{"id":1751,"date":"2022-06-17T21:56:45","date_gmt":"2022-06-17T21:56:45","guid":{"rendered":"https:\/\/blog.ark7.com\/?p=1751"},"modified":"2023-05-19T03:57:22","modified_gmt":"2023-05-19T03:57:22","slug":"what-investors-need-to-know-about-how-technology-is-changing-real-estate","status":"publish","type":"post","link":"https:\/\/ark7.com\/blog\/learn\/in-depth\/deeper-dive\/what-investors-need-to-know-about-how-technology-is-changing-real-estate\/","title":{"rendered":"What Investors Need to Know About How Technology Is Changing Real Estate"},"content":{"rendered":"
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Innovations in technology have changed virtually all aspects of our lives: how we communicate, work, learn, and everything in between. As new technologies continue to emerge and evolve, the world of real estate is also experiencing seismic changes. It\u2019s important that real estate investors stay on top of the latest changes in technology and how they\u2019re changing the real estate game.<\/span><\/p>\n

Did you know that a survey of more than 100 real estate professionals found that\u00a0<\/span>two-thirds<\/span><\/a>\u00a0of them reported that adopting new technologies was a strategic priority?<\/span><\/p>\n

Technological Innovations and Their Roles in Real Estate<\/b><\/h2>\n

Let\u2019s take a deeper look at how specific technological innovations are changing the real estate landscape.<\/span><\/p>\n

Blockchain<\/b><\/h2>\n

Blockchain is a digital ledger that stores many different kinds of data, including information about cryptocurrency transactions, NFTs, and decentralized finance (DeFi) smart contracts.<\/span><\/p>\n

Of course, any other conventional database is capable of storing this kind of data, but the blockchain is unique because it\u2019s completely decentralized. This means that instead of having the data maintained in one location by one central administrator, such as in a bank\u2019s database, several identical copies of blockchain databases can be held on multiple computers spread out across a blockchain network.<\/span><\/p>\n

The advanced network of computers and algorithms facilitated by blockchain technology has the potential to empower blockchain real estate apps to disrupt the housing market forever.<\/span><\/p>\n

Whether you\u2019ve dabbled in cryptocurrency yourself or just skimmed a few articles on the subject, you\u2019ve likely seen that Bitcoin, Ethereum, and other crypto coins have become synonymous with the blockchain. But when it comes to blockchain technology and real estate, it stretches much further than just crypto assets.<\/span><\/p>\n

At its most basic level, blockchain real estate deploys a network of computers that will act as a more technologically advanced and secure escrow company. Blockchain real estate can help buyers, sellers, and investors exchange currency, records, contracts, and other information on one safe and secure network.<\/span><\/p>\n

For example<\/span><\/p>\n

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  1. Cecilia accepts Mark\u2019s offer to buy her house. She requests the money over the blockchain.<\/span><\/li>\n
  2. A large network of advanced computers, called nodes, get to work facilitating Cecilia’s request.<\/span><\/li>\n
  3. The nodes use pre-set algorithms to verify and process Cecilia\u2019s request.<\/span><\/li>\n
  4. Like an escrow company, once the exchange can be verified, the actual exchange of funds and documents will occur.<\/span><\/li>\n
  5. Following verification, a new block of data will be added to the blockchain ledger, forming another link in the chain of data (the blockchain).<\/span><\/li>\n
  6. Once the new block of data is added to the blockchain, it\u2019s impossible for it to be altered in any way.<\/span><\/li>\n<\/ol>\n

    Blockchain Technology Tokenizes Real Estate<\/b><\/h3>\n

    Understanding the concept of tokenization is extremely helpful to gain a clearer view of blockchain real estate. Tokenization is a method in which an equitable interest in a property is turned into a token. The token becomes a digital representation of the equitable asset.<\/span><\/p>\n

    Say two investors, Bill and Jason, are purchasing a condominium together.<\/span><\/p>\n

    If they tokenize their interests in the real estate asset on the blockchain, Bill and Jason would each receive tokens to show their ownership of the condo on the blockchain.<\/span><\/p>\n

    If Bill and Jason each purchase 50% of the condo, they\u2019ll each receive an equal amount of tokens. But if Jason purchases 80% of the condo and Bill purchases 20%, their tokens will reflect the difference.<\/span><\/p>\n

    When all tokens are added together, they will equal the asset\u2019s total value. Separately, each investor\u2019s tokens will demonstrate their share of the condo. No matter which way you crack it, tokens are used to demonstrate the following details of an asset\u2019s ownership:<\/span><\/p>\n