CRE is a legal term for Commercial Real Estate. It includes office space, warehouses, and retail space. CRE purchase and sale processes can be frustrating and time-consuming, with numerous documents to sign by lawyers, brokers, buyers, and sellers.
Wouldn’t it be much easier if the various parties could speak directly to each other? The CRE process would be transparent and less expensive for all parties. Below are some of how Blockchain technology can help streamline the CRE process.
1. Reduce the Time to Closing With Smart Contracts
When you go to a restaurant, you order food and then wait for it to arrive. You are also charged at the end of the meal for your food, whether or not you receive what you ordered. Smart contracts are used because they reduce paperwork and errors by providing an automated payment system that eliminates human interaction with the process.
2. Eliminate Paperwork and Errors
When you buy a home with a mortgage, you must sign many documents, such as the mortgage and the deed, to make legal promises. The use of smart contracts can reduce this paperwork and eliminate errors by having all agreements digitally recorded on the blockchain. It would enable all parties to easily see what exact terms have been made, eliminating much of the human error and conflicts arising during closing documentation.
3. Reduce Costs
Smart contracts reduce the time and money that each party spends on the transaction. For example, closing costs are often high. This sum can be reduced by having all parties sign off on a UI (user interface) agreement at the close of escrow, reducing the amount of paperwork required to close correctly.
4. Reduce Risk
Typically, there is a relatively large amount of risk in residential real estate transactions because of uncertainty regarding property values and financing. Smart contracts reduce this uncertainty by automating all agreements and providing a transparent system that allows all parties to see the exact terms each party is entering into. It reduces the chance of human error, such as misspeaking or overlooking an important detail.
The use of smart contracts can significantly reduce the time, money, and risk necessary for a CRE transaction. It can improve the quality and speed with which closings take place while reducing risks and paperwork. With this in mind, it is clear why Blockchain technology will continue to significantly impact CRE throughout the year and in years to come.