Blockchain Applications in Real Estate

Blockchain Technology for Real Estate

Blockchain Technology in Real Estate

In a mostly paper-record based industry, blockchain real estate allows for a significant gain in efficiency in how records are stored and recorded.

The real estate industry as a whole historically lags in adopting new technology, with many paper-based documents exchanged. Should the real estate industry choose to adopt blockchain technologies for essential functions such as payment, escrow, and title, this could create unprecedented efficiencies and cost savings. Furthermore, implementation of this technology can reduce fraud, increase financial privacy, speed up transactions, and internationalize markets.

Blockchain technology can play a particularly prominent role in property title management, providing improved property ownership record tracking, and improve efficiencies for title companies, title insurance companies and all manners of data-retrieval services with employees who trek to town, county, and state government offices to pull information from paper files.

Distributed Ledger Technology (DLT) has excellent potential to reduce friction in paper transactions, monetary exchanges, and can help to abbreviate intensive processes with automation. Real Estate interactions are third-party dependent making them costly and time-consuming. From rentals to larger commercial deals, smart contract technology can be deployed to make for smoother real estate transactions.

This guide to blockchain applications in real estate will review the current industry pain-points, the benefits of decentralization, and discuss specific use cases for this new technology.

Problems the Centralized Real Estate Industry Faces

Real Estate is a $217 trillion global industry that is more than fifty percent residential properties. We all have to live somewhere, and the population continues to increase, and we live in a more borderless world, the industry will involve more and more transactions annually.

As the real estate industry exists today faces a cornucopia of problems with its tangled processes. Here are some of the main issues that hamper the real estate industry from functioning optimally:

  • Fraud

Both low-level petty renter fraud and high-level wire fraud are prevalent in the real estate industry. Fraud is responsible for millions lost annually. Centralized electronic fund transferring is not secure. Cybercriminals steal millions from purchase transactions. Additionally, pen-and-paper tenant screening creates a spotted and selective paper trail created by tenants themselves. Tenants choose their references and what rental history they share with landlords.

  • Inaccurate market data

Even popular platforms like Zillow fail to provide real-time data to investors and renters. There is no reliable hub with consistently updated listings for real estate professionals and buyers to rely on. This can result in time down the tubes as people tend to inquire about properties that have been long removed from the market. Data about a home that someone is buying can also be faulty.

  • Time intensive processes

To close a deal in the real estate industry, there are many moving pieces that all rely on paper processes. As technology evolves firms and agents struggle to keep up with the latest tech solutions. Between inspections, releasing contingencies, loan approval, unexpected repairs, completing cash transactions for closing, and completing all the necessary paperwork—closing a deal is an incredibly time intensive headache for both buyer, seller, and third-parties. Anyone who has bought or sold property can agree that it is a bureaucratic nightmare and complex event to orchestrate.

  • No means to protect client data

Cybersecurity risks plague real estate brokerages. They are unable to guarantee the security of client data, in addition to their own. Hoping for the best is never a excellent security strategy, but many real estate companies are doing just that. To purchase property, clients need to disclose an alarming amount of personal information to various parties, leaving them vulnerable to identity theft.

  • Financing difficulties

Securing a home loan can be incredibly difficult, especially for those with bad credit scores. Interest rates on home loans are often out of the buyer’s control and depend on the current market. The centralized loan and financial services system is highly bureaucratic and is likely to slow down the entire transaction. Relying on a centralized bank to say ‘yay’ or ‘nay’ to your dream of becoming a homeowner can be discouraging and can even prevent some from buying altogether.

Blockchain Real Estate News

The Benefits of Decentralizing the Real Estate Industry

  • Trustless

Blockchain can offer the real estate industry automated and secure smart contracts to create a trustless environment for fund transacting. The sender and recipient can have authentication without a third-party. The proof of transaction will exist on the immutable public ledger to certify digital ownership. Currently, real estate transactions depend on an element of blind trust with every fund transfer, DLT eliminates that need for faith.

  • Frictionless and Secure Transactions

Transactions are less likely to be hacked on the blockchain and have improved security protocols. The transactions are also faster even when multiple time zones separate recipient and sender. Blockchain is a remarkably faster mode for money transactions when compared with centralized financial institutions that required multi-day verification. Real estate typically deals with more significant sums of money and blockchain is a superior way to transfer without high fees and wait times. From sales to listings and auctions to settlements and transfers, blockchain can create more frictionless transactions.

  • Real-time Immutable Data

Data on the blockchain is immutable and therefore more reliable than data on a website or centralized server. Blockchain also allows for more real-time analysis that improves our ability to detect fraud. The transparent nature of a public ledger allows anyone to trace data origins. Better data provides a basis for improved decision-making. Better data organization and storage helps to streamline processes.

  • Fewer intermediaries, more time and more profit

The real estate industry is third-party heavy. From start to finish a real estate deal could have twenty or thirty different individuals handling paperwork, approving, inspecting, sending, transacting, etc. The fewer people a process involves, the less room there is for error, the less time it takes, and the less money it costs. Smart contracts help to automate transactions that would typically require several human hands to verify.

  • Global Access

“It is a small world after all,” and it just keeps getting smaller. We live in an increasingly globalized world, and people are looking to purchase property internationally now more than ever before. If you thought buying or selling property domestically was a real chore, then you probably haven’t even attempted to close an international deal. Decentralizing the real estate industry can help make property transactions borderless. With cryptocurrency as a medium for universal exchanges, fund transfers across borders become easier.

