Teresa Grobecker, founder of Real Estate Consortia (REC) and Senior Vice President at US Capital Global met Zoya Malik, managing editor at The Fintech Times STO event to talk about her business uses for the tokenisation of real estate and how blockchain will shake up real estate as an asset class for the future.
What’s a Real Estate Token?
I’m sure everyone appreciates how complicated real estate deals can be, selling agent, buying agent, referrers, listing, title validity, closing… lots of parties, and behind the scenes multiple databases and registries.
Tokenising the property is a gateway to increased visibility into its provenance, value and related multi-party transactions.This can benefit everyone from the seller trying to improve the perceived value of the property, to the buyer seeking complete knowledge and the various parties who have earned commission and referral revenue. For example, in the US, 30% of real estate transactions are referrals and $20 billion of referral revenues are untracked, can’t be tracked.
Real estate tokens, smart contracting and blockchain transactions can help track and harvest this revenue.
What lead you into a career in real estate and into digital technology?
Right out of business school I worked in financial services then started my digital real estate brokerage in 2012, which is still active today. While operating in the sector, I noticed that a lot of other fintech innovations were missing from the real estate industry and because I am passionate about improving the real estate experience for professionals and clients using technology, I started Real Estate Consortia, my third real-tech project. I’ve never worked on a project that had gained such traction with large industry players as quickly and at such scale as this project. I think it’s essential to have the industry specific expertise to understand all aspects of real estate transactions as a broker and from the management and sales perspectives, and also as an owner of investment properties. REC innovative products come from solving pain points where improvements are massively overdue. I love feeling purposeful and helping fellow realtors do their jobs better and more efficiently, using technology.
What was your objective in partnering with US Capital Global and what will be the synergies for both companies?
I viewed USCG as thought-leaders in the space of blockchain technology as it applies to real enterprise solutions, especially in fintech and real-tech. I sold my earlier Real Tech company, Grobecker-Holland, to USCG in 2018 and they also took a substantial stake in REC at that time because they have tech, enterprise, and investor expertise which is invaluable. One of the things real estate agents need is a real-tech platform that efficiently tracks real estate referrals to provide more transparency, increase professionalism and provide a better customer experience. REC leverages the blockchain to do this efficiently and we envision being the industry standard for virtually all real estate referrals.
What are your plans for extending reach to overseas markets and especially the UK real estate market?
REC is partnering with the world leaders in international real-estate and information technology that see the need to track real estate title records outside the United States. We believe that partnering with these firms instantly expands our footprint. REC aims to be the international standard for referral sharing and real estate blockchain data.
How will you tackle existing operational and regulatory hurdles in these markets?
To expand internationally, we have to research each government’s rules and existing infrastructure for title and land registry. Where there are existing systems, we will partner with local municipalities to incorporate their data. In areas where records are incomplete, we will work with local government and stakeholders to help improve the data. We envision that emerging countries will appreciate the REC title token because of the enhanced security, reliability, and transparency for taxation and reduced land disputes.
What are opportunities and concerns in blockchain technology adoption for the real estate industry and homeowners?
There is a huge opportunity for REC blockchain technology since we have first-mover advantage in tokenisation of the asset. Some of the largest real estate enterprises have been exploring blockchain for years. Since REC has already tokenised each property in the United States using blockchain and existing land records, REC truly is the frontrunner. We realise that the technology is a bit advanced for the average homeowner, but thankfully, our technology doesn’t have to be marketed or dealt with by the homeowner as blockchain.
The title token is the underlying technology that powers the data and web-user experience, but the user interface is conventional best-practice. The realtor receives training on the REC referral platform, but there again it is an elegant and user-friendly experience. When the homeowner claims the title token, or identifies his property as connected with the token the homeowner then has increased visibility into the chain of title and receives special offers from lenders and real estate servicing companies. As the homeowner becomes more engaged with the REC title token system, the owner is encouraged to securely store all property improvement records, contracts, title, deeds and other important disclosure documents in the REC data room.
