to more individuals. Tokenization, in fact, makes it possible to divide the shares of a property for sale, and therefore to simplify access to the property for small savers. The blockchain will be used to store and verify the transactions carried out, but also to authenticate part of a property owned by the buyer. The token then becomes a trusted third party.

The blockchain therefore appears as a technology capable of facing multiple challenges in the real estate sector: security, speed and accessibility.

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