(Replying to PARENT post)
It's interesting, both have registries, so why is one harder? Is it because the registry is better? No, it's because real property transactions are more complex:
- What condition will the property be delivered in and when? - What happens if the condition is not as specified? - what personal property is included in the transaction? What condition is it in? - Are there disputes over the property lines? - Are there easements? How do they work? - Are there third party consents needed? How do those work? - Will the seller vacate immediately, or will they rent back? - How will you pay for the property and when? - What happens if you don't pay? How much is the deposit and what are the terms of the deposit?
The complexity of the transaction derives from the complexity of the subject matter. Sure, if you could standardize those items, you could make property more like stocks, and people are trying to do that, which so far limited success. But for the average person, this is a huge investment, and they will want to spend time and create a transaction that works for them.
Almost none of the complexities related to the transfer of real property relate to issues with the county registry. Sure registries could improve, but very little would change.
One of the expenses is paying for title insurance. Sure in some sense a perfect ledger would obviate the need for that insurance. But given there seems to be more fraud in blockchain than in normal US real estate transactions, not sure the insurance price goes down, rather than up...
(Replying to PARENT post)
Buying houses are expensive because:
- Realtors are a state-sanctioned monopoly for real estate transactions and suck up a % of the costs. They also provide the necessary service of aggregating information about the market and negotiating on your behalf - Due diligence on the state of the property. This means inspecting that there’s no mold growing everywhere, checking that proper maintenance has been carried out, etc - Property law developed over literal centuries to provide the legal framework that we have now, if you damage something as you move out I can sue you to recover costs involved, we have statements about property state before closing, if the building doesn’t meet code we negotiate about who pays the costs - Property registries matter because legally speaking that’s a part of how you prove ownership. The county knows who to send the tax bill, if you default creditors can impose a lien, these are legal technologies that developed over time
This is why you can’t just pledge your house as collateral and borrow against it in a HELOC like you can borrow against your stock portfolio. The bank needs to verify that nobody else has a claim on your property and that the property actually exists and is worth as much as you say it is.
A house NFT has none of the legal protections of a SPA and all of the risks. If it’s not up to code you’re fucked, if the county has a tax lien there’s nothing you can do, etc. Us engineers like to think that everything is an engineering problem, and that’s often true, but law seldom works that way.
(Replying to PARENT post)
Replace NFT with deed, and what you think we can’t execute the transfer quick enough? No we can but we don’t because, we want to title search, violation search, inspect, appraise, survey the freaking thing you are about to blow your life’s savings on.
There is a reason why people continue to lose millions and billions on NFTs and crypto and why systems to slow and prevent rampant fraud exist.
There is no real technical problem with a real estate transaction that has not been solved. I closed on my house remotely, in 6 weeks, never having met anyone except my broker. 6 weeks were spent doing due diligence inspections.
I have an NFT of the Brooklyn bridge to sell you, cheap, 200 million dollars.
(Replying to PARENT post)
Have you read any of the proofs behind any of these algorithms? Ever notice how often some one finds a crack and disappears millions of dollars? Think we’ll actually make it secure some day?
I’m also not convinced this even needs technology. Some things are better locked up on paper in slow, bureaucratic institutions surrounded by layers of administrators. Makes it a lot harder to break in and steal stuff.
Most people aren’t buying properties online like games on Steam. If it takes 6 weeks or 5 it won’t make much of a difference.
Even if you want to digitize proof of property ownership it would be orders of magnitude more efficient to host your blockchain on a handful of Raspberry Pi’s. You could probably manage all property sales on an entire continent with it. Not dealing the Sybil attack problem is a lot cheaper and easier than trying to deal with it.
(Replying to PARENT post)
It's not really the NFT that's the 'win' there, if indeed it is a win.
(Replying to PARENT post)
> But in the 99%+ of times you're in the happy path, economic transactions occur based on autonomous rules encoded in software.
In the happy path, people just “trust” that the system works; that the merchant and cc company transact properly, that cc company and bank work together, that the software underpinning all this is tested and has no errors, that the bank and cc company can help in disputes of fraud from the merchant…
It’s actually based on a lot more trust than the normal person realizes and polar opposite to nearly trustless.
(Replying to PARENT post)
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(1) Do we really want high frequency markets in real estate? Is that socially and economically desirable?
(2) Land and property records so far have survived centuries (if not millennia), can we hope that an NFT solution will have the same long-term compatibility?
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To be perfectly pedantic, you still aren't the owner of the Microsoft stock. Your broker makes a record of you being the beneficiary of X shares of Microsoft stock, with about a dozen asterisks. Each of those asterisks fall off over the course of the next few days and then it is all finalized - your broker owns a bunch of shares for your benefit.
It only feels like it is instantaneous because they assume everything will work out (it usually does). They can do this, because everything is reversible if it doesn't.
Now, if you would like to be the actual owner of Microsoft stock, you can do that. If you've never done that before, expect the process to take a few weeks. But go right ahead - head over to ComputerShare [1] and start the process. If you really want, you can even get them to issue you some paper stock certificates in your own name, but that takes even more time and comes with a lot of extra fees.
[1] https://www-us.computershare.com/Investor/#DirectStock/Summa...
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Who enforces seizure when lendee defaults but the lender is "anyone in the world"?
(Replying to PARENT post)
""" Nobody owns stock. What you own is an entitlement to stock held for you by your broker. But your broker doesn't own the stock either. What your broker owns is an entitlement to stock held for it by Cede & Co., which is a nominee of the Depository Trust Company, which is a company that is in the business of owning everyone's stock for them. """
https://www.bloomberg.com/opinion/articles/2015-07-14/banks-...
Also: https://bitsonblocks.net/2019/02/07/who-legally-owns-all-the... compiles similar information on Singapore and Hongkong (googled - not verified).
(Replying to PARENT post)
The analogy I like to use is what's harder to buy a $1 million house or $1 million of Microsoft stock? The former process takes weeks, and dozens of man hours from lawyers, realtors, escrow agents, bankers, county property registrars, etc. Whereas a buy order to execute Microsoft shares happens in microseconds. That's because we've built a highly streamlined autonomous system for executing stock transactions. Yes of course, there's a trusted layer built on courts and fiat law at the bottom. And occasionally for a corner case, real lawyers have to get involved. But the vast majority of the time, this layer is completely abstracted away and trading stocks are just bits flipped on a computer.
When somebody says something like "let's put houses on the blockchain", the idea isn't to get rid of the fiat law system completely. At the end of the day, you still need courts and sheriffs to enforce property rights. But the idea is that we can wrap the house in an LLC, whose bylaws state that it's governed by on-chain contracts. (Which Delaware Chancery courts will absolutely recognize and enforce.)
Now instead of directly transacting at the very low-tech county property registrar we can transact using an on-chain NFT that grants the equivalent of ownership rights to the house. (This is very analogous to how Cede & Co technically owns almost all the stock shares in America, and holds them under your name for you.)
That NFT is way more powerful and efficient to transact with than the county property record. It lives on a credibly neutral level that already has billions in native capital and liquidity and exposes a fully Turing complete smart contract system. You can sell your house atomically and instantly to anyone in the world with no lawyers or escrow agents. You can pledge it as collateral and borrow against it. You can fractionalize it and sell a portion. Or roll it into a larger portfolio and slice into tranches. All with no more than few dozen lines of code. Without blockchains all of those operations would take hundreds of pages of legal documents and weeks of back and forth.