Transcript: National Association of Realtors is Contributing to the Blockchain Revolution

I'm actually surprised it's taking this long for us to see companies having success with blockchain and real estate. I feel like it's like 1992 and everyone is like, or maybe 1994, and everyone has heard of the internet and what it can provide, but not everyone is willing to put all of their information out there just yet. These collections of data that we're creating are going to become extremely valuable. Like, data is the new oil, right? It's the most valuable thing that your company could have.

And if that is shared among all of your competitors, it kind of changes the business model, right? It's more about what you do with the data as opposed to just controlling access to it. Last episode, we spoke with Ragnar Liffresar, founder for the International Blockchain Real Estate Association and the founder and CEO of VLocks.re. He spoke with us about the blockchain pilot VLocks.re that was done in Cook County to achieve the first USA-based conveyance of a property and a public recording of the associated using a Bitcoin blockchain.

Lastly, we discussed how he founded the International Blockchain Real Estate Association, Ibrea, and we got his opinion on initial coin offerings or ICOs. So if you haven't listened to that episode yet, check it out at constructor.com. In today's episode, I will be speaking with Dave Conroy, research and development lab engineer at National Association of Realtors or the NAR. He frequently educates about how blockchain and distributed ledger technologies, prototyping, software design, management, and networking can integrate with real estate. He believes that real estate finance and supply are the most viable markets for a blockchain.

And if you're part of any association, pay attention to how the NAR is leading the way by eating their own dog food, testing out how to build a better credibility and reputation model by tracking their own internal network. So Dave is really passionate and excited about what is to come in the coming months with technology and real estate. So with that, let's get into the interview. We are interviewing Dave Conroy, research and development lab engineer at National Association of Realtors. He has spoken at over 25 events this year, 2018 already, about how blockchain and distributed ledger technologies, prototyping, software design, management, and networking can integrate with real estate.

He believes that real estate finance supply chain are the most viable markets for a blockchain application because of the high value of assets and reduction of the friction between multiple parties that have to be involved. So Dave, welcome to the Constructor podcast. Thanks so much for having me. What are some of the reasons why the National Association of Realtors is getting involved with blockchain? As you said, I've been very active in the education space for blockchain and specifically in real estate.

And because of that, I've had the opportunity to travel all around the US and talk to many people in the real estate industry about blockchain, kind of do my job to educate, but also kind of just get all the different perspectives about how blockchain could be used. What's interesting is if you think about a real estate transaction and just the number of people that are involved, of course you've got your buyer and your seller, but they both have their own agents. They might have their own attorneys, there's lenders, there's title, there's escrow, there's home inspectors, anywhere between 40 and 50 different people with hands on a single real estate transaction.

So when you think about the average closing time, where it could be anywhere between 45 and 60 days, it's no wonder because of all of the inefficiencies that are involved with that many people relying on each other and each all relying on their separate silos of information with no real single source of truth, inefficiencies are just kind of almost baked into the way we transfer real estate. I think blockchain could really help with that. If you think back to just selling a single home involving 40 to 50 people, of course it's going to take a lot of time with all the due diligence that needs to be done by single one of those parties.

But in addition to that, I'm not sure if you're aware, but in real estate, especially in residential real estate these days, wire fraud is a massive problem. Cyber criminals have gotten really incredibly advanced. It used to be very clear when you were dealing with a spam email, you would have your Nigerian prince type scenario, but today it's gotten incredibly advanced. You could be closing on your condo today and this morning you would get an email from your realtor in your realtor's tone of voice talking about how you and your wife or your husband are really going to love the property and you're very glad that you found this one because you know that you were looking at a bunch of different districts.

And oh, by the way, there's been a change to the wiring instructions. If you could please send the $400,000 here as opposed to there. And all of a sudden transactions completely derailed or delayed or perhaps the buyer could be out of funds. So when you think about the high stakes that are involved in real estate, the lack of trust between parties by design and the natural inefficiencies and friction in the transfer process, it's almost like the industry is begging for blockchain solutions, a way where all of these parties can work together without necessarily trusting each other and having a single source of truth when it comes to information about the property, the buyers, the sellers and the lenders.

