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How will blockchain technology affect the real estate industry?

Traditionally, we rely on trusted third parties to register and transfer the ownership of land and real estate property. In the U.S., the task is given to local courthouses and city halls. In the UK, it’s the Land Registry, a government-owned body. In less developed countries, tribal leaders define how land is distributed among citizens.

This model poses several problems. Documents are often non digitized, hard to reach, even harder to update, and sometimes lost in time. In some cases documents don’t even exist and agreements are made verbally between tribal leaders. If one of them decides to take back their word, there’s no evidence to prove them wrong. Even in documented systems, if someone destroys or tampers with a land claim, there’s no way to prove them wrong.

Blockchain solves this problem with transparency and public knowledge. Every record stored on the blockchain (i.e. a parcel of land being transferred from one party to another) is validated and replicated on thousands of computers. Once a the ownership of an asset is confirmed and stored on the blockchain, no one can deny its existence. Neither can they change it because they would have to change the records across all the network, which is virtually impossible. Meanwhile, mathematical equations and cryptography make sure that the sequence of records can’t be changed either.

Ownership of blockchain assets is tied to encryption keys. Only the person holding the private key to a blockchain address will be able to transfer its assets to another person.This model obviates the need for a central authority or third-party broker.

Several advantages of blockchain to the global real-estate industry are inclusive to;

1.MLS Property Data: At its core, blockchain is the ability to share databases and processes. This opens up promising opportunities to make real estate data, which is principal to the process of buying and selling homes, more centralized and accessible. Every real estate transaction goes through the multiple listing service (MLS), which tracks what agents represent which clients, contracts, listing agreements, appraisals and more. However, the MLS is notoriously fragmented. The information is decentralized and restricted, making access difficult for people who are not real estate professionals. It’s often out-of-date as well, which hampers an agent’s ability to make comparisons and spot trends. Blockchain technology can be used to overcome these barriers within the MLS. By providing a way to securely share data, the blockchain makes a shared, nationwide database possible, one that offers real-time access to property information straight from the source and enables a more holistic view. It also opens up more opportunities for collaboration among players in the real estate industry.

2. Title Records: Title records are another decentralized, challenging-to-access aspect of the real estate buying/selling process. Even in 2017, title information remains stored at the local level and is offline. With the blockchain, this is starting to change. In 2016, Cook County, Illinois began the nation’s first to experiment with blockchain technology for transferring and tracking property titles. When someone buys a property they receive a digital token and the traditional paper deed. The accompanying documentation of the token transfer is used as proof of ownership. Eventually, tokens could become the standard and take the place of paper deeds altogether. The blockchain could provide a central title database for the entire country to securely store and instantly access historical title records, allowing for the streamlining of title transfer in a property sale. Inman called the Cook County experiment “one of real estate’s most important experiments with blockchain so far.

3. Transactions: The third area of real estate that the blockchain will transform is the efficiency and the security of transactions. The blockchain does not require there to be trust between two parties to conduct business. Each user has a unique identity on the blockchain via cryptography, which means consumer financial information can be shared securely with other parties during transactions. One person can send funds to another person that won’t release until the transaction is formally completed. This layer of security speeds up the transaction management process. Whether or not the buyer and seller are in the same place, property financing is sped up by the existence of a centralized financial record for each party. Blockchain technology streamlines the real estate ecosystem by enabling people to securely and efficiently share data and money. It makes information more accessible, cuts out middlemen and reduces the risk of fraud and theft. A more secure, speedier, trusted process for buying and selling property is good for everyone involved.

Sweden became the first western country to explore the use of blockchain for real estate in July last year. At the time, the Swedish Land Registry partnered with blockchain startup ChromaWay to test how parties to a real estate transaction – the buyer, seller, lender, government – could track the deal’s progress on a blockchain.

Other countries at the forefront of blockchain for real estate include The Republic of Georgia, Honduras, and Brazil which announced a pilot program earlier this month. While this might seem like a disparate list, it’s in these countries where the long-term potential of a blockchain for real estate are most significant. Systemic corruption and insecure database management in these countries, and many other emerging economies, is seen as a major constraint on growth and prosperity. Why would you invest in a house, or any other asset, if there is a distinct possibility that the record of your ownership could simply disappear?

With that said, the real estate industry is poised for a technological leap forward that will deliver immense value to key stakeholders – buyers, sellers, mortgage lenders and government registries. There is huge scope for increased efficiencies because the basic steps for concluding any real estate transaction are repetitive, documentation is standardized, the closing process which runs on hard copy documents is antiquated, and the number of parties involved in any transaction is vast.

CPROP’s blockchain-powered workflow management system is a planned integration with property portals around the world to help deliver an unprecedented level of trust to real estate transactions while increasing their revenue opportunities. For property buyers, CPROP aims to remove anxiety associated with long-distance transactions by providing blockchain authenticated documents, smart-contract escrows, process automation and options to choose user-rated service providers. THE CPROP Solution address widely acknowledged pain points in an enormous global industry with multiple pathways to revenue. Sales channel strategy designed around partnering with property portals to accelerate time to market. Practical, commercially valuable blockchain applications sit at the centre of CPROP’s solution to address ubiquitous need for trust and transparency. A sustainable, closed-loop, tokenised ecosystem which uses a membership model to drive market adoption and revenue, reinforced by the use of tokens to incentivise buyers and sellers for their participation. Flexible business model that works with virtually any property portal in the world. Experienced, proven leadership and development teams. Business model validated by multiple active partnering discussions. Completed product demo, roadmap dedicated to a functional MVP in immediate future.