Widespread blockchain technology application across the world has made it difficult to find a sector it hasn’t disrupted. From financial services to healthcare, the new technology has had a positive impact, and is still continuing to do so. And real estate is not an exception.
Up to now, real estate transactions have never been conducted through digital channels. Instead, they are conducted offline, involving face-to-face engagements with various entities.
In view of the legal requirements of real estate, it is important that blockchain as a solution to real estate problems can incorporate these too. This is where L3COS’ regulated blockchain, the technology that will make life easier for the real estate industry players, comes in.
Real estate has long been the investment choice of the wealthy. The problem is that the barrier to entering the real estate market has always been extremely high. These barriers can be citizenship, international bank accounts, credit score, financing, cash flow requirements, accreditation and access to the right sponsors and fund managers.
In addition to cost and entry barriers, third-party intermediaries such as lawyers, brokers and banks tend to take advantage of the complexity of these transactions. According to the United Nations, three-quarters of the money laundered worldwide comes from real estate.
Clearly, more transparency can combat corruption, tax evasion and money laundering, and this is where L3COS has a role to play.
L3COS’ regulated blockchain is designed to speed up lengthy and complicated processes and increase transparency. Here are three areas in which L3COS will change real estate.
People still use physical paper-based documents for identity verification. Needless to mention, such an approach requires significant time and effort. This manual verification process also increases the occurrence of errors and can involve multiple third-party service providers, which can be costly and slow down the due diligence process.
By using digital identities in the L3COS regulated blockchain, this entire process can be taken online securely — increasing efficiency, enhancing data security, lowering costs, and reducing the chance of manual errors.
Worth a mention also are the L3COS smart contracts. L3COS’ smart contracts are not just a representation of existing legal contracts. They are a set of conditions that ensure the agreement of all parties (the seller, the buyer, the buyer’s bank, the real estate agent and the land registry), record and store the information and help avoid fraud during an operation.
They can also streamline the process of transferring property titles while also adding layers of security. All parties involved in the process have their own digital identities and can have the process regulated by an institution or the government.
Losses related to title fraud in the US averaged approximately $103,000 per case in 2015, requiring many buyers to purchase title insurance. Moreover, title professionals find defects in 25% of all titles during the transaction process due to unpredictable mistakes, according to the American Land Title Association. This means property owners often pay high legal fees to ensure the authenticity and accuracy of their property titles.
These title management issues could be resolved by using L3COS’ blockchain technology to create immutable digital records of land titles. This approach could simplify title management, making it more transparent and helping reduce the risk of title fraud and the need for additional insurance. And in cases of domain disputes, L3COS makes it possible for the regulatory authorities to resolve the dispute.
In the real estate sector, millions, if not billions, of global transactions are made each year. If the majority of the industry’s players are to transition to the blockchain, then it will have to be able to handle these transactions seamlessly.
At the moment, Ethereum can only currently handle about 15 transactions per second, and Bitcoin only around 7 transactions a second. In comparison, L3COS boasts very high speed, with 50 000+ transactions per second. That’s a record that other blockchains are simply unable to achieve.
The real estate sector is in the midst of a digital transformation, since the methods used to do business and keep records are costly, archaic, and inefficient.
L3COS is a technology that has significant improvements to make in the real estate industry. It will eliminate the need for third parties to manage transactions, increase trust among the actors, keep records, reduce costs and fraud. Therefore, investors should take it into consideration if they want to be efficient, make profits and avoid unnecessary expenses.