Why do you need a Property DNA?

For an industry as old as real estate, some things never change. Land, buildings, buying, selling and repairing. The same elements have been around for hundreds if not thousands of years.

But some things do change. Today, much more information is collected, stored and used when dealing with real estate properties. And people care about that information.

They also care that it changes over time. Prices change, values change. And with the passing of years, it’s harder and harder to keep track of everything that has changed over time.

Elea Labs believes that this is why there is a real need to create a new way of looking at property – a new view, that encompasses everything about it.

From A to Z.

In other words, this becomes a Property DNA, a “living, breathing” data set, organised at the property level (not in some government database along with thousands of other properties) and accessible through a digital interface.

Here are a few (of the many) reasons why this is necessary.

Due diligence

One of the major pain points in the real estate industry is the due diligence process. Most properties undergo a due diligence – legal, financial and also technical when they are bought or sold.

While the average property may not change ownership very frequently – the point of sale is not the only time when a due diligence is required. Real estate funds are normally required by law to re-evaluate their portfolios on a regular basis, at least once per year, and insurance and mortgage issuers may also require more frequent surveys of a real estate asset, even privately-held ones.

Not suprisingly, the due dilgence process is most often long, tedious and inefficient. This is not only because there is mass of information that must be collected and analysed (much of which changes during the period of time between a due diligence), but also because the parties engaged in the process may change – asset managers, property management service providers and so on.

 

A single view creates immense value for all participants in the due diligence process.

 

The Property DNA helps re-align the organisational structure inherent in the due diligence process. It provides a way to link information to the asset itself, permanently, and make it a party in the process – an active participant in the due diligence process – instead of just a subject of scrutiny.

Now, instead of documentation sitting permanently in the hard drive of a property manager or in his/her software system, the relevant information is linked to the property itself, where it can be accessed at the appropriate time by all those who need it.

Naturally, this significantly reduces the wasted time in communication and passing of information between parties in the process. If we look into the future, a smart contract may be employed to automate all or part of the verification and execution of the necessary.

Insurance

We have already mentioned that insurance is one part of the property industry that requires frequent due diligence and data analysis.

This is complex and burdensome enough – without the fraud factor. For insurance companies, the validity of data and (digital) paper trail is of great importance.

 

Verified costs for properties and insurance claims can supported by the Property DNA

 

The Property DNA uses cryptographic technology to provide a transparent chain of record for the data which is provided from multiple sources. While this hashing of documents in and of itself does not guarantee 100% eliminate fraud in the underlying documentation, it does may tracing errors and manipulation much easier and with an ever-growing set of information, fraud becomes much harder and harder to commit.

Market speed

It is a well-known fact that business is moving faster and faster. “Time-to-market” is no longer measured in years or event months, but in weeks and sometimes even days.

While the real estate market may not accelerate at exactly the same speed as consumer goods or SaaS tools, an uncertain global economy and the memory of the recent financial crisis sparked by a housing crisis in 2008, increases the importance of moving assets quickly and remaining flexible to react to market conditions.

With Elea’s Property DNA, asset and portfolio managers, as well as private owners of large or multi-tenant properties can significantly increase their “time-to-sale” and even their “time-to-rent.”

A due diligence becomes a matter of a few days, if not hours; marketing is taken care of in a few clicks – and in the case of fractionalised ownership through tokenised investments, we can imagine an investor buying shares in a building or group of buildings over an open exchange, with full confidence in a matter of minutes.

Blockchain

Elea Labs believes that blockchain technology is a fundamental part of what enable the benefits of the Property DNA.

The immutability of the blockchain helps support the creation of a “chain-of-record” for each property and in particular the subsets of required data for various facets of the due diligence process.

By tying each property to a unique smart contract, the Property DNA can allow external systems (given access through a blockchain-based permission layer) to serve as oracles and enable automated actions.

And this is just the beginning.

Just like each Property DNA must start from a specific point in time as its data set is filled up, so the vision of the Property DNA goes beyond the simple gathering and verification of documents and data.

