How Real Estate App Development Using Ethereum Streamlines Property Management
Real Estate is one of the largest asset classes throughout the world. It is the profession of selling, renting, or buying properties (land, buildings, or housing). There are numerous challenges associated with the Real Estate industry and development that cannot be disregarded. The challenges like delayed processing, online fraudulent activities, and undecided transactions hinder the scalability and expansion of Real Estate promoters and organizations across the world. However, with Blockchain app development using Ethereum, many Real Estate companies are trying to work on the loopholes, resolve challenges, and benefit from the process.
5 Major Existing Challenges in Real Estate Sector
The digital disruption and growing trends present new challenges in the Real Estate sector repetitively. In Real Estate, several factors impact the revenue for realtors like contact information management, property listings, stakeholder management, and others. Let’s look at some of the mutual challenges encountered by the realtors below:
1. Lack of Transparency- Still, the Real Estate industry is not receptive to everyone due to varying factors like accreditation, cash requirements, citizenship, credit score, etc. Moreover, there is no market database or a compact way to access the information required for making selling and buying decisions. This, overall, makes the sector disorganized and vague for all.
2. Monotonous Paperwork- In the conventional Real Estate environment, every transaction involves a substantial set of time-intensive and tedious paperwork. Due to this, many Real Estate firms result in losing their potential customers and revenue, along with getting distracted from the main objective.
3. Risk of Fraudulent Activities- Since all the property details and agreements are recorded in paper arrangement and the trust is based on humans, there are greater chances of fraudulent practices in the Real Estate industry.
4. Record Maintenance and Security- With several transactions happening, recording each transaction is challenging for realtors. It’s not just about ensuring all details get recorded, but also assuring that the records cannot be altered and are only available to authorized people.
5. Involvement of Intermediaries- This is one of the major challenges associated with the present Real Estate practices. Any two parties have to contact third parties at various levels during a property transaction to create trust in the process. Therefore, Real Estate costs become higher due to various intermediary fees like exchange fees, broker fees, taxes, attorney fees, etc.
Therefore, developing a Real Estate application acts as a bridge between realtors and customers. It seamlessly connects both sellers and buyers. Companies can also eliminate the intermediaries for online deals of property for purchase or rent. However, Ethereum Blockchain technology, with its incredible features can help the Real Estate industry to resolve problems in various areas and processes through app development.
Introduction to Ethereum
Ethereum is a decentralized, open-source Blockchain software platform. Ethereum allows the applications and Smart Contracts built on its network to function smoothly without downtime, fraud, middleman control, or any third-party interference. Ethereum has its own programming language named “Solidity” and a native cryptocurrency known as “Ether”.
Why Ethereum for Real Estate App Development
By leveraging the potential of Ethereum Blockchain technology, Real Estate companies can optimize practices of commercial property sales, execute transparent transactions, eliminate human errors, and increase property investment opportunities. Ethereum Blockchain is effective towards asset tokenization, reduced cost, and efficiency in Real Estate process and operations which leads to the scalability and success of the business. Developers from the right Ethereum development company help businesses manage increasing property listings and transaction records effectively through DLT (Distributed Ledger Technology) which is highly beneficial for Real Estate success and growth. In simple terms, developing a Real Estate app that involves Ether (cryptocurrency) and digital assets can help transform the overall Real Estate sector.
Benefits of Real Estate App Development Using Ethereum Blockchain
No Intermediaries
Brokers, banks, and lawyers have always been part of the Real Estate environment. However, developing an app with Ethereum Blockchain may eliminate their involvement in Real Estate transactions. App platforms can eventually take up functions such as legal documentation, listings, and payments. Cutting out the mediators will result in sellers and buyers getting more out of their money as they save on fees and commissions charged by these intermediaries. This also allows the realtors to perform the property management process much faster with greater transparency.
