A
long blog about smart contracts.
Thought it might be of interest.
Great read. Thanks for the link. I wonder what Sidhujag has in mind to tackle the issue. I mean there's got to be a solution to it right?
i totally agree with it, and this is where me and david differ in oppinions although we are in sync with the end goal, the path we choose are opposite, I feel that in order to disrupt this market you must work within the current guidelines and offer interim solutions before the market adjusts without shock and realizes they can cut the middkemen out entirely.
Case in point, here in vancouver we have a huge rei bubble going on, with rei agents shadow flipping properties by front running real bids and reselling properties before their closing within 6 months making up to $300k in some deals at little to no risk. The superintndnt of rei was issued a mandate recently to discover tools and processes to combat this type of problem.. What me and my coworker thought of is this, although i pitched him the blockchain concept he convinced me an even more naive solution was required to patch the prblem first.. being able to audit the process of bidding on a property as a buyer represented by an rei agent.
So we have mls.ca and they process the sales and transactions and have an api, mostly a pull api to get info.. We simply force them to allow pushes and track bids of buyers represented by rei agents.. You cant cut rei agents out of the loop initially, the politics amd corruption reins up the ladder and it wont happen, atleast not with government help.
So you now can audit via mls and have to trust mls is accurate if courts look.
Then you offer a system that lets you track via a blockchain whereby you can issue something like a syscoin certificate to an rei agent, one to the bidder and have the pair required to place a bid on an offer (to sell the property).. Since rei agents are supposed to provide value in terms of competitivr bargaining on behalf of clients as well as provide insight into which properties the buyer should bid on it would require that the buyer would work with an agent to place a bid. Lawyers would need to be involved to oversee the documents that thr rei agent would get signed by the buyer that he can legally place bids for the buyer and it can be stored in th certificate data section as a scanned image or hash of a document. Now if it goes to court the judge can simply see what the rei agent did and confirm the buyer allowed them to bid, aswell as the buyer would br able to audit what the rei agent is doing for the buyer, all with ability to prove that you were the owner of certain certificates because you own the private keys, and you signed a notary witnesses document for the rei agent which is part of your certificate. When the sysoin offer is sold the commission is assigned to the rei agent and buyer pays the property price through an escrow. This id just an example off top of my head where you work in steps to solve these problems..
Later when market realizes that you can discover prices through some online metric and you can filter out properties you ewnt to bid on, you can lobby to remove the rei agent out of the equation and have direct buyer seller interaction without the need for lawyers or middle men, the final step in the evolution of the smart contract for the everyday world.
There is an extremely lucrative real estate trick that you can do very similar to the one mentioned above. Anyone who wants to make a killing can do this although its not entirely fair to buyers and sellers. Its called "double escrow" not to be confused with double deposit. Basically, in real estate you offer a listing an exclusive option in exchange for a dollar or whatever they accept. The option agreement might give you a few months to decide to execute. Then you secure an escrow company to find a cash buyer. You underbid on the house you optioned (like a 1 million dollar house you offer 900,000). THEN you find a the cash buyer who wants a 1 mil house for 950!
Next part is easy, you set up two escrows and pocket the difference. This amazingly is legal! It doesnt even need to be disclosed in some states which is totally ridiculous since most RE transactions require disclosing things as ridiculous as a ghost being on the property! (like how could you prove that)... Anyways, the difference in net is zero risk for the person securing the escrows. They make 50,000 on a deal they were never involved in. Double escrow was one of the many reasons for the real estate crash because of inflated prices and the ease of the deal.
Now consider that there is another deal much more effective since it eliminates you completely and you operate 100% as a silent middle man. You do the same, underbid on a million dollar house at 900,000 but maybe do it to 100 houses getting the options as cheap as possible. Then you shop the underbid portfolio to buyers and their real estate agents. This is called "find and assign". The find and assign technique is just literally options and selling the actual piece of paper since you add a clause in the contract to make the option assignable. Now you are an invisible middle man who can net anywhere from 1-50 thousand dollars per assignment depending on how awesome you got the bid. (Imagine if you bid on a hotel or a bulk amount of land, the assignment becomes extremely valuable if the bid was good).
These are examples sidhujag just like you mentioned above. Good business models but totally contrary to a realtors fiduciary responsibility. Find and assign is more ethical than double escrow since the lack of disclosure is a little unfair to the parties involved. As a realtor, I am forced to disclose double escrow here in california but in some states i think its still okay. In fact, these deals not having a license is better than having it since there is absolutely no fiduciary responsibility. Knowledge of the law actually hinders you.
Traditional real estate is totally corrupt. Especially zoning laws which have basically zoned off grid living out of existence and is a direct infringement on the freedom of mankind.
Anyways, sidhujag you are actually correct in your assessment that people will take a very long time to warm up to smart contracts since it requires them to think differently about everything they do. Also it moves consumers from a "trust" society to a "trustless" one. Of course its superior, but it takes time for people to adjust. I hope they wake up sooner than later. Hopefully one day people will decide they have had enough of middle men jacking up prices of everything.
