It's no secret that the real estate industry is known for adapting slowly to technology. New advancements in technology, such as e-signing documents, took years to finally be considered ‘the norm’. Our industry has painted a giant target on its back and is prime for disruption. Technological innovations have already shifted the way that people buy and sell houses. For example, scrolling through Zillow listings while shopping for a home on their smartphones is usually the first place that buyers start. On the sell side, homeowners are utilizing tools like 3D virtual tours and drone videos to help get their property sold.
What is the next big technological advancement to disrupt the real estate industry? Cryptocurrency and blockchain technology have their eyes set on changing how we do things as real estate agents. It's predicted that houses will be bought and sold within a few minutes on the blockchain through smart contract automation. This is quite a difference from the traditional real estate sale, which can take several weeks. Where does that leave real estate agents? Should we fear the blockchain? Innovation and automation will continue to shift the real estate industry, whether we like it or not.
Here's how your job will change.
What is the Blockchain? (High-Level)
There is no shortage of online resources to read about the blockchain and what it is. To save you time reading, I'll give my high-level summary of it. If you want to take a deeper dive into what the blockchain is, check out this resource.
The blockchain is a decentralized collection of digital information (blocks) that operate at extremely high speeds. All the data is publicly accessible. Smart contracts are used on the blockchain to perform actions triggered by certain parameters happening (or not).
Within a real estate transaction, there are countless moving parts involved. From the title report, to mortgage approvals, to appraisals, to inspections, there are tons of different data points from different sources/people that must be compiled and reviewed to close a transaction. The blockchain aims to have all that information together, in one place, easily accessible, and automatically triggering steps throughout the process based on certain information. Realtors could be replaced by cryptocurrency at this rate. Unless realtors adapt to the changing blockchain technology, they'll likely get left behind.
How the Blockchain Will Affect Realtors
“Realtors will be 100% cut out of the real estate process from innovations in cryptocurrency and blockchain technology.”
This is a scary thought. Many people believe this. What do you think?
Personally, I believe that realtors’ jobs will be completely changed once blockchain technology is adopted in the mainstream real estate world. We will be forced to adapt our skills and change what we focus on. Realtors will have to add value in different ways as technology continues to shift our industry. However, I do not think we will be completely cut out of the process.
Blockchain Will Replace These Realtor Tasks
Here is a list of things that Realtors currently do that cryptocurrency and blockchain technology will do in the future for home buyers and sellers.
Seller’s Agents
- Long Listing Periods – Properties will sell in minutes vs weeks because all information needed to close is already on the blockchain. Houses become more liquid because you don’t have to wait for all the traditional steps and processes to take place in order to close. Ownership will automatically transfer to a buyer once certain parameters are met, set in the smart contract of the sale of a home.
- Taking Offers – Offers will be submitted through blockchain and will be verified instantly. It will likely work similarly to a bidding system with everything automated. Once an offer is submitted that meets all the parameters set by the seller, it will be automatically accepted and the deed will be transferred.
- Title Report – All information about a property will already be on the blockchain in a live document, including a full title report. Running a new title report won’t be necessary. People can sell a house with multiple code violations quickly because all title issues will be known to the buyers. Transparency and speed enable this to happen without issues.
- Less Paperwork – Everything will be digital. Wet signatures eventually won’t be required.
- No Human Error – All contracts will be 100% accurate based on existing blockchain data.
- Death of the MLS – Similar to how Zillow works today, sellers will be able to list their homes on the market themselves. The blockchain will act as a platform similar to Zillow. They will connect with buyers and receive offers through the blockchain. They can set parameters of what type of offer they are looking for through smart contracts.
Buyer’s Agents
- No Home Inspection – All permits, work done to a property, repairs, and damages will all be recorded on the blockchain in a live document and easily accessible for homebuyers. The complete property history will be logged on the blockchain. Walkthroughs to confirm condition will likely be done virtually. Inspections won't be necessary.
- Crypto-backed Loans - A buyer paying with an FHA loan backed/collateralized by bitcoin will carry the same weight as a cash buyer. The speed of mortgage transactions will quicken and if backed by a cryptocurrency. Cash buyers will be considered just as good as buyers paying with crypto-backed mortgages. You can view a list of these cash buyers at this source. Also, the time it takes to get approved for a mortgage will be within seconds.
What Is The REAL Future for Real Estate Agents?
Drum roll…
If the real estate industry didn’t change at all, aside from adopting blockchain technology, realtors would still be needed in a similar way to how we are needed today. However, other technologies and platforms will arise that will change our current realtor tasks. Companies like Zillow and making it easier for buyers and sellers to complete transactions without heavy involvement of a real estate agent. Technology will continue to disrupt the industry. We eventually won’t be needed for things like helping sellers get professional photos taken and adding them to a listing for them with a fancy description – something can be created that can do that.
How about helping a seller determine a good sale price for their listing? Currently, realtors help people decide how much to sell their homes for. Zillow Zestimates are trash. But do you believe they will always be?
Buyer’s agents do a great job today of helping buyers decide on a neighborhood by providing local insight. As more content fills the Internet, more information will be available about particular neighborhoods by bloggers, YouTubers, and other online influencers. Realtors will have to step it up and try to add even more value through this. Blockchain will have trouble taking over this part of being a buyer’s agent AKA being a local expert.
Overall, I believe that realtors will take on a role more similar to an attorney involved in a real estate transaction. We will leverage our knowledge of real estate vocabulary to help buyers and sellers navigate smart contracts on the blockchain. If houses aren’t sold on a bidding system, we can help people negotiate. Buyer’s agents can help people learn about the nuances of different neighbors they are considering moving to. Lastly, realtors can still provide general real estate and financial advice. These are things that, as far as we can tell, will still require the human touch.
What Does the Crypto Real Estate World Look Like Now?
Here are some fun innovations going on currently in the cryptocurrency real estate world.
By turning a property into an NFT, you can fractionally sell shares of it to multiple buyers. CityDAO purchased 40 acres of land in Wyoming. They are selling fractions (plots) of the land to people who want to become part of the community they created.
Propy is leading the charge to become the top platform to buy and sell real estate using cryptocurrency. You can list your home on this platform using an agent and receive and offer with cryptocurrency as the form of payment instead of cash. Unlike other tech giants in the real estate industry, Propy is keeping the agent involved and not cutting them out.
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