I'm actually surprised it's taking this long for us to see companies having success with blockchain in real estate. Yeah. I mean, I think you hit the main point, right? So security, the amount of time that it takes and then having that single source of truth. What's really interesting is that when we were closing on our condo, I actually got the wrong wire transfer information and it wasn't because of fraud.

It was an accident. So it was really interesting because when we started asking questions, you know, I had my money at the wrong title company and literally at the closing, they were like, wait a minute, what were your wire transfer? What was the information that was sent to you to wire your funds? And we were like, has this happened before? And they literally were like, yes, this happens all the time because of wire fraud.

And we were like, totally put out by it, obviously, even though everything went through. I think it was a blessing how that went through. But whatever the case might be, that's when I started learning about this stuff. And you're exactly right. This is a huge problem.

Yeah. I'm totally technical myself. Like I love everything to be online and everything to be streamlined. But when it came for me to do a refinance, like a couple months ago, I said, you know, why don't you just send me a paper check? Yes.

And there's more reasons why NAR is involved with blockchain than just the ones we've mentioned. There are some really interesting potential applications for enforcing of contracts using smart contracts. Also for establishing identity, like using decentralized IDs, we could improve property records using blockchain. You might not know this, but in the US, there's about 700 different MLSs. These are where agents were putting your house for sale.

They enter the listing into an MLS. So there's about 700 of those in the country. They all run about a dozen or so different types of software. But when those MLSs do software upgrades or migrations to new software, often all of this listing information is lost. So kind of like if you were to buy a used car today, because you had the VIN number, you would know every single thing about that car.

The same isn't true for property. So that's again, another project that we're working on at NAR is to kind of build a VIN number for homes so we can have applications built on top of that, similar to Carfax. So it goes way beyond just the actual transfer of property. Just improving property data in general is something that we think can help improve the industry. I agree with you.

The fact that there's so many different sources of information that can definitely skew the understanding of what is actually the truth about that piece of property. And I think that makes a lot of sense to have that model. So if you guys are working on that for residential and for corporate real estate, that could be really, really valuable. If you were mad at your neighbor or something and you wanted to cause issues with their sale, it's very easy to just Photoshop, deed or document or lien to the recorder's office.

And with absolutely no verification that gets recorded, I feel like there's a massive need for not just us, but all parties in real estate to be looking at how we can improve our infrastructure. Let's take a little bit of a step back. We kind of know the reason why you and the NAR are really interested in getting blockchain to work. Let's talk a little bit about why blockchain is better than other traditional databases that we use. I mean, we talked about the VIN number scenario, but are there any other particular pieces that you want to highlight right now just from a higher level perspective about blockchain?

There's a few things. One is that the information is usually append only, which means that you can't go back in history and alter something that was added to the ledger prior. The reason you can't do that is because everyone who is participating in this blockchain network, whether it's public or private, everyone retains a copy of all of the information. Therefore, if somebody was a bad actor on the network, was trying to change the ownership of a property from 10 years ago, it would be immediately rejected by the network because everyone who's participating, again, whether it's public or private, would know the actual true ownership from 10 years ago and would be able to reject that transaction automatically.

Again, so what's different from traditional databases is that it's append only. Everyone in the network maintains their own copy of the ledger. They're cryptographically secured and tamper-proof by design. So it kind of works great in situations where no one really owns the information, but everyone needs it, contracts for real estate, things like that. And also in scenarios where you trust somebody enough to do business with them, but you wouldn't necessarily give them root access to your servers so they could start changing all of your information.

It's kind of like a trust but verify type situation. That makes a lot of sense. The next thing I really want to dig into is what are some of the types of analytics that you can do on a blockchain that you can't do right now specifically in a real estate? That's something that we're looking at very, very closely. In fact, one of my colleagues who I probably work closest with at NAR, his name is Alex Vlokoski.

