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Technology is having a huge impact on the real estate industry, and as home stagers, you’ve probably already felt it. You now need to cater to virtual walkthroughs powered by virtual reality (VR) technology and you’ve also probably felt the threat that comes from sites like Zillow and Trulia.
One of the most revolutionary technologies facing real estate, however, is a behind-the-scenes tech called blockchain. Blockchain isn’t a new app or even a tangible experience, but a functional database that carries all the relevant buying and selling information for a property or even for a group of properties. It’s a huge deal in finance, which makes it hyper-relevant in the real estate world.
What could blockchain mean for real estate, and could it impact the role of home stagers? Here’s what you need to know.
What is Blockchain?
Blockchain is a buzzword in tech because it’s commonly associated with Bitcoin and other digital currencies. But what does Bitcoin have to do with real estate beyond the potential to buy properties with it? The answer is everything. Because blockchain makes complex transactions safer and easier to track, it could simplify real estate transactions in ways never thought possible.
The simplest way to describe blockchain goes like this: it’s a database unlike any you’ve ever used before because it’s decentralized. It doesn’t belong to anyone or any provider. Rather than using middlemen, blockchain allows people to connect directly and out in the open where every transaction is approved and recorded.
Let’s say you want to send money to another person. On the blockchain, your transaction is a ‘block,’ and when you send the money, everyone can see that someone sent that money to someone else: a public blockchain is actually anonymized so you won’t necessarily know who’s behind it unless you know usernames. The network approves your transaction, and then your block is saved and added to the record, which adds another block to the chain. Your block also contains the details of the block before it, which links it intimately with the chain. If someone tries to alter or delete the block, it impacts the entire chain.
Blockchain is best known as the powerhouse behind cryptocurrencies. But as noted before, it can also be used to send currencies like U.S. dollars between people, sell goods, and complete complex legal transactions. It’s also used in areas like records management in healthcare and government identity management. Blockchain even has the potential to be used to make voting safer.
How Can Real Estate Professionals Use Blockchain?
The impact of blockchain in the real estate industry has the potential to simplify all kinds of transactions, from title exchange and sales to investor management. As IBM notes, it will make property a far more transparent asset, and it could make the transaction as technologically simple as online shopping.
The big appeal of blockchain is that you can buy and sell goods and services and even manage the entire transaction without involving a bank. It removes the need to use bank financing and gets rid of all the 14-, 30- or 45-day waiting periods associated with being beholden to banking regulations. It also removes the fees involved. The fluidity this offers is what’s making blockchain so attractive to high-end real estate brokers, in particular.
Real estate asset tokenization is another key benefit of using blockchain. With tokenization, asset owners can raise capital faster and open up their assets to investors in a way that’s currently unprecedented. Tokenization is considered the future of real estate investments, and it will allow both individual and institutional investors to source and participate in deals previously unavailable to them. For example, traditional investment in a $6.5 million property required $6.5 million in assets upfront: with tokenization, investors can buy a stake for as little as $6.50.
For the average buyer, seller, and agent though, the impact will likely be most felt in what’s called “smart contracts.” Smart contracts replace a huge amount of the paperwork and provide the same security through programs run on the blockchain. For example, a buyer can store their personal and financial identity as a block, and mortgage lenders can then use that to decide whether to lend to you before issuing a smart contract to the agent and initiating the terms. What’s more, you can log in and check the process at any time.
Could Blockchain Affect Home Staging?
Although blockchain seems to affect the legal and financial side of the property business first, it may have knock-on effects for the rest of us working in real estate. If blockchain is successful in cutting out the middleman in more transactions, it will allow homeowners to complete for sale by owner (FSBO) purchases faster and with far less hassle.
Full-service Realtors are already working hard to add value that these platforms can’t, and some of that value will include real support, real staging, and real photos.
Rather, the bigger impact will likely still be the use of virtual reality (VR) and augmented reality (AR). These technologies allow clients to personalize a room for themselves according to their own taste. However, given the importance of in-person walkthroughs for experiencing a home, it’s possible to leverage VR and AR as preview options to get more buyers to the open house. NOTE: No one should ever alter the interior appearance of their house with virtual technology as that opens them up to a lawsuit.
Ultimately, blockchain is a technology you should know about because it will impact the industry itself. But the real estate industry is nothing if not resilient. And nothing can replace the skills of a great home stager or the smell of freshly baked cookies.