Blockchain technology and the digital currencies surrounding it have been getting quite a bit of attention in recent years. Some suggest that this technology has the potential to change the way we do business in real estate.
Joseph Snyder joined me on a recent podcast to discuss the blockchain and its place in our industry. His company, Lannister Holdings, is one of the first to facilitate mortgage loans via blockchain technology.
According to Snyder, blockchain-based transactions could replace the traditional pen-and-paper approach to facilitating property purchases. Listen to my interview with him below to find out why. For a rundown on how blockchain-based transactions can benefit both agents and consumers, read on.
Why blockchain is better
As companies like Lannister Holdings etch out their place in the real estate arena, they discover better, faster ways to close deals for consumers.
Blockchain technology is especially useful during the offer and offer-acceptance stages of the real estate transaction. At present, these processes are managed manually. This is slow, which can cause buyers to miss out on deals and sellers to miss out on offers.
Through blockchain-based smart contracts, these and other parts of the property-sale process are completed automatically and instantaneously. Both buyers and sellers enjoy a streamlined experience. Also, the expenses associated with servicing transactions can be drastically reduced.
What is a smart contract?
A smart contract is a contract built on the blockchain system. It’s a specific, coded contract that securely handles multiple points in the transaction. With a well-coded smart contract, there’s no need for middlemen.
It’s possible to automate the verification of funds as well as the chain of title.
Essentially, smart contracts can replace all of the antiquated (and often expensive) processes associated with servicing real estate transactions, and this isn’t just good for consumers, it’s good for agents as well.
Think about it: How many times have you gotten to escrow only to have issues surface that either slow down the deal or cause it to fall through entirely? By reducing the potential for human error, smart contracts could help agents avoid the vast majority of these issues.
Snyder’s advice to real estate agents
Although it’s true that most real estate transactions still rely on decades-old systems and processes, changes are on the way.
Snyder’s advice to agents is simple — pay attention.
It will likely be at least a few years before blockchain technology disrupts the day-to-day work of the average real estate agent. Still, the best time to prepare for coming changes is now.
To do this, agents must educate themselves on blockchain, at least to the point that they understand the language and processes involved in the typical smart contract.
Agents proficient in blockchain-based transactions will be in a unique position to service the growing pool of tech-savvy consumers in coming years. Plus, they’ll be ready to adapt in the event that smart contracts become standard in the industry.
Pat Hiban sold more than 7,000 homes over the course of his 25-year career in real estate. Now, he dedicates his time to helping others succeed as agents and investors. As host of the Real Estate Rockstars Podcast, Pat interviews real estate experts to explore what works in today’s markets. He also founded Rebus University, an online training platform for real estate agents and sales professionals.