He's also from Chicago. He's a data scientist for the National Association of Realtors, but also in his spare time, he is an adjunct professor at DePaul. He works in their computer science department teaching machine learning and artificial intelligence. And he also has growing interest in blockchain and what that means for analytics. It's one of those things where the potential is there.

It's just that it's still so very early. There aren't a lot of just specific examples we have that we can point to and explain on a thing like a podcast. Crazy how quickly everyone has kind of agreed that blockchain is the right thing for real estate and all of the analytic opportunities it'll provide before there's really any solid implementations of it out there. This is something we're working on. There's a term in software development called Eating Your Own Dog Food.

At NAR, we've got 1.3 million members, and they're actually members on multiple levels of our association. So I work at the National Association, but there are also memberships at the state level and the city and local town level. Now, what's frustrating to me as someone with a tech background is that we don't really share information about these realtors at every different level. Like yes, we share their email addresses and what offices they work for. We don't really track that much information.

So when it comes for us to do leadership development or for us to decide how to do our marketing and who to target, there's a lot of questions that we don't have answers for. So to try to solve this problem, we have implemented a project internally that we are calling the Block R, which is using blockchain for actually a legitimate use case. There are a lot of people out there who would think blockchain is almost a solution looking for a problem and that there are actually only a few very true use cases of it.

This I believe is one of them. It's inter-organizational ledgers. So again, from the national point of view, the state and the local, we're able to track the engagement of our realtors and share them using a private permission blockchain. So this is between a thousand different organizations, three levels of access, tracking 1.3 million people as assets and able to track their involvement with the realtor association and share them internally. So far it's going really great.

You've got the state of California, the state of New Jersey, Massachusetts, Florida, Indiana, and we're all beginning to share information about our members more efficiently. And it's a great test case, kind of a long answer to your question, but this provides us with so many data analytic opportunities that we didn't have before. Imagine if you're a realtor in New York and you spent 30 years going to every meeting, serving on leadership, donating to our political advocacy, and then you retired to Florida, but still wanted to practice real estate.

With our current systems, the Florida associations would have no idea of how much of a rock star realtor you are. But now with this new hyperledger based private permission blockchain, we're going to be able to track your accomplishments regardless of where you are in the country, have your own built in resume, and therefore we're not asking the realtors the same questions over and over. They're not having to enter it in every time they switch offices. And we're able to help predict which members might be the best leaders of the organization going forward.

People kind of are ready to get rid of the training wheels on a lot of their kind of private blockchains and put this stuff public. There are going to be so many opportunities for data, especially when you think about just some of the built in features of blockchain, just that the data can never be overwritten and it's tamper proof and it's going to be available 24 seven online. There should be unlimited opportunities for data scientists to run wild on this new trusted type of data set.

I think what you guys are doing internally, I mean, just merely to use your own internal organization as a guinea pig, if you will, to test the model, I think is fantastic. And then in addition to that, to do it to improve the membership quality, that's going to be a great success story when it's all said and done. That's a great approach to testing the viability. I mean, we already know the benefits of it, right? But it's a great way to test it and get everyone on board with the idea.

I feel like it's like 1992 and everyone is like, or maybe 1994, and everyone has heard of the internet and what it can provide, but not everyone is willing to put all of their information out there just yet. Everyone is kind of just building their local networks at their office. They're maybe networking a few offices with a LAN, local area network. And then over the next decade or so, they start taking on more and more of the available features of having this stuff public, that e-commerce starts.

I really think that over the next 10 years, we're going to see some amazing growth here. And I agree, we've learned so much from just doing this internal pilot. I personally wouldn't feel right going on the road telling other organizations to do this if I hadn't kind of come through it myself. So yeah, we've learned a ton. And another interesting part about this project is that it's completely open source.

So from everything from the deployment scripts to set up our six regional nodes to the smart contracts that are using to record the engagement of our realtors, everything is going to be available at the National Association of Realtors GitHub. So if anyone has a similar organization or wanted to try a similar project, you can learn from our work or perhaps our mistakes. Because what's crazy is that the development tools surrounding blockchain over the past year have gotten so much better and everyone is just iterating so quickly.

