Blockchain is becoming an attractive way to transfer and manage real estate.
A digital ledger or real estate blockchain history can streamline, enhance, and accelerate the ownership verification process. For investors, developers, and real estate investment trusts, blockchain offers an alternative financial model. For financial services, it can create transparent processes for lenders and borrowers.
“The old way of tracking money, from signature to payment, can be done quickly and securely[with blockchain]and I see the industry going there in the next three to five years,” said Chicago. said Alex Lang, vice president of strategy and innovation for the National Association of Realtors.
The Lehigh Valley market is “still in the early stages of using blockchain, with growing acceptance and comfort levels in using blockchain,” said Norris McLaughlin Penn State in Allentown. said Graham Simmons, shareholder and co-chair of the Business Law Group.
“The idea behind this technology is to create the most accurate and secure record of these transactions. In theory, this would reduce the chance of fraud,” Simmons said.
Ownership and transaction history are established by the rules governing the blockchain, “so there is regulatory compliance,” he said.
Simmons said secondary markets for mortgages and mortgage-backed securities and assets could be the first to incorporate blockchain into new recording practices.
Some of the earliest adopters of blockchain technology in the Lehigh Valley may include large financial institutions and corporations that have already incorporated cutting-edge technology into their business practices, he said.
Blockchain has several benefits, from tracking real estate ownership history to speeding up title searches and other ownership verification processes to creating a more decentralized location for record-keeping.
The combination of AI, the Internet of Things (IoT), the metaverse and blockchain creates a “fusion of technologies that becomes very viable,” Lang said.
What is real estate blockchain?
Blockchain is used for a virtual digital ledger, or history, of real estate.
Simmons said there is great potential for the use of blockchain in the real estate industry, which could change the way title searches are conducted and the way real estate ownership is verified.
“Blockchain is a secure way to document business transactions, contracts, and even ownership of various assets,” Simmons explained.
According to Lange, transaction changes, escrows, and title changes can be done efficiently using blockchain without human intervention.
Investor management; financing
Daniel Jameson, an attorney and member of Jameson Stone LLC in Camp Hill, Cumberland County, said blockchain represents a more “decentralized” concept for record-keeping.
“I think it’s the companies with the bigger war chests who can afford to invest in technology early, before it’s more widely available and understood,” he said.
For real estate investors, blockchain offers an alternative financial model for developers and real estate investment trusts.
“For example, there could be a fund with tens of thousands of investors, and ownership could be tracked[on the blockchain],” Simmons said.
He said secondary markets for mortgages and mortgage-backed securities and assets could also be some of the industries affected by blockchain technology.
“With blockchain, you can check everything that’s going on with your mortgage at any time,” Lange said.
Simmons predicts that the industry will move toward blockchain to create the most accurate and secure real estate records.
“Theoretically (blockchain) would reduce the possibility of fraud,” Simmons said.
Jameson said advances in blockchain and other technologies have “helped move us forward, but the downside is not everyone has access to it.”
Although younger generations are comfortable with new technology, many of those currently buying and selling real estate may not have the knowledge, access, or desire to move into the uncharted territory that blockchain represents.
Many records are already digitized
Jameson said many real estate records have already been migrated or moved to searchable electronic formats over the past 10 to 15 years, and many use the same technology.
While traditional title searches require multiple in-person visits to county offices to discover and confirm ownership of a property, blockchain changes the process.
A title search includes whether there are any adverse judgments against the property. These include financial or tax liens, recording of deeds, divorce or bankruptcy proceedings, and more.
“The idea of blockchain is that you take one transaction and all the records related to that transaction are stored in one repository,” Jameson said.
Jameson said the process is expedited because all the details, the history, or ownership of the property, are stored in one digital space that is searchable and customizable.
Using blockchain to create a real estate history creates a secure record of ownership, transfers, and other events related to it, making future sales or transfer transactions more streamlined, efficient, and time-consuming. It will no longer take.
Blockchain and cryptocurrencies
Blockchain is separate from cryptocurrencies, including Bitcoin.
Lange said Bitcoin has little presence in real estate transactions, even on a national level.
“People are dabbling in it. We see blockchain as a technology being used in all sorts of areas and it’s growing,” he said.
Simmons said current expert advice from lawyers, real estate agents and financial advisors is that Bitcoin does not hold or maintain a stable market value and is not suitable for real estate or real estate purchases. He said it remains.
He said the volatile, unpredictable nature and susceptibility of cryptocurrencies is one of the reasons people don’t use them to buy real estate or land.
Regulated industries such as real estate, banking, and finance hinder cryptocurrencies from becoming widely accepted currencies.
“Bitcoin poses a risk point from a compliance standpoint. Another concern with cryptocurrencies is that they appear to be the currency of choice for nefarious actors,” Simmons said.
Mr Jameson said real estate transactions are large-scale transactions with “a lot of challenges to navigate” for consumers and lenders. Most people would rather err on the side of caution than gamble with unfamiliar or uncomfortable monetary technology.
“Eventually it could become a kind of payment system, and I think people are considering that. But for now, I wouldn’t sell a house with Bitcoin,” he said.
Melinda Rizzo is a freelance writer