True digitalisation in real estate starts with simple data organisation and stretches forward into the many possibilities of connected buildings, tokenised invesment, automated payments and crowd-funded loans and maintenance.

 

«Hello World» aus dem Crypto Valley: erste Immobilien-Transaktion auf Blockchain

Zug, 1. März 2019. – Die erste Schweizer Immobilie lebt nun auch auf der Blockchain: In Baar ZG wurde die erste Liegenschaft über die Transaktionsplattform von blockimmo tokenisiert – diese basiert auf Blockchain-Technologie. Das Handelsvolumen beträgt rund drei Millionen Franken. «Hello World» erschallt es nun aus der Liegenschaft aus dem Zuger Crypto Valley in die ganze Welt. Diese Transaktion war nur durch eine Kombination der drei Zuger Firmen blockimmo, Elea Labs und Swiss Crypto Tokens möglich. Elea Labs lieferte die vollständigen und validierten Daten der Immobilie und Swiss Crypto Tokens hat die Transaktion mit dem «CryptoFranc», einen direkt an den Schweizer Franken gekoppelten und dadurch stabilen Token ermöglicht.  

«Ich bin erfreut, dass wir nun als Premiere über blockimmo die erste Immobilien-Transaktion vollziehen konnten. Die Plattform ist das erste sichere Blockchain-Produkt sowohl für private Anleger als auch für professionelle Investoren», erklärt Bastiaan Don, Gründer und Managing Director von blockimmo.

Tokenisierung ist der Prozess, bei dem das Eigentum an realen Vermögenswerten digital auf einer Blockchain in Token-Form dargestellt wird. Diese neue Finanzierungs- und Investitionsmethode ist ein Produkt der blockimmo. Sie soll zum weltweiten Marktplatz für die Tokenisierung von Immobilien werden. Bastiaan Don: «Traditionelle Immobilieninvestitionen mit ihrem Emissionsrahmen haben sich kaum mehr entwickelt. Es besteht in der Schweiz ein intransparenter, schwer zugänglicher Markt mit asynchronen Informationen. Das wirkt sich unter anderem negativ auf das Liquiditätspotenzial des Immobilienmarktes aus. Blockimmo ermöglicht durch die Anwendung der Blockchain-Technologie die Lösung dieses Problems und läutet somit einen Paradigmenwechsel für Eigentum und Handel von Immobilien ein.»

 

The Grabenstrasse 3 property including Hello World restaurant.

 

Immobilie im Kanton Zug

Es wurden rund drei Millionen Franken oder 20 Prozent des Liegenschaftswertes tokenisiert und anschliessend in einem Club-Deal an vier Investoren verkauft. Die tokenisierte Liegenschaft befindet sich an der Grabenstrasse 3 in Baar im Kanton Zug und besteht aus 18 Wohnungen sowie dem Restaurant «Hello World». In Baar steht damit die erste Liegenschaft in der Schweiz, die nun auch einen so genannten «digital twin» (digitalen Zwilling) auf der Blockchain hat. Die vier Transaktionen wurden auf der Ethereum Blockchain getätigt und können auf der Plattform von blockimmo verifiziert werden.

Die Transaktion wurde durch Elea Labs unterstützt, welche die Immobilien-Daten der Liegenschaft zur Verfügung gestellt hat. Elea Labs hat sich zum Ziel gesetzt, dass jedes Gebäude seine eigene Identität, seine eigene «Property DNA» besitzt. Dadurch wird die Immobilie real – alle Daten über eine Immobilie sind gesichert und dezentral gespeichert.

«Mit dem dezentralisierten Immobilienregister Property DNA ermöglichen wir den Benutzern der Plattform von blockimmo einen soliden Investitions-Entscheid zu treffen, basierend auf vollständigen und validierten Daten der Immobilie. Die Property DNA wird in Zukunft eine nachvollziehbare digitale Due Diligence ermöglichen. Sie wird zudem die Prozesse der gesamten Immobilien-Industrie generell vereinfachen, beschleunigen und kostengünstiger gestalten», erläutert Martin Schnider, CEO von Elea Labs.