It can be difficult for developers out there. I first got involved with Hyperledger because it was backed by IBM and they kind of had a business interest of selling servers for people to run Hyperledger on top of. So they had better documentation. They had better tools where on Ethereum, it's more of the true decentralized who believe more in public blockchains and that private blockchains are a waste of time and things like that. There was just a little less organization of all of the software tools and the documentation.

It was kind of harder to get started. But man, in the past year, so much has changed and just glad that I've been able to follow it for so long because I feel like I've just learned a ton and happy to share as much information as I can, either whether it's public speaking or podcasts like this, Brittany. Yeah. Well, and how long have you been studying this? Because I know you've been studying this outside of even work, right?

Just kind of give us a little bit of a history of how you even found out about it. I started getting into Bitcoin specifically before I even knew what the word blockchain was. Like 2012, 2013 or so, I started mining Bitcoin in my basement with these little US B ASIC Bitcoin miners at the time you could get from Amazon for like 50 bucks. I ended up getting an array of them. Like I had 10 or so of them going.

And I just was totally nerving out about how cool, how this could possibly replace cash. And I bought in really hard, really early. I started blogging about it and I got featured on TechCrunch back in 2013 or so, how you could turn a Raspberry Pi into a Bitcoin miner, something that's completely impossible today. Yeah, like I said, I was so hardcore. I was like spending my Bitcoin because I thought I was helping to build the community and the network and help branch adoption further.

And now I've just got like, I've got a pair of $10,000 snow boots that I can barely even look out getting ticked off. My end table in hindsight now costs like four grand. At the time, it was like 95 bucks. It's funny how like how this has really grown and how what started as a personal hobby is now kind of almost a full time gig, almost multiple full time gigs. Around 2015, I started getting into smart contract development.

So I was sitting in the National Association of Realtors in our 600 square foot research lab by myself. I had heard about Ethereum and smart contracts and I was like, huh, what if I wanted to do escrow on a house? How would that look with a smart contract? So I started doing some development and solidity. Again, this is way back before there was really any development tools, but we were able to get some very basic scenarios working.

So literally like the afternoon that I figured it out, I scheduled a meeting with our CTO and our head of legal counsel. I said, look, you've hired me to look at any emerging tech that could affect real estate. Well, you know, this could impact real estate in like a dozen or so ways. Here's two or three practical ones. I actually like walk them through how it could work.

Since then, I've kind of been given the green light to just keep focusing on blockchain, building relationships, starting pilots. We've got a really cool one coming up here this month. We're working with a large county to help record property documents using a digital ledger to help reduce some of that fraud we were talking about earlier. In my spare time, when I'm not block chaining for real estate, I'm also doing hackathons where we're looking at blockchain for social good, had some success in some global competitions. I'm actually going to Las Vegas in two weeks to present at IBM's global conference on one of our blockchain solutions that I built with a few of my friends, actually Alex Falkosky, who I mentioned earlier, he helped on that as well.

It's blockchain 24 seven for me. It's beyond just a day job, just decentralization and improving efficiencies and providing tools to people to own their own personal information as opposed to it being spread out on a few different social media websites or search giants. Stuff that I feel is really important. Just really thrilled to be in the position that I am. I'm thrilled to be speaking with you here on the podcast, someone who's been invested in from a time perspective, but also you put your skin in the game, right?

You've done the research, you've been talking about it, investigating it. You've invested it in Bitcoin and tested how it works and had some wins and losses, it sounds like. There are those funny kind of losses. Yeah, yeah. With the snow boots on the table, right?

It's good to talk with people like you who can really see the breadth of it, who are making some steps to adopt it. And with NAR, I know you mentioned the pilot with the counties, but I know there's another that you're doing about transacting real estate. And I heard you do a talk on this to kind of have each perspective view or respective view in the actual transaction. So I wanted you to talk a little bit about that particular pilot. This is another open source application that I was able to build just because of all of the awesome open source applications that came before me.

