Radical changes are coming for home buyers and sellers!
If you didn’t already know, the blockchain is transforming the future of homeownership.
And for early adopters, this is already happening.
Hi this is Eva Lin, Broker-Owner at Lin Realty Group here in Pasadena.
If you’ve been tracking the developments in blockchain technology…
…you already know that we’re on the cusp of revolutionary change.
Today, I’m sharing a few ways this technology will radically change homeownership and the buying/ selling process.
This is something I’m personally very excited about because real estate is broken in many ways.
Buyer and sellers have to deal with…
– Lender fees
– Title insurance fees
– Escrow fees
– Broker fees
– Mountains of paperwork and disclosures
– Appointments with notaries
– Dealing with the county recorder’s office
– Wire transfers
– and on and on…
It’s clear that the entire process is stuck in another century.
But, with blockchain technology, what once took weeks of back and forth with numerous parties…
…will now take minutes!
What’s more, the added cost from all those parties will be massively reduced or outright eliminated.
To be clear, this isn’t speculation.
Early adopters are already buying and selling properties on the blockchain.
And they’re doing so with complete transparency and legality.
It’s hard to believe, but it just takes the click of a mouse.
I firmly believe that in the coming years, buyer and sellers will DEMAND…
…the simplicity and transparency offered by this new approach.
Allow me to walk you through what this looks like for today’s early adopters.
This might get a bit technical, but bear with me.
Step 1 for Sellers
Create a unique kind of digital file called a Non-Fungible Token (“NFT”).
This NFT is specific to your property.
It contains digital versions of all the info needed to sell the property, including:
- Title deed
- Inspection reports
- Title insurance
- Professional photos, 3D tour, etc.
And anything else that would be relevant for a buyer.
NOTE: An NFT is a special type of file.
It’s one of a kind and cannot be duplicated like normal files sitting on your desktop.
What’s more, an NFT allows for transfer of ownership from one digital wallet to another.
There are already companies out there who specialize in tokenizing properties.
So, you could have an NFT for your house created or “minted” today and….
…sold for cryptocurrency on the blockchain tomorrow.
By law, you would no longer be the owner of your house.
Step 2 for Sellers
Create a legal instrument like a trust or an LLC.
The LLC (or trust) will own the NFT and thereby hold title to your house.
You, as the homeowner, are the managing member of the LLC.
Why do this?
It means the county recorder’s office never needs to be involved with the sale of your house again.
As far as the county is concerned, the LLC owns the house.
So, when you sell your house on the blockchain, what you’re actually doing is…
…transferring ownership of the LLC.
This is FAR simpler than changing the recorded owner of the house.
Step 3 for Sellers
Place the NFT up for auction.
Within X number of days, if the seller’s price is met, the buyer instantly transfers cryptocurrency…
…and the seller instantly transfers ownership of the LLC.
The simplicity is truly shocking compared to what traditional buying/selling looks like.
Now, I know this all sounds pretty crazy but it’s happening!
And it’s only going to become more refined and popular!
The traditional escrow process is going to vanish.
The need for title insurance is going to disappear once property ownership is recorded on the blockchain.
The cost of getting a loan is going to plummet.
And, yes, the cost of hiring a real estate broker is going to drop too.
The tremendous efficiencies of this new process will change everything.
Of course, it’s still early days.
You can be sure that the big legacy institutions will fight tooth and nail.
But, I firmly believe the cat is out of the bag.
It’s not a question of IF the blockchain will transform property sales/ownership for the better…
…it’s a question of WHEN.