About 5.6 million homes were sold in the US in 2017, and that number is expected to increase to about 5.8 million in 2018. About 90 percent of those sales have been or will be assisted by a real estate agent, according to to the National Association of Realtors. Also, if you’re looking to buy or sell a home, you probably won’t have to look far to find a local agent: there are about 2 million active real estate licenses in the US today.
These numbers should make it apparent that the average real estate agent only handles a handful of sales per year. And because there are so many of agents out there, competition for the public’s attention and business is brutal, resulting in high expenditures on networking and advertising. In these market conditions, most Realtors make their money by charging high commissions — generally about 6 percent of a home’s selling price, or 3 percent each to the buying and selling agent. According to Zillow, the median home sale price in the U.S. is $228,200. That means the average American home-seller is handing over about $13,500 to real estate brokers.
Deedcoin’s Solution
Deedcoin was founded by a group of business, real estate and tech experts who noticed the inefficiencies in this system. A flooded real estate market keeps home buyers and sellers guessing at who can best address their needs, while high commission rates have become the inescapable market norm. Selling your house yourself is hardly a solution, requiring an understanding of real estate laws and market conditions, as well as hours and hours of your time and energy trying to manage this complicated process.
Deedcoin presents an alternative. They’re currently launching an ICO of dedicated Ethereum blockchain-based cryptocurrencies that will ultimately tie the real estate commission world to the free market, rather than arbitrary commission rates. When sellers pay their Deedcoin agent a commission, they can pay as little as 1 percent of the house’s sale value in cash. The rest can be paid in Deedcoin, with every ten tokens subbing in for 1 percent of the commission.
Let’s say someone sells their house for $200k, using a Deedcoin agent, to a buyer also using a Deedcoin agent. The seller can pay a commission of only .5 percent of the sale value in cash ($1,000) to each realtor. 25 Deedcoin, representing 2.5 percent of the home’s value, also go to each realtor. That 5 percent represented by 50 Deedcoin would be $10,000 if paid in cash, but if the seller’s paying with Deedcoin purchased during the ICO, that 5 percent commission costs them only $75.
Even if the seller winds up using a Deedcoin agent to sell to a buyer with a standard realtor, they only have to pay 4 percent in cash commission–1 percent to their Deedcoin agent (plus 20 Deedcoin) and 3 percent to the buyer’s standard realtor. If a buyer uses a Deedcoin agent to purchase a home sold with a standard realtor, their Deedcoin agent will only take a cash commission of 1 percent of the home’s value, while the other 2 percent can be rebated to the buyer, who exchanges 20 Deedcoin for the 2 percent commission paid by the seller to the buying half of the party (representing $4,000 for a house selling for $200k).
The benefits to buyers and sellers in this marketplace are obvious, resulting in savings of thousands of dollars. But why would realtors participate in a system with lower commissions? Because the Deedcoin agent network is exclusive, requiring an application process and providing only the number of agents a given market requires.
This means member agents don’t have to compete with each other for clients or spend any money on client acquisition. Freed-up resources and a steady flow of interested Deedcoin-using buyers and sellers mean that while realtors may earn less per transaction, they’ll process far more transactions per year while reducing or eliminating their advertising costs.
What if Deedcoin becomes so pricey on coin exchanges that it’s largely inaccessible to most home buyers and sellers? Deedcoin’s Alpha System activates once the coin hits certain values, allowing buyers and sellers to pay less than ten Deedcoin per 1 percent of sale value. This keeps Deedcoin widely accessible and prevents the ecosystem from getting taken over by speculators simply buying and selling the tokens without using them for their intended real estate purpose.
This recently launched ICO only costs $1.50 per coin. The staged ICO will periodically offer more coins through the end of 2018, and coins can also be obtained through public exchanges. ICO fundraising will pay for the full Deedcoin platform launch. Because the platform uses secure and efficient blockchain technology, administrative costs will stay lean, and commissions can be disconnected from the monopolizing control of industry groups such as the National Association of Realtors.
Final Thoughts
Buying or selling a house can be tough, and homeowners (and aspiring homeowners) aren’t usually that excited to add an unreasonable commission price to their worries. Deedcoin is offering a feasible blockchain-based alternative to this unsustainable market environment, promising a low-stress and high-savings solution for homeowners, buyers, and quality real estate agents alike.
Will you investigate a blockchain platform the next time you buy or sell a property?
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