This project that we're talking about now, it's code name right now. It's just a property ledger. I guess it's not that creative. What it allows for is multiple views into a single real estate transaction. So say you are a consumer and you had a broker, you were looking to buy a new construction.

Or say you are a home builder in Florida who's building out a thousand homes in a neighborhood and you needed a portal for people to be able to send orders to. Or even if you were just a recorder's office who needed to keep track of all these real estate transactions that are going on and making sure that parcel IDs are being generated making sure that the parcels are being assigned to the appropriate people, that the right assessments are being made for those properties. So the application I've built right now, it handles those three scenarios.

But since it's underlying technology is a blockchain, it would be very easy to add on additional parties like lenders or insurers. Quick side note, some of these speaking opportunities that I've been doing have actually helped me form a lot of pretty interesting relationships. So while we're under an NDA, there is a really large lender that is also looking at how they can adopt blockchain tech, not only just for keeping track of transactions like a ledger, but also perhaps opening up some of their payment platforms to accept cryptocurrency.

Back to property ledger. I actually built it initially as an educational tool because you said I've been traveling the country speaking to realtors about blockchain. And if it isn't apparent already, it's something I'm really passionate about. I got a background in technology, so I would often travel. I was in Topeka last year and I was as a computer scientist, I'm talking about mining and cryptography and hashing and all these computer science reasons why blockchain was cool.

But I realized I wasn't doing a good job for the audience explaining it for reasons and ways that they would understand and appreciate. I built the property ledger tool really as just educational. So you could see how a property could be different from today if we were using blockchains to transfer property. But even though it was built for education, I built it using the tools that you would use if you were bringing this to pilot or to production. And this tool is actually what led to us winning that pilot that we'll be announcing soon.

You know what? And I think the educational side of it is really important when you have practical applications to talk about. I know that since we talk about on the Constructor podcast, primarily construction, we talk about how to make construction more efficient so that whoever the owner operator of the space is, whatever they're hoping to achieve as a result of their built environment, I'm always trying to figure out ways to make that more efficient. And when I saw this particular demonstration that you did in that presentation, I said, oh, this 100% makes sense.

I love this application. So to your point, this is a great way to explain how it could potentially work. And it really I liked how you incorporated the builders view as well. Could you talk a little bit more about that? Yeah.

So during your intro, I recall you saying that like industries that I think will be impacted greatly by blockchain was finance, real estate, but also supply chain. And when I was building that property ledger application and making sure to include the builders in it, not to get too meta here, but you could actually have blockchains within blockchains. While I have our real estate transaction here on this blockchain that's keeping track of title and ownership and parcel IDs and things like that, the actual home builder part of it could itself be another great use case for blockchain.

Earlier before I said when I bought my used car, my used Camry, I knew every owner it had and every time it had been maintenance. If there was any insurance claims, I think that I want to buy a new house in the next five years, especially if it's new construction. I should really know where every nail in that house came from. Not only the model numbers of the appliances, but I want to know where the gypsum board came from. I want to know where the bamboo came from.

This is information that exists today that just isn't being recorded. And builders have, especially if you think about real estate construction, they have a lot of things that they need to keep track and need to keep verified. Again, just another great use for how blockchain could be used. And think about what that would mean for resale value. When I bought my condo in Boston 10 years ago, I knew very little about it besides what I was able to gather from a couple of public records and the time and conversations that I spent with realtors.

But if you're able to sell your home and on a one sheet, you're able to tell everyone about every single item in that home, how long it's under warranty, who's the vendor, what's the serial number, have there been any recalls. You have better property data, therefore you have more informed consumers. I would imagine that you would have property selling from our dollars. Again, it's just another reason why the NAR is involved here because when you think of real estate, that's really our inventory of our members.

