Real estate transactions have always been vulnerable to fraud. Anyone who has bought or sold a house knows that money, documents, and communications are transferred through dozens of parties during a standard sale. At every point on this protracted chain of events, there are opportunities for errors and dishonest activities. By some estimates, real estate fraud losses topped $2 billion in 2018.
Modern blockchain applications for the real estate sector, like Propy, eliminate most of these vulnerabilities. Propy’s transaction platform has already been proven in numerous California real estate sales. Before we look at exactly how Propy reduces fraud cases, let us first look at how fraud commonly occurs in this industry.
Real Estate Fraud: The Problem
Real estate fraud occurs in two main ways: wire fraud and malware. These two fraud methods use different means to achieve similar outcomes.
In wire fraud, a hacker gains access to a real estate professional’s email address, changing the password so that the owner cannot access it. From there, the attacker has access to all kinds of sensitive documents. By obtaining sensitive data, the hacker requests for a specific amount of money to be wired to a bank account; the criminal then restores access to the email account to its owner.
A malware attack is a bit more sophisticated. This type of fraud activity represents a piece of software that performs actions on someone else’s computer, without the owner’s acknowledgment of the harmful act. In any case, the goal of this fraudulent activity is to gain access to sensitive data that may include property buyer’s or seller’s contact information.
The Blockchain Solution to Real Estate Fraud
Blockchain’s immutable data storage methodology makes it impossible for hackers to gain access to data and applications from the outside. Additionally, smart contracts eliminate potential points of failure by using automation that replaces human-driven contract signings and other closing procedures.
Propy’s transaction platform brings the newest blockchain solutions into a single application, which is designed to be used by all parties involved in the property closing process (a buyer, a seller, a buying agent, a selling agent, a title company, and other parties). Blockchain technology is adding security and simplicity to the real estate investment space by making it difficult for hackers and bad actors to exploit old-style systems.