1. Significantly reduce closing costs and associated fees
At the moment, a significant number of expenses are incurred any time a property changes hands. Closing costs on just a single residential property can run up to five percent of the purchase price and commercial closing costs go even higher. While real estate overall tends to appreciate over time, it takes some time to appreciate beyond the costs lost just by the transfer of ownership. Blockchain technology has the capacity to administer smart contracts, which will cut out a number of parties currently involved in the contractual transfer of ownership, which will also cut down significantly on expenses.
2. Conditional transactions
Not only are the contracts produced by the blockchain, but they are also administered by the blockchain. This means that smart contracts can also include the conditional release of funds. For instance, a smart contract can be entered into in which the purchasing party has a certain amount of time to ensure the property is in satisfactory condition before funds are released to the buyer. Since the contract is administered by blockchain, any disputes are also settled by the blockchain itself in a thoroughly democratic matter.
3. Swift transactions
On average, it takes roughly 50 days to close on a house. This is in part due to all of the many checks that need to take place before a mortgage can be fully approved, including inspection, appraisal and reviewing the property title. Not only can smart contracts reduce the costs associated with a change in ownership, but they can also significantly reduce the time it takes as well. This means that the time may not be far off when individuals can buy and sell a home as quickly, cheaply and conveniently as they can rent an apartment.