The housing stock is our inventory. So the better care that we can keep of it and the better records we can keep of it, the better it should be for all. Yeah, absolutely. And it's interesting because especially if they're like appliances, I mean, if you're thinking about commercial, which is what I'm primarily involved with, you're getting to a lot more mechanical components that you need to keep track of. Not that your water heater and your furnace are important.

I think they're hugely important. It'd be really great to have more documentation of like, how is this manufactured? And is there a particular part that could be under warranty for a lifetime? And maybe the entire unit is under maybe five years of warranty. That's something that would be hugely valuable to know.

Even kitchen appliances, things like that. And this is where the IoT or Internet of Things really comes in, right? If you start combining distributed ledgers with Internet of Things and smart machines, you can start getting ahead of maintenance. Restoring this information in one place, you could actually get an idea of the health of a property and how well it's functioning, getting ahead of maintenance. We were just talking earlier about all of the analytical opportunities.

When the smart home or where the Internet of Things meets the blockchain, you're going to have so many opportunities to improve efficiencies, maintenance, and value of the built world. Yeah, I'm all about that right now. For those of you who don't know it at this point in time, I'm part of the Construction Blockchain Consortium. I'm on the steering committee now. And these are the types of things that I think we're really investigating at this point.

And I'll talk more in the outro about this. That's sort of like, how can we integrate all these technologies? Yes, we have to do these pilot projects. We do have to get these use cases underway in order to validate it. But there is so much opportunity when a lot of these newer innovative technologies do get integrated for sure.

Completely agree. I wanted to talk a little bit with you about tokenization, especially since you are pretty well versed in blockchain. From the perspective of the fact that there's a lot of people who are considering cryptography and how it can be deployed in real estate transactions, there's benefits obviously outside of the cryptocurrency side of things and the financial aspects of things. And I wanted to talk about tokenization not used for cryptocurrency. So maybe from the asset perspective.

My question for you is, what would that look like in real estate for you? Before I dive into that, I wanted to be clear that I'm pro cryptocurrency or digital currency or whatever you want to mention it. I obviously invest in this stuff. My experience so far, I just feel that there are so many people that just automatically assume blockchain equals cryptocurrency. Not everyone always normally understands that you can do things like enforcement of contracts and the establishing of identities and all these other efficiencies that can be gained with blockchain, but that they don't necessarily involve cryptocurrency.

Actually, this is probably the first time I've ever gotten this question about tokenization without cryptocurrency, but it's something that I've personally run into. When I was talking about that story, like December 2015, when I was writing escrow smart contracts, back then I was tokenizing the properties when I was doing, for example, selling a property on Ethereum blockchain. When I was writing it in the programming language Solidity, but you do need a way to kind of bridge this digital world and the real world. It's going to be interesting when these properties or leases or whatever instruments they are, when they get tokenized, how they're going to map to the actual real world.

When it comes to enforcement of these contracts, how that is going to play out, because yes, there's a lot of people out there who are looking at smart contracts as a way to eliminate all middlemen and be able to transfer properties, hardly any friction at all. Some people will even go as far as saying code is law and things like that. It's like, well, the law is law. When these things don't work out, you're going to find yourselves in actual courts. It's almost kind of why I've taken this private permission blockchain, where we have to worry about less bad actors.

We don't necessarily have to involve cryptocurrency or funds in these transactions, almost like crawling before we're walking. I do feel that there are dozens of applications for tokenization in real estate, for example, fractional ownership of homes. In theory, I agree with all of these, but how they're actually going to get from the whiteboard to the sidewalk, I'm not sure exactly. It's going to take a lot of... People don't even trust the underlying networks yet.

Bitcoin has been around for 10 years with no downtime, but people still don't trust it fully. If we're going to get to this tokenization of real estate, whether it's commercial leases, commercial property or actual titles and deeds, again, there's just going to be so much education needed. This is not just the buyers and the sellers or the realtors or the real estate licensees. Attorneys are going to need to learn how to use this. Judges are going to need to learn what it means.

