When you think of buying a home, what's the first thing that comes to mind? If you imagine endless paperwork and long queues, you're not alone. But this can be changed, and this is already changing with PropTech. Let's find out what this term means and how it works.
What is PropTech
PropTech stands for 'Property Technology'. There is a big toolbox that holds all the digital tools used to buy, sell, or manage properties. From apps that help you find your dream home, to virtual tours and online mortgages — PropTech makes real estate easier and faster.
Real estate technology, also known as PropTech, realtech, or CRE tech, is the use of technology to improve the real estate industry. Some examples of PropTech include investment platforms that match retail investors with real estate assets, and property management platforms that run residential, office, and retail properties.
How Does It Work
Imagine playing a video game where you can create and explore buildings. Now, imagine doing that but with real buildings and properties. That's kind of what PropTech does. It uses smart tools like 3D virtual tours, online contracts, and chatbots to answer questions. You can do almost everything from the comfort of your couch. No more running around signing papers.
PropTech can seem distant from the individual consumer, but it is already having a major impact on the way we find and rent or buy property. For example, Airbnb has made it possible to find and book unique accommodations all over the world, often at a fraction of the cost of a hotel.
Here Comes Blockchain!
Hold on, let's add some secret sauce to PropTech: blockchain. It is used like a kind of notebook everyone can write in, but no one can erase or change what's been written. It's a super-safe way to keep records.
In real estate, it's gold. When buying a house, there's tons of information to keep track of — contracts, payments, and titles. With blockchain, everything is secure and can be shared without worry.
The Impact on the Market
For starters, it’s cost-saving. With blockchain, there’s no need for middlemen, like banks or lawyers, to verify documents. This means fewer fees, so businesses can save a lot on buying, selling and renting properties.
Speed is another perk. According to the Ellie Mae Origination Insight report, the average time to close a house deal used to be 50 days. Now, with PropTech, deals close much faster. As technology advances and obsolete regulations are abolished, they can even be closed in 1 day, online, without intermediaries.
And this is already happening right now. For example, Home Key offers to build a house or invest in construction through tokenization and blockchain. This avoids unnecessary costs; therefore, the cost of a new house is approximately equal to that of an apartment in the same area.
With blockchain, the risk of fraud goes down because the notebook keeps everyone honest. Plus, all the information is transparent, so buyers and sellers know exactly what’s going on. Home Key and other projects implementing PropTech are making buying and selling properties safer, faster, and cheaper.