 

Umsetzung mit CryptoFranc, dem digitalen Schweizer Franken

Das Preisschwankungsrisiko von Crypto-Währungen wurde durch die Implementierung eines sogenannten Stablecoin eliminiert. Die Transaktion wurde durch den Crypto Broker Bitcoin Suisse, respektive via deren Tochtergesellschaft Swiss Crypto Tokens unterstützt: Für die Liegenschaft in Baar wurde die Investition mit dem digitalen Schweizer Franken «CryptoFranc» oder kurz «XCHF» getätigt. Das Unternehmen lancierte letzten November einen an den Schweizer Franken gebundenen digitalen Token und hat bisher rund CHF 15 Millionen emittiert. Der CryptoFranc dient als Liquiditätsinstrument für das Schweizer Blockchain-Ökosystem.

«Mit dem Stablecoin CryptoFranc haben wir ein wichtiges Puzzleteil für die Schweizer Blockchain-Ökonomie entwickelt. Blockimmo hat dies für den Immobilienmarkt brillant umgesetzt. Hier kommt die Wirkung in der Praxis ideal zur Geltung, denn die Transaktion der Immobilie kann rein auf der Blockchain abgewickelt werden», erklärt Armin Schmid, CEO Swiss Crypto Tokens.

 

blockimmo plant weiteren Ausbau

Nach diesem ersten Schritt plant blockimmo eine weitere Immobilie zu tokenisieren, welche anschliessend mittels eines «Public Crowdsale» verkauft wird. Alle Immobilien-Tokens werden voraussichtlich im zweiten Quartal dieses Jahres an einer regulierten Börse gelistet, was die Handelbarkeit weiter verbessern wird. Das Team von blockimmo arbeitet an einem dezentralen Handelsplatz, bekannt unter STX.SWISS: Er bildet die Grundlage für ein neues System der Anlage Tokenisierung und des Handels.

«Mit der Markteinführung und dem bahnbrechenden ersten Deal ist diese Technologie jetzt live. Zusammen mit unseren Partnern digitalisieren wir ein reales Vermögen. Wir sind dankbar, dass wir die Möglichkeit haben, den Immobilienmarkt und die Blockchain-Community nachhaltig zu prägen und freuen uns auf den nächsten Schritt», blickt Bastiaan Don von blockimmo weiter in die Zukunft.

 

– – –

Über Elea Labs AG

Elea Labs ist ein innovatives Proptech-Unternehmen mit Hauptsitz in Baar ZG im Herzen des Schweizer Crypto Valley. Es ist aus der reamis ag hervorgegangen, die eine «Digital Real Estate Platform» betreibt. Mit mehr als 15 Jahren Erfahrung in der Branche erarbeiten sie Technologie-Lösungen für die Anforderungen im Immobilienbereich. Derzeit konzentriert sich Elea Labs auf den Einsatz von Daten und DLT-Technologie, um die weltweit erste Property DNA aufzubauen. Die Property DNA ist eine grundlegende Enabler-Technologie, die dazu beiträgt, die überwältigende Komplexität sowie die mit dem Erwerb, Betrieb und Verkauf von Immobilien verbundenen Kosten zu reduzieren. https://elea.io