There's going to have to be education of legislators so that they know to propose regulation that doesn't stifle the innovation. We've been pounding all the educational opportunities, trying to do as many as we can. By the way, I appreciate you inviting me to come on here to talk about that, because if we want to get where we all think this should go, people need to just be more aware of it. The fact that you said we need to really get the involvement of every single different potential party that could be involved.

That goes back to your demonstration that you talked about. It's getting the broker, it's getting the builder, it's getting the financial institutions, the lenders all involved. My curiosity is, yes, building awareness, but how do you, from a governance perspective, right now at probably a number of blockchains with federated models, I'm curious to your perspective on what should the industry be looking at in order to go that direction? The way we've been approaching it is there's a couple of nonprofit bodies in real estate that could help with the governance aspect.

I was just in Phoenix talking to MLSs, again, those are those groups of people who handle all of the listings. These are competitors of each other. They want everyone to be members of their own MLS as opposed to neighboring MLS. But at the same time, they also need to work together. They need to define standards for how the data should look if they want to have any interoperability.

If you want to promote innovation in real estate, you want everyone who's coming into the industry to be working from the same playbook and not have to implement their solutions 700 different times just because they're 700 MLSs. There are groups that are currently formed help manage these data standards. One specifically is called the Real Estate Standards Organization or RISO. I don't want this to sound bad, but I kind of feel like that that is going to be kind of the Trojan horse for this blockchain tech because you already have groups of parties with real estate data who need to share information with each other.

Could probably be doing so more efficiently. Also, in a way that would be more permanent. They were to go down for a week or something because of some technology disaster. When they were to get their systems back online, they could perhaps not have lost a single thing because the information was distributed. They already have a business interest in making sure that the information is accurate and up to date and could only benefit more from more people working off their kind of their same page to the point where they might even be able to offer it for free to local towns or recorders offices or counties.

We're attacking this from multiple ways. Like I've been trying to educate that RISO group for a few years now and they are for sure definitely coming around on the possible use cases of this. We're also doing our internal pilots at NAR and we're also doing the pilots that we're about to announce with the local counties. I'm not sure which one is going to take off first or if at all, but kind of having the nonprofit, whether it's the National Association of Realtors or the nonprofit of being the real estate standards organization, because there's a chance that these collections of data that we're creating are going to become extremely valuable.

Data is the new oil. The most valuable thing that your company could have and that is shared among all of your competitors. It kind of changes the business model. It's more about what you do with the data as opposed to just controlling access to it. And additionally, could become a new revenue stream for that coalition.

If they were to sell access to this verified trusted data, it could be worth a lot of money. So you're going to need somebody. I know it goes against the whole decentralization idea, but at least when it comes to these enterprise level blockchains and in real estate, we're going to be relying heavily on the nonprofit boards that make up companies that are involved in the business network to make the type of decisions like governance, access control. I mean, somebody has to run this stuff, right? Unless it's a public blockchain, there's infrastructure involved and there's costs involved.

So if 2018 is the year to get serious about this stuff, there's going to have to be some involvement. What I'm guessing is nonprofit third parties. I do want to give you a little bit of an opportunity to talk about any of the pilots that we haven't mentioned already. I know that you have the one that's similar to a VIN number, which is the UPI registry, right? So that project was actually out of that reso group I was just talking about.

Four years ago, three or four years ago, they were trying to find a way to do essentially, the easiest way to explain it is just a VIN number for properties instead of cars. And again, this is a nonprofit group. There's committees. They only meet a few times a year. It might not be the most efficient process to make sure everyone is on the same board.

They've actually recently now decided how that will be formatted, this universal property ID. For the listeners who aren't aware, you might just think of these as county pin numbers and why the need for a universal one. Every county in the country does this differently. In some counties, they'll even reuse these unique identifiers when properties are bought and sold. So this UPI is a universal way, regardless of whether it's in the US or anywhere in the world, to uniquely identify a property.

They've just decided on how that format should look. You can find out more information about that at reso.org, R-E-S-O dot O-R-G, and call back to earlier. They control how data should look inside an MLS. Is it for two and a half bathrooms? Is it two plus or is it 2.5?

