This post was written by Andy Barkett, VP of AI & Machine Learning at REX. Andy is a veteran of the hardware, software, and hyperscale internet industries. He has worked at Google and Facebook, and was a Sr. Director of Engineering for Livescribe, a consumer electronics company. An expert on infrastructure scalability and AI, Andy has a BA from UC Berkeley and an MBA from UC Davis.
Thinking About the Blockchain
It’s hard to browse the web without running into another story about the rise of bitcoin or about how bitcoin’s underlying blockchain technology will disintermediate certain industries. Blockchain is a shared, peer-to-peer digital ledger in which cryptocurrency transactions are logged and shared publicly. As blockchain advances and starts to become prevalent in real estate, it will begin to make the process of buying and selling a house easier, faster, and cheaper. At REX, we’re committed to saving home buyers and sellers money with very low commissions. The blockchain and smart contracts will allow us to carry this mission even further in the next few years.
Expediting the Process
Many blockchain transactions can clear in as few as ten minutes. They are recorded and verified by the consensus of peers and a proof-of-work system, all handled by machines. Compare this to processes that require human interaction and must happen during business hours. Even with attentive people, the home escrow processes can take weeks. A blockchain based escrow could realistically achieve two to three day closings.
Middle Men and Transaction Fees
We pay many third parties in today’s real estate market to provide one thing: trust. We don’t trust the counterparty, so we use title companies, escrow companies, title insurance companies, and the like. With ‘trustless’ blockchain transactions, the history of the house is well known, the escrow process is handled by the distributed blockchain and smart contracts, where all the other participants in the chain provide the verification we need, and we no longer need to pay thousands of dollars to middle-men to create trust or to insure against loss.
Facilitating Fractional Ownership
It’s a lot of work to create and manage partnerships or LLCs to allow multiple people to own a piece of real-estate. And it’s inconvenient to change ownership percentages. Even small changes can require a lot of paperwork. An Ethereum token or cryptocurrency-based system would make transferring fractions of ownership easy, fraud-resistant, and fast.
An Immutable Record
Perhaps the most important change to real estate could come from the immutability of the blockchain itself. When we use the blockchain and smart contracts to manage and record everything from title transfers to appraisals to inspections, it will become much more difficult to lie about a house’s history. When the homeowner can safely and selectively share access to this record, it will make it faster and easier to get home equity loans, to reduce insurance premiums, or even to remember when to do preventative maintenance.
At REX, we’re excited about the prospect of developing blockchain-based solutions that help our customers save even more on their houses while making their records more secure.