How is real estate evolving in the new economy?

Let’s face it – real estate is still a pretty antiquated process.   As banking, travel and hospitality have adopted internet-based technology in the last ten years, Real Estate has severely lagged behind with commoditised offerings and very little technical advancement. But, there are changes happening in the industry that could make your next home purchase more simple and direct. But, before we look ahead, let’s see how we got here.   From Human to Digital Network In Canada, homes in the 90’s and for decades before were sold by listing agents to buyer agents using signage, phone calls and faxes. This was of immense value to consumers given limitations of the technology of its time, ultimately creating an analog “human network” to establish a functional market.   

In the 2000’s, the explosive consumer driven growth of website assets and search-ability delivered home pictures, videos, specifications, pricing and location to the real estate sector.    This fundamentally changed the role of the agent from a “turn key solution” in the decades before to providing a collaborative and administrative role with the customer that now had direct access to a subset of the market information.

While social media and peer to peer transactions became normalised in other sectors like shared transportation, hospitality and vehicle sales. Real Estate transactions stagnated. The Real Estate industry adoption of technology added digital signatures on contracts and some new ways to 3D image your home – but these have been small incremental changes with little impact.   The Era of Blockchain I believe Blockchain will drive the digital economy for the next decade and there’s no question that real estate can be part of this transformation. A blockchain is, an immutable time-stamped series record of data that is distributed and managed by cluster of computers.    But what does it mean to consumers in real estate? Blockchain based smart contracts, create a streamlined process by which two peers (a buyer and a seller of a home) can negotiate and agree directly, simplifying and digitising a transaction of any scale.    Smart contracts are written as code and committed to the blockchain.    The code and conditions in the contract are publicly available on the ledger.    When all events outlined in the contract are triggered, like a target price is reached, the code executes and money transfers from one peer to the other peer.    Regulators are able to watch this activity while maintaining the privacy of both the buyer and the seller.   Benefits of this to the people involved in the transaction: Greater Transparency – Since blockchain is a type of distributed ledger, all network participants share the same documentation as opposed to individual copies. That shared version can only be updated through consensus, which means everyone must agree on it. Thus, data on a blockchain is more accurate, consistent and transparent than when it is pushed through paper-heavy processes. Enhanced Protection – transactions must be agreed upon before they are recorded. After a transaction is approved, it is encrypted and linked to the previous transaction. This, along with the fact that information is stored across a network of computers instead of on a single server, makes it very difficult for hackers to compromise the transaction data. Increased Efficiency and Speed – Since record-keeping is performed using a single digital ledger that is shared among peers, you don’t have to reconcile multiple ledgers and you end up with less clutter. And when everyone has access to the same information, it becomes easier to trust each other without the need for numerous intermediaries. Reduced Costs – With blockchain, you no longer need to make guarantees because it doesn’t matter if you can trust your transaction peer. Instead, you just have to trust the data on the blockchain. Environmental Impact – This will have a substantial environmental impact with fewer parties making trips to the banks and to lawyers.    It will also lay the foundation for a completely paperless transaction process.   There’s a Platform for That! In order for real estate consumers to take advantage of the next wave of the digital economy, they will require user-friendly automated platforms that provide users with all of the data and functionality required to be successful prior to and beyond the transaction. Calgary-based Bōde is one of the new disruptors in the real estate industry, and it currently has a completely digital smart contract process that will plug into blockchain when the technology catches up.   Will Real Estate jump on this new wave to catch up to its industrial peers that are ten years ahead or fall further behind? Let me know your thoughts below.