Chapter 19: Blockchain Applications in Real Estate

Properly understanding the potential for blockchain applications within the real estate industry requires grasping the unique and complex nature of real property. Real estate or real property is an alternative investment, which is a separate asset class distinct from traditional assets such as stock and bonds, acquired and managed by its own set of norms, laws, procedures, and standards. Fig. 19.1 shows the steps in a typical real estate transaction. After the first step ‒ negotiations between a buyer and a seller for the price and terms agreement ‒ the process goes through a complicated and time-consuming sequence of events including but not limited to the following: exchanging comments between the attorneys, conducting engineering inspections, signing a contract before a final closing, making escrow deposits, issuing bank appraisal and underwriting loans, ordering title insurance and verifications, satisfying local/state code requirements and variances, receiving loan approvals, obtaining insurance, and executing a closing to transfer the property. The purpose of this chapter is to examine possible applications of blockchain in real estate and discuss the issues and challenges involved in these implementations.