If you’ve noticed “blockchain” in the headlines recently and wondered what it means for the business of real estate, you’re not alone. Mark Lesswing, chief technology officer for T3 Sixty and co-founder of the Real Estate Blockchain Initiative, is a pioneer in this revolutionary and emerging technology, and he predicts it will play an important role in the future of real estate, making it more secure, accessible, efficient and transparent.
Blockchain 101
So, what is blockchain, anyway? “It’s a place to store things,” says Lesswing, who formerly served as senior vice president and chief technology officer of the National Association of REALTORS® and has worked with companies in the industry to prepare them for blockchain. Lesswing says to get your head around blockchain, you have to open your mind to a totally new way of thinking and wean yourself off of our current system for tracking information. According to IBM, which has invested millions in developing flexible blockchain technology, it’s a “shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.” Blockchain can provide immediate, shared, transparent information that can be accessed only by permissioned network members, which makes it attractive to many industries.
Tracking licenses
In thinking about how to best apply blockchain in the industry, Lesswing looked at areas in which technology does not have existing standards, such as licensure. “Plumbers, dentists, doctors, agents and brokers all have licenses, and the licenses are controlled by the state,” he says. “Licensees need continuing credits to maintain their license, and it’s up to them to prove they’ve taken the courses. It’s not the state’s job to keep track of the credit hours.” So Lesswing and his team at the Real Estate Blockchain Initiative helped create a way for the Real Estate Standards Organization certification system to interface with the blockchain, so the credits can always be stored in one central place. In many cases, the organization that offers the course can update the blockchain for the student. Once the information is in the blockchain, it’s unchangeable and easily validated by the state.
Homes as digital assets
Perhaps you’ve seen the news about sky-high prices for non-fungible token (NFT) artwork, watches and sneakers? Why not a house? An NFT can transform items into unique, verifiable assets that can be traded on the blockchain. “It’s like a numbered piece of art,” Lesswing says. “You don’t need ‘Antiques Roadshow’ to tell you something is authentic, because you have the number,” he says. “With the NFT, that number represents the asset—it’s a unique identifier—and there’s no reason you can’t attach that to a house or piece of property.” If a house were an NFT, Lesswing says, anything that happened to that property would refer to the asset number—whether it’s an insurance contract, taxes, a deed or a lien.
Merging NFTs with Real Estate
The prospect of turning homes into digital assets took a step forward in April 2021 as the first-ever residential real estate property was auctioned off, coupled with a unique non-fungible token (NFT) digital artwork of the home, in Thousand Oaks, California. The NFT is encrypted in a digital ledger called the blockchain.
The physical home consists of two units that are currently collecting about $60,000 in rent per year, along with already-approved permits for a potential addition of a third unit should the next owner choose to do so.
By purchasing the property, the owner will also receive exclusive ownership of an NFT art piece, designed in partnership with award-winning artist Kii Arens, providing a digital representation of the home. According to Shane Dulgeroff, the listing agent for this pair of assets, “This piece of art will allow the buyer to live within the digital world’s vision of the property while also receiving a physical world asset.”
For more on Blockchain in real estate, check out the recording “Practical Applications for Blockchain in Real Estate” on CRS.com/catalogsearch.
Photo: iStock.com/NatalyaBurova
