Blockchain Property Transfers
Issue 9 - December 4th, 2020
Everyone has heard the term "blockchain". Most people incorrectly assume that its only application is for cryptocurrency. A blockchain has applications for many more things in addition to the crypto world. A blockchain is just a simple record of transactions.
The residential real estate industry in 2019 saw over 5 million property transfers in the USA. The process for changing title of ownership and "updating the system of record" is a very archaic process when real estate transactions take place. Title companies and title attorneys perform title searches or order title work from "title plants" to verify ownership and lien information. There are countless parties involved in the "closing process", and a lot of the work done today is still very manual and performed by humans. There is not a universal system of record yet to keep track of this information in a blockchain format.
In my opinion, the property record world is one of the most obvious and largest practical applications for a blockchain system of record, and I know that in my lifetime this technology will become the norm in this part of the real estate industry. The reason for slow adoption and innovation in this space is similar to the outdated brokerage models hanging on longer than they should. A lot of the slow innovation in the title business has to do with red tape in various parts of the market from state by state rules and regulations, but the main inhibitors to innovation are the old school "gatekeepers" hanging on to their ways to protect their income and business.
If you are in a business where your main competitive advantage is slowing innovation then it is only a matter of time before you and your business go out of business.
Newsworthy Links To Share
"The $2 Billion Dollar Mall Rats" from Esquire Magazine. This little known hedge fund, MP Securitized Credit Partners, bet on the demise of the traditional shopping mall months before Covid hit the world, and this story of their adventure making this highly risky trade is something out a movie. It was October 2019. The threesome was in the business of betting against—or “shorting,” in financial jargon—commercial mortgage bonds, specifically those heavily weighted with debt issued to shopping malls. A year prior, in 2018, the team made a $2 billion bet that a series of shopping malls, including Crystal Mall, would eventually fail. If retail tenants vacated and the malls’ landlords defaulted on their mortgages, MP stood to make a killing. They had taken many trips like the one to Crystal Mall over the past two years: this downtrodden mall after that one, seeing firsthand the shopping centers, once the heart of the American retail sector that, they were certain, would soon be underwater. Read more HERE.
Discount real estate brokerage REX files lawsuits against officials in Oregon for banning consumer commission rebates. “The Oregon prohibition on rebates is blatantly anti-competitive, denies home buyers financial relief, and supports the charging of high and near-uniform commissions,” Stephen Brobeck, a CFA senior fellow, said in a statement. “The U.S. Department of Justice has objected to anti-rebate laws and so to, hopefully, will the Oregon District Court.” Read more HERE.
Hewlett Packard Enterprises is packing their corporate suitcase and heading to Texas. For some reason, this one really caught my attention in the corporate relocation frenzy because Hewlett Packard is one of the OG true Silicon Valley players. The signaling to engineers and other Silicon Valley companies will have rippling effects and only continue the migration of company headquarters to Austin, Dallas, and Houston from the West Coast. Read more HERE.
Pandemic era stats on Amazon: they have hired over 400,000 workers in the last 10 months, a 50% increase in total headcount in less than a year. They have over 70 new logistics facilities in development in communities all over the USA. Amazon delivery drivers make over 180 deliveries in a single shift which is a package every 2.6 minutes. Read more HERE.
Canopy, a mortgage startup, aims to simplify the mortgage due diligence process with blockchain technology. Canopy CEO John Levonick and COO Andrew DeGood, who cut their teeth at Clayton Holdings in the early 2000s, say that the tech used to perform due diligence today actually introduces friction into the process, especially down the line as loans are bought and sold multiple times. They’ve built Canopy on a cloud-native platform with the goal of facilitating easier transactions and providing better data at a lower cost. Read more HERE.