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Application of Smart Contracts for Real Estate Transactions
07 November, 2021
Blockchain is one of the latest innovations of the technological advancements. Blockchain is highly popular in the world due to the advanced capabilities such as security, transparency, high levels of privacy, Decentralised network and infrastructure, Individual control of data, visibility and traceability. All the transactions and changes in the blockchain network can be traced to the owner of the change along with the time stamp of the change. Hence blockchain is widely used by people and organizations throughout the world. Over the course of this blog, we will look at one such industry and how blockchain is used to improve the industry. Real estate industry is one of the most lucrative industries in the world. Millions of properties are bought and sold on a very regular basis.
It is considered to be a billion dollar industry. With such lucrative opportunity available, it is filled with people and organizations who are looking to take advantage of the situation and make a profit. Every real estate transaction has 3 major parties involved i.e. the buyer, the seller and the various middlemen in the transaction. This reduces the transparency in the transaction and adds additional cost to the transaction. However, blockchain can be used to rectify this issue and create a transparent and a direct system between the buyer and the seller thereby eliminating the middlemen in the transaction.
How does a Smart Contract Work
One such tool under the blockchain domain is smart contracts. Smart contract is a computer program which monitors and controls the transactional protocols. A smart contract monitors and executes the terms of the transaction based on events and actions undertaken by both the parties. Solutions for the real estate industry by Speqto Technologies come with inbuilt smart contracts technology which connects the buyer directly to the seller there by eliminating the need for any kind of middlemen and unwanted expenses through the middlemen.
Any two individuals who wants to engage in a real estate transaction would use smart contracts and can follow the following steps to reach their goals easily.
1. The seller digitizes the legal documents of the house for the review of the potential buyer.
2. An interested buyer takes a virtual tour or even a real tour of the house.
3. When the buyer is interested, both the parties undertake the legal work related to the transaction.
4. The first step in the transaction is drawing a contract to dictate the terms of the agreement and the transaction.
5. Using various templates, either party can draw up a smart contract.
6. Both the parties engage in negotiations for the transactions
7. Once the negotiation is complete, one of the parties modifies the smart contract to meet the new terms.
8. The system records and time stamps the changes to the smart contract for review.
9. The buyer can review other property related documents through the same smart contract.
10. The financial transaction is initiated.
11. When the transaction is complete based on the terms of the smart contract, the deed of the property is transferred to the buyer automatically.
12. The system and the smart contract records all the details of the transaction for review at any point in time by either one of the parties or 3rd party for verification.
Benefits of Using Smart Contracts
1. Autonomy and Savings :-
Smart Contracts do not need any kind of intermediaries to broker the deal. The elimination of intermediaries reduce the cost of the transaction as the intermediary fees need not be paid by either the buyer or the seller. The goal of Speqto Technologies is to help our clients save money through our solutions for the real estate industry.
2. Backup :-
The blockchain system and smart contracts keeps a duplicate copy of all the documents. Hence, it is very simple to restore or go back to a previous version of the documents. Redundancy is the mantra for success. Our solutions ensure, that our clients and their data is never lost.
3. Safety :-
Smart contracts and blockchain systems are encrypted which means all the details are protected and very difficult to break into. The safety and security of our clients is the highest priority and that reflects in the solutions designed by Speqto Technologies.
Smart contracts use various automated computer responses and protocols to replace monotonous business processes and hence saving hours of time in a single shot. We aim to help our clients achieve their goals as quickly as possible. Our solutions are a representation of the goals of Speqto Technologies.
5. Accuracy :-
Since a majority of the work is done by the computer or through the computer, the possibility of human error is drastically reduced thereby increasing the accuracy of the entire transaction. Blockchain solutions from Speqto Technologies have a reputation of being accurate.
6. Transparency :-
Smart contracts promotes and represents direct buyer to seller interaction, this increases the transparency of the entire transaction. Transparency is the secret to success. Blockchain solutions from Speqto Technologies are as transparent as water.
1. Difficult to Change the Process :- The process in which a smart contract executed cannot be changed easily. Hence, experts here at Speqto Technologies take extra precaution to design solutions best suited for our clients.
2.Possibility of Loopholes :- Smart contracts are notorious to have loopholes which are easy to eliminate. The secret lies in the design process of the solution. Speqto Technologies is proud to develop solutions without any loopholes.
3. Involvement of 3rd Party :- Smart contracts are designed to eliminate intermediaries, however, these intermediaries take a non-traditional role in the world of smart contracts. However, with our solutions at their disposal, our clients have significantly reduced the involvement of intermediaries.
4. Vague Terminology :- Smart contracts cannot be executed under vague terminology usage. Hence, we at Speqto Technologies, have become experts in creating efficient and highly accurate solutions for our clients in the real estate industry.
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