DIGITAL TECHNOLOGY & ITS IMPACT ON REAL ESTATE TRANSACTIONS

PRESENTED BY MICHELLE GARCIA GILBERT, ESQ.

GILBERT GARCIA GROUP, P.A.  | SAPPHIRE TITLE & ESCROW COMPANY

 

 DIGITAL TECHNOLOGY

Bitcoin, virtual currency, example of blockchain (or distributed ledger) technology

  • Released at time of financial crisis, due to advances in software, communication and encryption
  • Established set of rules that ensured integrity of data exchanged among computers globally, without use of government or other trusted third party
  • Ledger recording transfer of bitcoins resides on virtual network which uses encryption and secure keys for transactions; each transfer is recorded in a block of information
  • Each block has time stamp and link to prior block which creates permanent record that is almost impossible to alter
  • Technology is being used for other distributed ledgers

APPLICATIONS

Digitally record tangible and intangible assets in a system that is more trustworthy, transparent and verifiable than any other

  • Private blockchains, not public like Bitcoin, participants  verified against pre-approved list
  • Collaboration among many participants required
  • Common technical standards and processes required Participants must share information
  • Resource intensive
  • Legal concerns regarding intellectual property, data privacy, data security, anti-money laundering, settlement finality and securities requirements

 

REAL ESTATE TRANSACTIONS NOW

Old-fashioned industry with paper contracts, manual escrow deposits, hard files, and in-person closings

  • U.S. net worth totals $89 trillion, household ownership of real estate is $27 trillion out of a total of $33 trillion of  nonfinancial  assets
  • 2016- outstanding real estate debt was $11.5 trillion residential and $2.6 trillion nonresidential
  • Industry has long history of state and local regulation, lobbying power of real estate agents, and interaction with laws, tax code and American culture of home ownership
  • Establishing property rights involves navigating lawyers, insurance agents, realtors and title agents
  • Current state of affairs: brokers and realtors facilitate transaction for a fee; parties can use an attorney in addition to an agent or in lieu of an agent, to prepare a contract;  contract uncertainties exists with contingency for inspect ions, appraisals, state of title, and financing; title search is performed to determine state of title and requirements that must be met to convey marketable title; title insurance is provided as part of the transaction; 2016- 88% of all buyers financed homes; closing – most take 1-2 months to get to the table, and the closing itself can last hours

 

REAL ESTATE TRANSACTIONS IN THE FUTURE

Blockchain technology has the potential to address uncertainties in real estate transactions by providing more direct, precise and efficient process.

  • Smart contracts: digitally signed agreement, stored on blockchain program would speed closings be­cause payment would trigger automatic transfer of title; limited use for structuring of agreements, and handling of breaches and dispute resolution; also, without common technical standards and processes, suspect to hacking
  • Land records: outdated system in which paper filings are maintained as a chain of title by local government office; manual process with high potential for error and fraud; risk mitigated by purchase of title insurance, though about 5% of premiums paid out in claims in 2016; In September, 2016, Cook County, Illinois launched a pilot program to current system with public blockchain technology; Cook county never completed a blockchain conveyance but reported alter the pilot ended, in May, 2017, “…that blockchain and distributed ledgers are natural fit for keeping land records and stream lining the dozens of intermediate steps needed just to get a deed into public record.”
  • Transaction platforms: Encrypted, secure and distributed ledgers provide a way to execute transactions with little or no intervention by people. Instead of involving many employees, third-party agents and paper processes in a transaction flow that takes days, weeks or longer, huge volumes of transactions will be com­ pleted very quickly and transparently. Financial institutions, in particular, have been struggling with business process inefficiencies, but such inefficiencies exist in other industries, including real estate.
  • States opting in: Blockchain recognized as a legitimate form of ownership.

 

WHAT IS HAPPENING NOW…

  • Countries like Georgia and Ukraine have already implemented blockchain, as the start-up Propy executed the first real estate transaction through cryptocurrency, in which a San Francisco investor bought a house in Kiev for $60,000 in Ethereum tokens (another cryptocurrency)
  • And more examples to be provided
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GTAR: Mortgage 101: Guiding Customers through the Mortgage Process

.     Mortgage 101: Guiding Customers thru the Mortgage Process

  • DATE: Thurs., March 17, 9:30 a.m. to 12:30 p.m., GTAR Auditorium
  • DESCRIPTION:  This course covers the basics of what every Realtor needs to know. Review lenders requirements – from check stubs to the newest Loan Estimate and Closing Disclosure by the Consumer Finance Protection Bureau, including Qualifying a Buyer, New Loan Estimate and Closing Disclosure, and The Processing Flow. State-approved with 3-hours of CE credits. Instructed by Robert Paredes of Envoy Mortgage.
  • Sign Up: https://mdweb.mmsi2.com/tampa/tampa_courses.pl?course=16PRO0307

 

GTAR: Discovering Commercial Real Estate

.     Discovering Commercial Real Estate

  • DATE: Wednesday, February 24, 9:30 a.m. to 12:30 p.m.
  • DESCRIPTION: If you are a newly licensed agent or a residential agent who wants to learn about commercial real estate, this course is NAR-approved that offers a broad overview of the basics of commercial real estate and how it differs from residential real estate. Realtors will be able to distinguish and understand the broker’s role and discover the different types of commercial properties, terms, valuation methods, marketing and resources for further education. While it will not equip you with all to practice commercial real estate, it will explain the business and introduce many of the resources needed to pursue a commercial transaction or a career in commercial real estate. Instructed by Carlos Fuentes, CCIM. PLUS, course is state-approved for 3-CE hours.

This course is NAR-approved that offers a broad overview of the basics of commercial real estate and how it differs from residential real estate._ Realtors will be able to distinguish and understand the broker’s role and discover the different types of commercial properties, terms, valuation_ methods, marketing and resources for further education. This is an ideal introductory course for those who are newly licensed and/or residential_ agents who want to learn more about commercial real estate. While it will not equip you to practice commercial real estate, it will explain the business_ and introduce many of the resources needed to pursue a commercial transaction or a career in commercial real estate. Instructed by Carlos Fuentes,_ CCIM. PLUS, course is state-approved for 3-CE hours. What You Will Learn in the Discovering Commercial Real Estate Course: * The duties of professionals who assist in commercial transactions * The key differences between commercial and residential real estate * Types of commercial real estate (Office, Retail, Industrial and Land) * Types of commercial transactions * Commercial contracts Brought to you by GTAR’s Realtors Commercial Alliance and co-sponsored by AB Capital Group and Florida Community Bank.

http://www.gtar.org

Sign-Up: https://mdweb.mmsi2.com/tampa/tampa_courses.pl?course=16RCA0224;

GTAR: Completing an Effective Purchase and Sales Contract

DATE: Tuesday, February 16, 9 a.m. to 1 p.m.

DESCRIPTION: The Sales Contract is the ultimate destination – the culmination of the Realtors® expertise with the customer’s binding agreement. In recognition of the full power it carries, this course was designed for real estate professionals to polish up their process of completing a contract from the first word to the last signature. Learn to view the contract as more than just an official document, but rather understand how to use it as an influential instrument to aid in closing. In conclusion, student will be able to explain the agreement to a customer/client, as well as identify the proper timing of execution and the use of the appropriate disclosures. Instructed by Phil Riek, Lic. Florida RE Instructor. NOTE: This course will cover the “as is’ contract only. Course is state-approved for 4-hours of CE Credits

 

LOCATION: Greater Tampa Association of Realtors