Über blockimmo AG

blockimmo ist eine auf der Blockchain-Technologie basierende Immobilien-transaktionsplattform. Sie soll zum weltweiten Marktplatz für die Tokenisierung von Immobilien werden. blockimmo arbeitet mit Finanzinstituten und anderen strategischen Partnern in verschiedenen Ländern zusammen und die Technologie von blockimmo soll weiter exportiert werden, so dass möglichst viele Kunden in den Genuss dieser interessanten Anlagemöglichkeit kommen. Letztendlich führt dies zu einem globalen Immobilienmarkt, der weitaus effizienter werden kann als der heutige Aktienmarkt. Über Crowdsales ermöglicht die Plattform von blockimmo gemeinsame Immobilien-investitionen und senkt so die Eintrittsbarrieren dieser attraktiven Anlageklasse deutlich. Die Plattform ist einfach zu bedienen und bietet maximalen Anlegerschutz. Das gesetzeskonformes Ökosystem ermöglicht Investitionen und Eigentum in Bruchteilen von Immobilien. Immobilien werden offiziell und rechtverbindlich als Security Token auf der Ethereum-Blockchain dargestellt. Auf der Immobilientransaktionsplattform von blockimmo können Anleger bereits mit kleinen Beträgen ab rund CHF 1000 in Liegenschaften investieren. Immobilieneigentümer auf der anderen Seite können Bestpreise für den Verkauf ihrer Immobilien erzielen. www.blockimmo.ch

 

Über Swiss Crypto Tokens AG

Die Swiss Crypto Tokens AG wurde im Juli 2018 als Teil der Bitcoin Suisse Group gegründet. Das Unternehmen hat seinen Sitz im Kanton Zug, dem Crypto Valley der Schweiz. Das Unternehmen bietet umfassende Dienstleistungen im Zusammenhang mit der Ausgabe von Token, einschliesslich der Ausgabe von proprietären Token an. Als erstes Produkt wurde der Schweizer Franken auf die Blockchain gebracht, der als «CryptoFranc» oder kurz «XCHF» mit 15 Millionen Einheiten im Umlauf ist, wobei der Stablecoin mit versichertem Bargeld 1:1 hinterlegt ist. www.swisscryptotokens.ch

“Hello World” from the Crypto Valley: first real estate transaction on blockchain

[German-language version available here.]

Zug, 1st of March 2019. – The first Swiss property is now “live” on the blockchain. In Baar, in the canton of Zug, the first property was tokenized via the transaction platform of blockimmo – based on blockchain technology. The trade volume amounts to around CHF 3 million. The message of ‘Hello World’ has now gone out from the property in Zug’s Crypto Valley into the whole world. This transaction was made possible by the combined efforts of three Zug companies blockimmo, Elea Labs and Swiss Crypto Tokens. Elea Labs supplied the complete, validated data for the property and Swiss Crypto Tokens enabled the transaction with the ‘CryptoFranc’, a stablecoin linked directly to the Swiss franc.

‘I am delighted that we were able to pull off this premiere, the first property transaction through blockimmo. The platform is the first secure blockchain product for both private and professional investors,’ explains Bastiaan Don, founder and Managing Director of blockimmo.

Tokenizing is the process by which the real asset value of the property is represented digitally on the Ethereum blockchain in token form. This new financing and investment method is a product of blockimmo. It aims to be the global marketplace for tokenizing property. Bastiaan Don: ‘Traditional property investments and their issuing programmes have barely moved forward. In Switzerland, you have a non-transparent market with asynchronous information that is difficult to access. This has a negative impact on the liquidity potential of the real estate market. By using blockchain technology, blockimmo enables a solution to a problem, representing a paradigm shift for real estate ownership and trading.’

Property in the canton of Zug

Around CHF 3 million, or 20 percent of the property value, was tokenized before being sold to four investors in a club deal. The tokenized property is located at Grabenstrasse 3 in Baar, in the canton of Zug, and consists of 18 apartments and the ‘Hello World’ restaurant. This makes Baar the site of the first property in Switzerland that also has a ‘digital twin’ on the blockchain. The four transactions were carried out on the Ethereum blockchain and can be verified on the blockimmo platform.

The transaction was supported by Elea Labs, which provided the real estate data of the property. Elea Labs aims to ensure that each building has its own identity or “Property DNA”. This makes the property real – all data about a property is backed up and stored decentralized.

 

View the Property DNA for the Grabenstrasse 3 property.

 

“With the decentralized property register Property DNA we enable users of the blockimmo platform to make a sound investment decision based on complete and validated property data. In the future, the Property DNA will enable a transparent digital due diligence and will also simplify, accelerate and reduce the cost of processes across the entire real estate industry,” explains Martin Schnider, CEO of Elea Labs.

