We may be divided on just about every subject imaginably, but there is one thing everyone can agree with.
There are few people you can trust.
Whether a person found this fact out when they were promised ice cream that never appeared as a kid or when they trusted that another driver would stop because they had a stop sign and ended up in an accident, for better or worse, no one can grow up without learning to not trust people.
You can see the consequences in the way we do business, especially in industries like real estate where on slip up could result in the loss of a person’s savings and dim their financial future. Accordingly, buying and selling a house is an incredibly complicated process that not only requires jumping through legal and regulatory hoops just to transfer ownership, but often requires an unbiased third-party, like an escrow company, to make sure that everyone gets exactly what they paid for.
While the real estate industry isn’t alone in its regulatory hurdles, it is one of the few industries that is already using blockchain technology to prevent fraud and loss while also improving efficiency.
Let’s say you are a real estate agent with a house on the market. Before you can complete any transactions, the sale must be approved through the multiple listing service (MLS) to check that all the information, such as appraisal value, contracts, and listing agreements, matches what has been presented.
Of course, any service with that much data is going to be heavily guarded to make it difficult to access. The MLS isn’t just difficult to access because of cybersecurity measures though. In fact, if you aren’t a licensed real estate broker you can’t access it at all, and when you can the data you need still may be restricted, fragmented, or out of date. How can such an important service be so unorganized in 2018?
Because only a few people can be trusted with full access.
Blockchain could change that though. Blockchain data is distributed amongst its users creating a shared database that cannot be hacked or controlled without having control over the majority of the database. Blockchain data cannot be altered once it has been published either, making it even easier to share data safely through it. That means an MLS database using blockchain technology could be shared with users all over the country safely with up to date information.
The MLS isn’t the only system in the real estate market that blockchain could simplify, as many property titles are still stored either locally or offline completely making them difficult to access. Blockchain could completely remake the title sharing system by creating not only a secure and accessible database, but an easy way to share data and complete transactions through smart contracts.
Blockchain could help buyers and renters too. According to the FBI, $969 million was scammed or nearly scammed out of the hands of buyers and renters in 2017. That’s almost $1 billion of regular people’s hard-earned dollars stolen through fake closing fees, security deposits, and false escrow services, and that’s only a few of the many kinds of real estate scams out there.
The people who run these scams are the reason why the MLS and title transfer process is so inefficient and difficult, but Blockchain could undo all of that. As mentioned, Blockchain technology offers the ability to create smart contracts that essentially do the job of an escrow company. Any payment or transfer is only completed once both parties have met the requirements agreed upon in the contract, like a normal contract, but through a Blockchain database, a smart contract would verify the identity of two parties and then complete the transaction for them. Thanks to the unalterable nature of Blockchain data, there would be no change to create false ownership documents for a property or even list a property that you don’t own. The complete transparency between buyer and seller would be a major step to stopping real estate fraud once and for all, and the gears to make it happen are already in motion.
Cook County, Illinois began a pilot program in 2016 aimed at creating a Blockchain supported property title transfer system. Currently Cook County has created hashes for all land properties within its jurisdiction so they can be loaded to a digital ledger. Once the rest of the system is built, the title transfer process won’t require multiple agencies and lawyers to review information and allow for errors or hacks to occur during the transfer process.
Although you’ll never be able to trust very many people, you might be able to trust Blockchain, and that could mean your business or industry will be modernized like the real estate industry already is. Don’t get left behind, learn about the latest cybersecurity developments today and be ready for tomorrow.