Efficient Blockchain Solution for Home Sales and Maintenance

Innovative. Like the digital twin. However, easier to pull off in a regulatory laden environment. I worry that some will have the incentive of doing off chain repairs. Just like people take their car in for a repair and do not report to insurance company. More info on the specifics of the blockchain implementation would be good too. Very nice. 87/100

PROPCHAIN Team 6 Nandita Beri, Kevin Gannon, Diya Mathew, Hunter Rudd

The market for selling existing homes is large and inefficient Existing Home Sales in U.S. (Number of Units) 5,690,000 5.5 million houses sold last year; market expected to grow at 4%. 5,450,000 5,250,000 1.1 million home buyers wish they had better inspection, prior to purchase. 4,940,000 Repair after moving in can be costly and inconvenient. 2014 2015 2016 2017 (F) https://www.nar.realtor/topics/existing-home-sales http://finance.yahoo.com/news/homeowners-regrets-buying-a-house-redfin-163113390.html

Current purchasing process puts the sellers and buyers at risk Ownership Transfer & Escrow Payments Steps in Purchase Find the right property Hire a real- estate agent Draft a contract Inspection & Appraisal Post Sale Issues Buyer Agents Buyer Agents Players Involved Buyer Agents Lawyer Notary Buyer Seller Agents Inspector Appraiser Buyer Seller Agents Insurer Lawyer Buyer Insurer Lawyer Time consuming Insufficient information > $300 Hidden problems undetected Misaligned incentives Superficial knowledge of house Managed by 3rd party escrow account Faults uncovered Insufficient information for repairs Major Inefficiencies

Keeping track of home improvement, repairs and maintenance is very inefficient Home owners are expected to maintain a timeline of events, with accurate records of receipts, scheduled maintenances and materials used, but there is NO file or form. NO official Without records, contractors and repairmen won t be able to provide the exact materials that were originally used the exact materials that were originally used for the job. When purchasing a house, the buyer might not get full details on the repair and additions done, which might cost them in the future them in the future. cost

Solution: Private, Permissioned Blockchain Propchain Parties to a transaction verify and publish to the chain Property Owners Third-parties validate through cryptography to ensure immutability through nested transactions General Contractors Real Estate Agents Permissioned, multi-party verification and security Trustworthiness provided by consortium members having competing interests and civil and criminal liability Material Providers Inspectors & Appraisers A single blockchain is created for each property thereby serving as an immutable record of relevant activity related to that property Sub- contractors

Example: Private, Permissioned Blockchain Propchain Property ID or Address Publicly Visible Private, Permissioned Registration of Title Real Estate Agents Ownership Change Permissions to General Contractor Property Owners Permitting for project Sale Cycle General Contractors Multiparty Verification Account Setup for project Materials Billing Sub-contractors Permissions to Sub-contractor Material Providers Installation Services Rendered Verification of work Inspectors Valuation & Sale Preparation

Example: Private, Permissioned Blockchain Propchain Property ID or Address Property ID or Address Publicly Visible Private, Permissioned Registration of Title Registration of Title Ownership Change Encrypted; Hash to Validate Permissions to General Contractor Encrypted; Hash to Validate Permitting for project Encrypted; Hash to Validate Owner View Account Setup for project Encrypted; Hash to Validate Materials Billing Encrypted; Hash to Validate Sub-contractor View Permissions to Sub-contractor Permissions to Sub-contractor Installation Services Rendered Installation Services Rendered Verification of work Verification of work Valuation & Sale Preparation

Blockchain technology provides the best solution Home ownership details & Price consensually shared and synchronized across network. Home inventory details shared with permissioned users. Distributed Ledger Builders: Reduced cost due to lower wastage Buyers/Sellers: Better info. for decision making RE Agents: Quick and transparent negotiations Cryptographically secured transactions by builders, home owners etc. benefit RE agents, home buyers in future. Remote independent writers Economic Benefits Degree of inspection needed reduced greatly. Some administrative staff for builders and suppliers no longer required. Consensus network with immutable transactions and timestamps to serve as evidence in case of disputes. Existence in absence of trust Disinter- mediation

Economic incentives for partners & consumers will get their buy - in Business Partners Consumers Government Material Suppliers Home Owners & Agents General Contractors Losers Administrative Staff 3rd Party like Escrow office (in the long term) Lawyers & Appraisers

Monetization Strategy General Contractors / General Contractors / Builders Builders Inspectors / Inspectors / Appraisers Appraisers Real Estate Agents Real Estate Agents Subscription Fee Fee per property Fee per property Value Proposition Decreases admin fees Reduces expenses attributable to overages Accurate Pricing Accelerate deal flow Reduces time and effort spent on valuing the property

Revenue Projections Contractors Annual Subscription Fee Top 280 contractors in US earn an average of $30M annually. Average small contractor earns $1.2M. There are 650,000 registered contactors in US. GOAL: Capture 1% of the market and charge 0.1% subscription fee ~ $7.8M Total revenue expected in Y2 of operation ~ 12M, expected to grow at CAGR of 4% Real Estate Agents Fee per property (commission-based) Most real estate agents earn a median salary of $36,000. Top producers sell at least one home a month and earn around $150,000. ARELLO*estimates 2M active real estate licenses in the US. GOAL: Capture 5% of the market and charge 0.1% commission fee per property $3.6M Revenue Projections 5 13.50 4 12.98 Years Inspectors / Appraisers Average home inspector/appraiser earns $70,000 annually. There are 96,000 inspectors and appraisers in US. 5M homes were inspected in 2015. GOAL: Capture 5% of the market and charge them 0.1% fee $340k 3 12.48 Fee per property 2 12.00 1 0 5 Revenue (in $M) 10 15 *Association of Real Estate License Law Officials

Risk Analysis RISKS STEPS TO MITIGATE Success of platform contingent upon reaching a critical mass of users Offer services free to buyers Free access to government/policy makers Limit to details that can be provided (cannot solely reply upon) 80/20 rule: adequate to capture 80% of the information within a home on PropChain, allowing traditional inspectors to fill in gaps Complexity of inputs / technology intimidating to inexperienced users Implement a highly user-friendly, scalable interface (customizable views, filtering capabilities, etc.)

Risk Analysis RISKS STEPS TO MITIGATE Success of platform contingent upon reaching a critical mass of users Offer services free to buyers Free access to government/policy makers Limit to details that can be provided (cannot solely reply upon) 80/20 rule: adequate to capture 80% of the information within a home on PropChain, allowing traditional inspectors to fill in gaps Complexity of inputs / technology intimidating to inexperienced users Implement a highly user-friendly, scalable interface (customizable views, filtering capabilities, etc.)

Risk Analysis RISKS STEPS TO MITIGATE Success of platform contingent upon reaching a critical mass of users Offer services free to buyers Free access to government/policy makers Limit to details that can be provided (cannot solely reply upon) 80/20 rule: adequate to capture 80% of the information within a home on PropChain, allowing traditional inspectors to fill in gaps Complexity of inputs / technology intimidating to inexperienced users Implement a highly user-friendly, scalable interface (customizable views, filtering capabilities, etc.)

Long Term Strategy Sellers & Buyers Ability to transfer title - Simplifies a cumbersome legal process, saving significant time and money Government / Policy Makers More accurately reflects value of property additions (for tax monitoring purposes)