 

(l-r) Armin Schmid (Swiss Crypto Tokens), Bastiaan Don (blockimmo), Martin Schnider (Elea Labs)

 

Implementation with CryptoFranc

Price fluctuation risks of cryptocurrencies are eliminated by the implementation of ‘CryptoFranc’, a ‘stablecoin’. The transaction was supported by the crypto broker Bitcoin Suisse, through its subsidiary Swiss Crypto Tokens. For the property in Baar, the investment was carried out with the digital Swiss franc CryptoFranc, or ‘XCHF’, from Swiss Crypto Tokens. Last November, the company launched a digital token pegged to the Swiss franc, of which it has issued CHF 15 million to date. The CryptoFranc serves as a liquidity instrument for the Swiss blockchain ecosystem.

‘With the stablecoin CryptoFranc, we have developed a key piece of the puzzle for the Swiss blockchain ecosystem. Blockimmo has utilised this instrument perfectly to realise the future of real estate transactions. Here, one can see a brilliant implementation of the way real estate will move between parties in the decades to come, purely on the blockchain.’ explains Armin Schmid, CEO of Swiss Crypto Tokens.

blockimmo planning further expansion

Following this initial step, blockimmo is planning to tokenize further properties that will then be sold by means of a ‘public crowdsale’. All property tokens are expected to be listed in the second quarter of this year on a regulated exchange, which will further improve their fungibility. The blockimmo team is working on a decentralised exchange known as STX.SWISS, which forms the basis for a new system for tokenizing, investing and trading.

‘With this market launch and ground-breaking first deal, this technology is now live. We are digitalising real assets together with our partners. We are thankful for the opportunity to shape in a sustainable way the real estate industry and the blockchain community and we look forward to the next step,’ says blockimmo’s Bastiaan Don.

 

Read (in German) about the first blockchain transaction in Switzerland in Neue Zurcher Zeitung.

 

– – –

About Elea Labs AG

Elea Labs is an innovative proptech company based in Baar, Switzerland, in the heart of Switzerland’s Crypto Valley. Led by a team of real estate professionals and driven, digital pioneers with over 15 year’s experience, Elea Labs develops technology solutions for the real estate industry. Currently, it is focused on using data and DLT-technology to build the world’s first Property DNA, a foundational enabler technology that helps eliminate the overwhelming complexity and costs associated with acquiring, operating and selling real estate property. https://elea.io

 

About blockimmo Ltd

blockimmo is a property transaction platform based on blockchain technology. It aims to be the global marketplace for tokenization of real estate. blockimmo works with financial institutions and other strategic partners in various countries and plans to expand exports of blockimmo technology to bring this compelling investment option to as many customers as possible. This ultimately results in a global real estate market that is far more efficient than the present-day stock market. The blockimmo platform enables joint property investments through crowdsales, which enable easier access to this attractive investment class. The platform is easy to use and offers maximum investor protection. The legally compliant ecosystem enables investment and ownership in fractions of properties. Property is officially represented in legally binding form as a security token on the Ethereum blockchain. The blockimmo property transaction platform allows investors to invest in properties with small amounts starting at roughly CHF 1,000. On the other side of the transaction, property owners can achieve top prices for the sale of their real estate. www.blockimmo.ch

 

About Swiss Crypto Tokens AG

Swiss Crypto Tokens Ltd. was formed in July 2018 as part of the Bitcoin Suisse Group. The company is based in the canton of Zug, Switzerland’s Crypto Valley. It offers comprehensive services related to the issuing of tokens, including the issue of proprietary tokens. Their first product brought the Swiss franc to the blockchain in the form of the ‘CryptoFranc’, or ‘XCHF’, which currently has 15 million units in circulation, with the stablecoin backed by insured cash on a one-to-one basis. www.swisscryptotokens.ch

Building Lifetime Customer Value with the Property DNA [Case Study]

Buying, selling — and renting out property is one of the oldest forms of business. And it has continued to this day on an ever-growing scale — with some twists along the way.

