PROPCHAIN Team 6 Nandita Beri Kevin Gannon Diya

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) R= CAG 5, 690, 000 4. 8% year; market expected to grow at 4%. 5, 450, 000 5, 250, 000 1. 1 million home buyers 4, 940, 000 2014 5. 5 million houses sold last wish they had better inspection, prior to purchase. 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 Repair after moving in can be costly and inconvenient.

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

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

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

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

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

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

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

Monetization Strategy General Contractors / Builders Real Estate Agents Inspectors / Appraisers Subscription 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 $30 M annually. • Average small contractor earns $1. 2 M. • There are 650, 000 registered contactors in US. • GOAL: Capture 1% of the market and charge 0. 1% subscription fee Real Estate Agents Total revenue expected in Y 2 of operation ~ 12 M, expected to grow at CAGR of 4% ~ $7. 8 M 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 2 M active real estate licenses in the US. • GOAL: Capture 5% of the market and charge 0. 1% commission fee per property Revenue Projections $3. 6 M 5 13. 50 Inspectors / Appraisers Years 4 Fee per property *Association of Real Estate License Law Officials 3 12. 48 2 • Average home inspector/appraiser earns $70, 000 annually. • There are 96, 000 inspectors and appraisers in US. • 5 M homes were inspected in 2015. • GOAL: Capture 5% of the market and charge them 0. 1% fee 12. 98 12. 00 1 0 $340 k 5 10 Revenue (in $M) 15

Risk Analysis RISKS • Success of platform contingent upon reaching a critical mass of users • Limit to details that can be provided (cannot solely reply upon) STEPS TO MITIGATE • Offer services free to buyers • Free access to government/policy makers information within a home on Prop. Chain, allowing traditional inspectors to fill in gaps • 80/20 rule: adequate to capture 80% of the • 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 Government / Policy Makers • Ability to transfer title - Simplifies a cumbersome legal process, saving significant time and money • More accurately reflects value of property additions (for tax monitoring purposes)