The owner is incentivised to share this data: the more information that’s provided, the higher the property’s provenance score becomes. If the owner is a more private person, then the owner doesn’t have to engage the REC system or can choose what data to share. The realtor and other relationships affiliated with the property can still be recorded on the REC title token without the owner engagement. The two functionalities can operate independent of each other, but converge via the realtor relationship with every property. The communications that can be built up between a homeowner and realtor on our system create a strong relationship and profile for the property. This profile tracks the property’s history and value that deepens its currency and relevance in the market. I believe in the adage, “When you list, you last” – this means if you own the inventory in the market, you will always have buyers.
What are perceptions towards blockchain technology and sharing of personal data by industry specialists and homeowners?
Interestingly, when I spoke in London about the title token I kept getting asked if I needed government approval to mint the title tokens for the entire country. People were shocked that in the US this is merely seen as another real estate data aggregator. I think that legal and market research needs to be done as we enter into any market so that we are in compliance and build goodwill with the local stakeholders. When local authorities and regulators see that the REC title token augments existing data and that we are willing to share with the governments, I’m confident that regulators will be willing to work with us. Industry specialists are definitely interested in the functionality of the REC platform. They see the platform as a real tool that will help them provide value to clients and generate more revenue. We are committed to many aspects of our tokenisation to be open source and confidentially available to governmental agencies, lenders, and others.
You talk of creating a digital home identity. What information is required to make a property attractive and sell able?
The REC title token is your property’s digital identity. It combines a myriad of public and private data sources, including information from the property owner. The information that the owner uploads, such as property updates, additions, owner verification, current mortgage and tax payments all contribute to an increased provenance score. The higher the score, the more attention the real underlying real estate asset will get on the title token portal.
What will be the take up of your token in terms of referral business in 2019? What are concerns from the real estate stakeholders and market regulators?
REC plans to go live with strategic partners in 2019, especially the banks that want to move distressed assets through the REC Realtor network. Given the potential softening of the real estate market and increase in interest rates, we are already seeing an uptick in distressed sales and we know that realtors will want to access this inventory. Regulators are increasingly scrutinising the way these referrals are distributed and we offer a more compliant and efficient way to do this. Even with a relatively modest first year penetration this is a massive book of business.
We are currently pre-enrolling agents onto the REC platform and seeing very high adoption rates. When we go live, we plan on marketing in earnest to the realtor community, both to the agent and the broker populations. REC will track these referrals using the title token and lookup portal for referral revenue disbursement. Luckily, there has been a massive focus on blockchain at the national level by the National Association of Realtors (NAR), Real Estate Standards Organization (RESO), and the Mortgage Bankers Association (MBA) MISMO groups, so REC feels empowered to move forward in this space. Over the past decade, these organisations have rapidly become pro-technology and are actively exploring blockchain solutions.
What type of inventory in the UK could go onto blockchain? What would be opportunities?
The UK has really impressive land title registries, so we would love to access these systems for referral tracking (permission based of course with the local government). We also have had some discussions with tracking rentals, leases and referrals of renters to real estate agents. Given the USCG footprint in London, REC is very excited to meet and explore these options.
What is the talent gap in your industry for digital take up? What needs to be done about this through academia, skills gap training and incentivising a new generation of developers and industry operators?
REC has hired a NAR super-agent trainer to create and teach realtors how to use the REC title token and referral platform. We plan to offer training for each stakeholder cohort demographic to create a streamlined and enjoyable experience for all participants.
What other sectors can benefit from your token model? How will you market to those sectors in the future?
The REC title token can track lending and title records as well as referrals in the real estate industry and in other industries. The REC title token is being deployed first in the residential real estate market, then REC will incorporate commercial real estate leases and sales. From here, we can track referrals in other industries, especially very practical applications in the fin-tech space where USCG has industry touch-points.
What qualities do you need to successfully grow your business and lead in a new era of digital technology?
REC is built on a really strong team. Everyone comes from successful careers in their respective domains, including real estate, technology, finance and banking, and we respect each other for our diverse talents. Appreciating each other and letting each member shine in their own way is critical to success. I’ve never been into micromanagement; I work with ethical, smart, effective professionals who all share the same goals and aspirations regarding REC and life overall. At the end of the day, our interests are all aligned and we appreciate each other’s contributions. Life is really short and I work really hard. It’s important that I’m improving the lives of my co-workers and clients. I enjoy knowing I’m moving the needle in the right direction.