Now, in today’s digital age, you can find homes listed online, you can even “tour them” via virtual reality and in some places you can even buy real estate using digital currencies.

Imagine!

But while all of these advancements are welcome, the real estate business still lags behind in some regards. This is especially true when it comes to the rentals business.

Nowadays in the e-commerce world, customers rule the retail experience and online shops obsess about retaining customers, turning them into loyal brand ambassadors and extracting as much “lifetime value” from them as possible.

Those concepts are pretty foreign to owners and operators of rental properties. Tenants come and go, properties remain and for the most part the owners could care less about making their tenants happy.

It shouldn’t be that way, though…

The cost of unhappy tenants

According to statistics in Switzerland, it can cost a property owner more than € 5’500 every time a tenant changes, depending on the country in question. That’s quite a fair hunk of change!

If a tenant stays an average of around 5 years and a multi-family apartment building has 20 tenants, that adds up to a total of € 110 000 down the drain over the same time span — or € 22 000 per year.

Like I said — a fair hunk of change.

Now what would happen, if that property owner figured out a way to retain his “customer” for a significantly longer period of time — say 10 years? In a B2B business or even B2C software business, “customer retention” and “lifetime customer value” would be a top priority.

But then again, we’re talking about real estate — a very old business here…

Building relationships

Now what if property owners and managers took a different outlook and treated their tenants like customers? In other words, what if they made an effort to retain their “customers” for a longer period of time?

For instance, if a tenant stayed twice the normal length of time — 10 years instead of 5 years — this could have a significant impact on the overall revenue of the building in question. Especially if it has a large number of tenants.

Following up on the example above — the 20-tenant apartment building could generate a savings of € 110 000 over the 10-year period.

But how to convince these people to stick around?

One way is to offer tenants a discount on their rent — provided they have been a good steward of the property and have not incurred a large amount of maintenance or repair costs.

But how do you know which tenants are good and which are not? How do you know if it makes sense to incentivise a tenant to stay or not?

Thankfully — there is an answer.

The Elea Property DNA® makes it easy to collect data about maintenance and repairs in one place and track the revenue generated by each tenant.

This means that a property owner could offer a greater rent discount to a tenant that generated no costs whatsoever — and a reduced discount to one that had some costs — and no discount to one that proved to be very costly.

By tracking this data within the Property DNA®, the owner can develop a relationship with their tenants and with data on hand, make relationship-building decisions in real-time.

At the same time, these incentives can lead to improved behaviour from tenants that ultimately reduce costs on the whole. As soon as tenants see that being a responsible tenant pays off, they will be rewarded — and ultimately stick around long-term.

And this is what Lifetime Value is all about.


Our focus is unlocking ALL the true potential in the buildings where you live and work — and most of all on making blockchain & crypto “real”…!

See what we’re doing here — Elea Website

Follow us on Twitter, LinkedIn and Facebook !

What is the PROPERTY DNA®?

PROPERTY DNA® — what in the world could that be?

To get to the answer — first think about this…

Buildings are everywhere — we live in them, we work in them, and many of us manage them, in one way or another. In fact, shelter is one of the three basic needs of mankind.

But even though we as human beings spend the vast majority of our lives inside one building or another — in many ways they remain an unknown frontier, a mystery — almost dead. There is no way to get a full picture of a piece of property, no window into the soul of your house, no way to interact with it or the other people in it.

That’s because it has no “identity” of its own; it has no real DNA to help tenants, owners and others see and understand the history of that piece of property.

That’s why we have created the PROPERTY DNA® .

 

More than just data

As you can probably understand — developing a PROPERTY DNA® that gives life to a building involves aggregating data about that building in order to give a complete picture of what it truly is.

This means that — in a nutshell — the PROPERTY DNA® acts as a smart data room where information is aggregated and secured, and perhaps most importantly, constantly updated and refreshed as the life of the property continues.

