The newest thing in real estate technology is the “smart contract.” This is the result of blockchain technology evolving. It’s now the standard way for real estate companies to ensure that all parties to a binding deal are kept safe and informed.
The world’s real estate market was worth $3.69 trillion in 2021 and will grow by 5.2% annually from 2022 to 2030. The housing market is one of the most extensive and confusing in the world.
In the real estate business, blockchain development, smart contract development, and NFTs pave the way for new technology. This piece will use real-life examples to examine how smart contracts help the growing blockchain-based real estate market.
Smart contracts for real estate
First, let’s discuss smart contracts and how they will change the real estate business.
A smart contract is an idea that makes it easier to set the rules and terms that govern business deals.
A smart contract is a self-executing digital code that facilitates and verifies the negotiation and performance of a contract agreement. These programmes are run on a decentralized blockchain network.
The people involved can set a condition that, when met, can set off a chain of events.
The best thing about smart contracts is that once a deal is complete, no one can change or manipulate the ledgers.
It is being used more and more quickly. The Globe News Wire says the global smart contract market was worth $144.95 million in 2020. As it grows at a CAGR of 24.55%, it should hit $770.52 million by 2028.
Smart Contracts Use Cases in Real Estate
Smart contracts allow everyone involved in a real estate deal to trust each other, be honest, and remain anonymous.
The following are some real estate use cases for smart contracts.
1. Identity Management
We must protect ourselves from identity scams, which can be very bad if someone gets into your bank account, emails, etc. without your permission.
Many technologies can stop these crimes, but they could be better because they sometimes give the owner complete control over their data and the information they share.
Smart contracts with digital identifiers (DIDs) are based on decentralized and distributed ledger technologies. They give people complete control over their data and let them share their information however they choose. This makes data more secure and lowers the risk of data loss or misuse.
For identity management to work well, smart contracts help ensure the following:
- Digital assets that protect your identity
- The person picks what information to share.
- Simple and easy KYC verification
2. Property Ownership Transfer
Conventional real estate contracts are becoming less valuable for several reasons. They are meant to spell out the terms of an agreement between two parties, but these terms can be vague and taken differently. That’s why people argue about the terms of contracts for a long time and cost a lot of money.
Traditional contracts aren’t as clear-cut when you use smart contracts.
Because traditional contracts aren’t unambiguous, it’s complicated and risky for both parties to move property ownership in real estate deals.
The seller usually wants to keep control before getting paid, and the buyer wants to keep the money the same before getting the property. Notaries solve the issue but make changing land ownership more expensive and take longer.
Smart contracts eliminate these issues and speed up changing who owns a property. When the right conditions are met, plans to change who owns a piece of property are automatically carried out.
For instance, the smart contract can change who owns an object automatically when the buyer sends payment to the seller. Or, a notary can tell a buyer right away that the previous property owner has paid off the debt, letting them know they can safely buy it.
3. Hassle-free Lease Agreements For Rentals
These days, smart contracts make it simple to rent out homes. Rent Peacefully is a platform that lets you rent and sell properties on the blockchain using smart contracts.
When a maintenance request is sent to the blockchain, the smart contract knows about it and locks the rent until the problem is fixed. This is a benefit for Rent Peacefully tenants.
How does it work?
The property owner starts the smart contract process by incorporating the terms of the lease into a new contract. These terms include rent, property management fee, and the due date.
The renter reviews the lease terms on the online site and, once they agree, digitally signs the smart contract.
The property owner also signs the contract digitally, making it a legally binding digital smart contract.
4. Investing in real estate
Blockchain adds a whole new level to real estate dealing. For instance, let’s say you know that the government is putting a lot of money into the growth of a specific town or city. In the next few years, this will cause home prices to go up. The value of your home has gone up, and the rise now works for you.
One more way to invest using blockchain technology is through tokenized partial ownership. It makes it easy for buyers to buy and sell tokens quickly and trade smaller pieces of their tokenized ownership instead of the whole thing.
You can script smart contracts to handle these kinds of real estate deals so that they give the owner money through rent or dividends.
conclusion
The use of smart contracts in the rapidly evolving real estate market promises to significantly alter how deals are made and handled. Smart contracts leverage blockchain technology to streamline operations such as property ownership transfers, leasing agreements, and investment transactions, offering unparalleled security, transparency, and efficiency. This reflects a fundamental movement towards a more accessible, egalitarian, and dynamic real estate market and a technological innovation that can decrease risks, boost confidence among parties, and reduce costs.