Reduced Costs
The transparency associated with Ethereum’s decentralized ledger system can also cut down Real Estate transaction costs. Beyond the savings made by eliminating mediators’ professional commissions and fees, there are other expenses such as registration, inspection costs, taxes, and loan fees associated with Real Estate. These expenses even vary based on the region that has different jurisdiction regulations. Similar to intermediaries, these expenses can be reduced or even eliminated as real-estate application centralizes the regulations, and automates processes and transactions.
Fractional Ownership
By enabling fractional ownership, Ethereum app development reduces the barriers to property investment. Usually, investments would require substantial money upfront in order to purchase the property. Instead, investors can mine pool their money to purchase higher-value properties. Through Ethereum Blockchain, investors would simply get access to a trading app to sell and buy even fractions of tokens as they see appropriate. Moreover, fractional ownership would also help investors avoid managing the properties themselves such as leasing and maintenance.
Liquidity
Real Estate has always been considered an illiquid asset class since it requires more time for sales to accomplish. This isn’t the case with tokens and cryptocurrencies as they can be traded for fiat currencies through exchanges. Therefore, a seller doesn’t need to wait for a buyer who can afford the entire property in order to gain some money out of their property.
Use Cases of Ethereum Real Estate App Development
Asset Tokenization
In the context of Real Estate, asset tokenization refers to the digitalization of assets, securities, and financial mechanisms. With Ethereum Blockchain app development, assets can be encoded to include ownership rights, rules & regulations, and transaction history to ensure asset distribution, transfers, and issuance are regulation compliant. For instance, realtors can include controls in the app to ensure that tokens can only be transferred to specific counterparties, or not at all be shared during a lock-up situation.
Moreover, tokenization moderates unwanted property costs and enhances the speed of forming, issuing, and exchanging assets, updating new features, managing dividends, and managing other commercial actions. Comprehensive Tokenization and fast issuance allow Real Estate companies to customize digital assets within the app directly based on investor demands, considerably reducing third-party risks.
Smart Contracts for Real Estate Loan & Mortgage Management
In Real Estate, loan initiation and underwriting remain inconsistent and non-reliant due to paper-based documentation. In the traditional loaning process, security structuring is left exposed to interpretation, and the chance of double-pledging of properties is higher. Whereas, using Ethereum’s decentralized ledger system, asset trading and servicing can be done effectively.
Ethereum’s Smart Contracts functionality provides banking institutions a single form of verified information, irreversible transaction, secure data sharing, and concurrent payment settlement. By digitizing a mortgage or loan, it can be embedded to include relevant details such as ownership rights and loan reimbursement history to help parties make appropriate decisions. Smart Contracts can be used to deliver real-time reporting to network users, and gather and distribute payments to beneficiary holders. This provides efficient lifecycle management and creates confidence among property buyers & sellers by offering investors proof of asset experience.
Ethereum Mining for Properties
Raising finance for some investors on a new property project might be challenging. Real Estate investors encounter higher interest rates from banking institutions and also face challenges with traditional loan sources as financing can be difficult to manage.
Therefore, Ethereum Blockchain simplifies access to alternative financing models by facilitating a mining pool for investors while ensuring better transparency and ROI. Ethereum mining with its lower barriers to entry, but strong market and growth potential offers various alternative financing options for investors to purchase newer properties. A mining pool with Ethereum allows investors to purchase properties based on fractional ownership and help them manage the properties with minimal upfront costs. This unlocks access to an extensive investor pool, increases investors’ self-assurance, and streamlines the investor property acquisition experience.
Wrapping Up
Ethereum Blockchain in the Real Estate sector brings a new level of security, and transparency, and modernizes the overall experience of selling and buying. Real Estate is taking a big step into a digital decentralized world with governments and industry leaders exploring and adopting Blockchain into mobile applications. The future of Real Estate includes a combination of other emerging technologies such as Artificial Intelligence and Big Data with Blockchain and provides a revolutionary shift to the traditional Real Estate processes.