So while we call this application “DNA” — it is, in fact, more than that. Just like a person adds experiences, memories, tests and trials to the aggregate volume of their life over time, the PROPERTY DNA® can be thought of as entire essence of a building’s individual “personality.”

New (real) relationships

Now, what does this all mean? For one thing, better, “real” relationships within the property ecosystem.

It won’t come as a surprise that the various interactions between different players within the real estate market involve a large amount of data — and in many cases, a great deal of distrust.

This can be:

  • Owners and property managers
  • Investors and portfolio managers
  • Banks and property owners
  • Developers and future owners

And the list could go on…and on…and on.

If a building has 10 tenants, an owner, a mortgage and a property management company , not to mention maintenance contractors and others — the amount of paperwork, information and interactions becomes a nightmare very quickly.

And that’s even before a person goes buy or sell the property!

By organising all the information around a building at the property-level and creating a digital, verified chain-of-record linked to that property, the sometimes chaotic mess of data can be brought under control.

Now, just like every company has its own website and its own web address, each property can have its own unique identifier and verified set of data to back up its “identity.”

Decentralised technology

The creation of a secure, verified chain-of-record requires technology to make it happen.

The PROPERTY DNA® is built using blockchain and Interplanetery File System (IPFS).

  1. The documents (valuation estimates, building plans etc) which provide the verification of the essential data points within the DNA are hosted on IPFS — and most importantly, hashed with a timestamp in order to create a sure record.
  2. In the wider scope of the PROPERTY DNA®’s usage, it is linked to a smart contract which holds its unique identity, creating a form of “decentralised registry” which enables, among other things, tokenised investments and programmable interactions between the property and other systems.

The foundation of…?

At the end of the day — what does it actually mean to have a DNA, a personality — or an identity, for your home, your office or your business?

Consider this — what things can a person do, when he or she is alive? The list is too long to count…

We believe that PROPERTY DNA® is just an enabler, the foundation for the future — a bridge to many new and exciting possibilities for real estate:

  • Tokenised real estate investments
  • High quality benchmarking
  • Provenance for fractionalized ownership of properties
  • Dynamic insurance products for building tenants and owners
  • Smart shared living spaces
  • Crowdfounded renovations and maintenance

This is how we use blockchain to make things “real.”


Our focus is unlocking ALL the true potential in the buildings where you live and work — and most of all on making blockchain & crypto “real”…!

Follow us on Twitter, LinkedIn, Facebook!

Selling real estate with the Property DNA® [Case Study]

While it may be clear to us what the advantages are of having a PROPERTY DNA® — that might not be true for everyone.

For this reason, we present the first in our series of PROPERTY DNA® Case Studies — “The PROPERTY DNA® in Action” to illustrate how we believe it will fundamentally transform the real estate industry.


So, let’s imagine Amy is trying to sell the apartment building she owns, which includes 10 apartments and a small restaurant on the ground floor. Let’s take a look at what exactly she has to do.

1.Valuation

Of course the first challenge that Amy faces is valuing the building she wants to sell.

Amy is confident that she can sell it for € 9.2 Million, but in order to actually sell the property, she needs to have it valued by a third party.

She hires two of the big five valuation companies in her country.

Company A offers to carry out the valuation for € 3.500.– and the other for € 2.800. — .

Company A estimates the value of the house to be € 7.6 Million and company B at € 8.5 Million. Since the range is so high, Amy decided to get a third opinion (costing her an additional € 3.200.–) which yielded a valuation of € 8.2 Million. Now this means that Amy has spent a total of € 9.500.– (and five months of time) in order to get a valuation to sell the property.

2. Due diligence

To be able to sell her apartment building, Amy must also invest a chunk of change into doing a red flag due diligence followed by a technical, legal and commercial due diligence.

This costs her € 86’000.– (1%) and takes between 6 to 9 months of time and effort.

3. Brokerage fees

Amy’s broker Tim is certain that he can sell the house for € 9 Million — a number which makes Amy happy.