They decide how the information should look through a data dictionary. So this unique ID is now actually a part of that data dictionary. And I'm guessing in the future at some point that that will become mandatory in the data dictionary. So this problem that we've had for years now will actually turn into an opportunity for the first company who wants to kind of create that car fax for homes. They'll now have the universal identifier for it.

Perhaps maybe they even do it on a blockchain. So you have the unique property identifier. Then you have the engagement tracker, which is what you guys are doing internally at the NAR to identify each person, right? Okay, so we got that one. And then what you're doing for the governance and access.

The property ledger, which is the home builder one that we were talking about. We're actually kind of going the traditional route with that. We are forming actual committees within our organization and assigning membership based on interests. That one is actually kind of the low tech route. I mean, right now it's still very early and it's exciting that we get to kind of control where the future of this technology goes.

But at some point it's not going to be a technology issue anymore. And it's going to actually be making sure that we can all agree upon the right way to do this and under the right governance and architecture. We're kind of pushing on both at the same time. So when it comes time to kind of go live with this, that everyone is on the same page, because people are very, very careful to enact changes in policy and real estate because they can have massive implication. So even when it comes to very simple changes on how MLSs should work together, the amount of scrutiny that goes into those changes is really high.

We kind of have to start both the pilots and the governance at the same time. It's going to take probably five to 10 years before this stuff is really mainstream. Yeah, absolutely. And I think that's part of the reason why we're talking a lot about potentiality for use in blockchain as well here, because I know that there's going to need to be a lot of education. There's going to need to be building of awareness.

There's going to need to be the review of, like you said, the governance model in construction as well. And I think looking at how it ties to real estate is really going to be the driver at the end of the day, because it's a longevity perspective. When you're looking at it from the real estate perspective, you're looking at long term, what is the value of this property? How can I make sure that it has proper resale value? It goes back to that tokenization question I asked you about assets.

How do you have that long term? And however the builder affects it, if you can track as much information as you possibly can about that entire transaction with multiple parties, that would be much more useful. Well, the last question I want to ask you is, what are the best ways for people to contact you and or learn about what you are doing and what the NER is doing? It's probably easiest to get in touch with me on LinkedIn or Twitter. Very active on both of those platforms.

You can just look me up. It's at Conroy Dave, his last name and then first name. Also, a lot of the work that we're doing at the National Association of Realtors is available on our research blog, and that's crtlabs.org. On that website, you'll actually find links to play around with some of the pilot and demo applications that we've been speaking about here. So again, that's crtlabs.org.

Or you can follow me on Twitter or LinkedIn, just at Conroy Dave. Thank you so much, Dave. This has really been a fun conversation. Thanks for joining us here today. I appreciate the opportunity, Brittany.

Thanks for listening to this interview with Dave Conroy. Find out more about Dave and what the NER is up to at constructor.com slash EP 68. If you've learned something valuable in this episode, share it with your friends and colleagues. You can also let me know if you've enjoyed our discussion by connecting with me on Twitter at Brittany underscore CT, or you can find me on LinkedIn, or you can just email me to at Brittany at constructor.com. That's BRITTANIE at constructRR.com.

Next week, we will be speaking with Kevin Schatoffman. He is a digital technology evangelist at Deloitte Consulting. He promotes blockchain, robotics, cognitive automation, and machine learning in real estate. In this episode, Kevin will be talking about how in real estate transactions, where we transfer funds from party to party, it could take days or weeks, where it could take minutes on a blockchain. He also discusses the many pilot projects that Deloitte is involved with, including leases on smart contracts and data hub document sharing.

He covers the four issues in corporate real estate that are making blockchain more relevant today. So, I look forward to sharing this interview with you guys next week. If you haven't already subscribed to the podcast, you can do so at your preferred podcast player. Please leave a review to show your support and let me know you're enjoying the podcast. I look forward to talking with you guys for the next couple of weeks about blockchain.