Use Cases for Blockchain Applications in Real Estate


Who owns what property? What is the chain of custody for this title? Blockchain would improve traceability through transparency and availability of immutable data sources. This would make title investigations much easier for those in the real estate business. The result? Expedited closings and lowered risk for error during title transfers.

Tokenized Real Estate Platforms

Tokenizing real estate assets makes purchasing property with digital currency investments. Tokens within a larger real estate specific ecosystem could increase in value through use. The tokens still can be liquidated or exchanged for other cryptocurrencies or buyers can receive in crypto and keep it as an investment. It would be the equivalent of accepting valuable stock for your property opening up the potential for more gains on your investment.

Tokenizing platforms specific to real estate could consolidate all transactions and processes, eliminating closing costs and broker fees. The transactions could be complete in a day rather than over the course of several weeks via several different platforms. Tokenization can support the exchange of real assets.

Real Estate Investment Trusts (REIT)

Blockchain applications and REIT are a match made in heaven. From shareholder communication to dividend distribution, REIT can benefit end-to-end from decentralization. Smart contracts can execute upon event according to predetermined conditions. REITs can crowdfund using digital IPOs. Investors can receive funds in a timelier fashion not having to wait for REITs to make good on paper contracts.

Smart Contract Escrow

This might be the most viable use case for blockchain applications in real estate. Smart contracts double as escrow and create a safe repository for funds to then be trustless-ly released to the verified parties when triggered by event confirmation. Rather than tenants sending landlords checks every month in the mail, tenants can have a multi-signature transaction with the use of public-private key cryptography. Security deposits can be held in escrow for the duration of the lease and only returned at the end upon two out of three parties (third being an arbitrator) using their private key.

Blockchain Notarization

 Real estate paperwork authentication often requires a notary. Buyer and seller sign an agreement and then the transaction can be recorded on the smart contract, and this agreement then receives designated a hash. The buyer then can obtain the address of the smart contract to send the funds to the correct blockchain-based locale. Notarization can now happen on-chain as the seller goes to the notary with the smart contract address and sign the final document without the presence of the buyer. The notary is then able to use their private key to mark the deal executed on the blockchain. In the future, as governments accept blockchain transactions as trustless, the notary can be eliminated from the process.

Property History Traceable via Blockchain

Property history databases are never up-to-date and are certainly not transparent in their origins or motives. Using blockchain to track the history of repairs and issues a property experiences can later help sellers improve resale value or make buyers aware of the property’s troubled past. A home inspection would also be either unnecessary or a less involved task. Home inspectors could contribute to databases to make sure property issues are part of the immutable records. This would help buyers feel more confident in their purchases knowing the full history of the property.

Lending Process

 Depending on a bank to approve a loan and set interest rates for mortgages can be lengthy and expensive, sometimes impossible process. P2P lending facilitated by on-chain technology can break down the barriers for home ownership for those with bad credit or past debt who otherwise should be eligible for a loan. Borrowing from a network of lenders rather than just one results in lower interest rates and service fees, above all else, it creates an opening for those who would otherwise be ineligible or face incredible interest rates.

Tenant Screening and Leasing Process

Manual pen and paper tenant screening is still common practice in the real estate industry. Landlords do not have a centralized hub to verify tenants through immutable data stores detailing rental history. Landlords have to conduct background checks with only the information provided to them by the tenant. Renter fraud is a common woe for property owners who have no tried and true way to screen tenants. Instead, they are forced to conduct credit and rental history checks themselves. If landlords and tenants could use blockchain to complete all rental-associated tasks on a p2p network, this could help standardize pre-authenticated on-chain renter and landlord profiles with immutable histories and reputation scores to help tenants avoid slum lords, and landlords prevent rent dodgers. P2P rental networks could also help renters crowdsource deposits to reduce the need to hold their own funds in a smart contract for a year or more.

Managing Commissions

 Smart contracts aren’t just used for buyer-seller or renter-landlord interactions. They can also be used to help real estate companies better manage their resources and fund distribution. It is common for multiple agents to be working on a single listing creating commission distribution hiccups. For multi-broker listings, everyone gets paid a percentage of the commission as described in paper commission-splitting agreements. Smart contracts can easily automate this process and companies can avoid the associated overhead that is involved in figuring out who gets what, how and when. Brokers and agents benefit from automated commission splitting as they will no longer have to wait for their funds, they can receive payment the same day the deal is closed.


Decentralization via blockchain can help disrupt the lengthy and interwoven, people-heavy property purchasing procedure. The real estate industry could stand to benefit as much as potential property owners. They could increase profits with all the saved time, fewer hired contractors, lower legal fees, and less risk for loss due to rampant wire transfer fraud.

Distributed ledger technology can help build trustless frameworks for the real estate industry to streamline the multiple and intensive steps to homeownership from listing to closing. All players in the real estate field are victim to data inaccuracies, trust-based transactions, and time-heavy paper contract creation and verification.

There is much to be gained in efficiency from how records are stored and record to brokering international deals. While some real estate companies and brokers might fear that blockchain technology can make them irrelevant, it will actually allow them to close more deals than ever before and offer improved services to clients.

The real estate industry is notorious for lagging in new technology adoption. Hopefully, decentralization will be the exception to the rule. If the real estate industry chooses to integrate blockchain technologies to improve and pare down payment, escrow, and title, there could be millions in cost savings. Cybersecurity that is a major pain-point for the real estate industry as it exists currently could finally be resolved. There could be a reduction in fraud, better financial privacy, faster transactions, and unprecedented client trust. With so much to gain it is only a matter of time before distributed ledger technology and decentralized platforms redesign the real estate industry.