Amy and Tim agreed to a success fee of 2.5% (a very conservative number if you consider an average of 6–7% for the USA and some European countries). Since Tim was able to sell the house for € 8.6 Million, Amy pays him a success fee of € 215.000. — .

Total Cost

All together transaction cost summed up to € 310’500.– (or 3.6%, excl. notary and many other costs).

A dangerous range

One special point to take note of here — Amy got three different valuations from three different agents. This range, and the time and money it cost her to get them, is a serious road-block in the process of selling her house.

Now it should be noted — before we explore the efficiencies that the PROPERTY DNA® brings — that these numbers are not just our opinion.

After an extensive field research, a well-known and independently-acting consumer protection company was able to prove that professional valuations in Switzerland differ by around 20%.

That means it will likely be that you will end up selling your house at a price between € 800’000 and € 1’200’000/.

The reasons

Why is valuing a property so difficult?

In general because there is a lot of manual and multilateral work involved in delivering benchmarking and valuations. This is due to different factors:

  • data models that are based on hedonic calculation
  • missing or complex access to high-quality data sets
  • often excel-based and therefore corrupt data
  • lack of standardized accounting tables
  • conflicts of interest → sellers tends to get higher valuations than buyers

A Better Way with PROPERTY DNA®

Obviously, there has to be a better way.

If we agree that inconsistent valuations and a lengthy, cumbersome due diligence process are key stumbling blocks in the path towards a successful sale — then let’s consider what the PROPERTY DNA® can do to fix this.

DUE DILIGENCE

Because the PROPERTY DNA® provides an “at-a-glance” picture of the property, all the data which Amy needs for the due-diligence process is held in one place. This data has already verified with numerous 3rd-party service providers (e.g. notaries, service providers etc.) with all the necessary documentation.

Also — because Amy has completed the DNA and “minted” it (tying the relevant data to a secure, immutable record on the blockchain) — this data can be trusted and is tamper-proof.

In essence, Amy has completed the due-diligence process (or a large part of it) already.

Now she won’t have to wait 6 to 9 months for all the necessary information to be checked and verified.

VALUATION

As mentioned above, the main problem with the process of valuing a building to sell, is the wide range of estimates that are returned. Obviously, when third-parties are involved, opinions — and more importantly, data — can vary widely.

But what if higher-quality data were available to all? And what if it wasn’t just contained in the proprietary servers of some third-party service provider (making it hard to verify and totally untransparent)?

The PROPERTY DNA® solves this problem in two ways:

  1. Users of the Pro version of the DNA can access reliable benchmarking data (provided by our partner ImmoCompass) which allows them to quickly get a view of the market and make educated decisions.
  2. On a wider scale, the verified data contained in the complete, “minted” DNA can be exchanged (anonymously) among peers for independent verification of market valuations — without the need for third-party validators.

Tokenized property sales

The scenario outlined above clearly shows how the PROPERTY DNA® can be of benefit when dealing with the pain points in the traditional process of selling a property.

This in addition to the fact that both buyer and seller (in particular the seller) benefit from greater transparency and reduced risk thanks to more accurate valuations.

Just imagine if Amy had only been able to get € 7.6 million for the property — a price much lower than expected and one which she was unprepared for because the valuations she received were wildly inaccurate.

Most importantly, however, the PROPERTY DNA® also lays the foundation for NEW POSSIBILITIES for the sale of real estate.

In the not-so-distant future, we may very well see the market altered by the opportunity for fractionalized ownership — shared profits among multiple owners and much more.

In this case, the slow, outdated processes of valuation and due-diligence will become even more cumbersome.

But using the PROPERTY DNA® to create a basis of trust — a “digital ID” for property — there will less of a need for intermediaries to take care of things — causing property owners weeks and months of waiting.

That’s why we believe the PROPERTY DNA® can enable dramatic innovation in real estate.


Our focus is unlocking ALL the true potential in the buildings where you live and work — and most of all on making blockchain & crypto “real”…!