- The overall brokerage paid in the top 25 cities of the country are close to a whopping Rs 30,000 crore.
- “The fact that the real estate community is dominated by brokers and our personal experience with brokers’ pressures, biases, and threats were what helped us conceptualise NoBroker,” said Agarwal.
The real estate sector is vastly unorganised and surrounded by issues of scattered information of property inventory, lack of transparency and inadequate legal framework that spells out the rights of landlords and tenants. However, off late this sector has seen increased use of technology in the way property is bought or rented and introduction of RERA, leading to more open and honest transactions. But one issue which every buyer or seller has failed to dodge is brokerage.
Brokers continue to charge exorbitant sums from both parties, just for introducing them, which does not justify the services provided. Not for long though. The broker stronghold is finally experiencing disruption. A Bangalore-based brokerage-free real estate platform, NoBroker, is defining its presence by making the services of property dealers redundant.
In an exclusive chat with The Blue Circle, Amit Kumar Agarwal, Founder, and CEO, NoBroker.in shared the idea behind launching NoBroker, the challenges during the journey, and how it is mitigating the COVID storm.
Setting up NoBroker
“The fact that the real estate community is dominated by brokers, and our personal experience with brokers’ pressures, biases, and threats was what helped us conceptualise NoBroker,” said Agarwal.
Multiple attacks by broker community on their offices, uncountable legal notices, and innumerable threats, nothing could break Agarwal and his team’s vision and goal. The threats were a sign of a potential business in that area and NoBroker didn’t think twice before entering the region.
Agarwal believes that once the property-owner and seeker are acquainted, there is very little left for the brokers to do. Yet, they were not substitutable. They would ask absurd sums to provide access to their contacts. The overall brokerage paid in the top 25 cities of the country is close to a whopping Rs 30,000 crore.
A few who tried to solve this problem by making property inventory discoverable online ended up becoming a channel for brokers to spread their network rather than solving problems of the consumers.
“We aimed to create a portal that would eliminate brokers completely from the entire property journey process,” shared Agarwal. Since the concept was nascent in India and globally as well, the biggest challenge he faced was to convince investors that the solution was made for India to solve a problem unique to India. However, once the platform got traction, the consumers saw value propositions, it became easier.
The Revenue Model
NoBroker claims it’s revenue model to be a freemium one – where no brokerage is charged. Homeowners can list their properties for free in exchange for 25 tenants’ contacts. Of which, they can access nine owner contacts for free. If parties fall short of finalising a deal, they could buy one of the plans to help them with more contacts and assisted search. To ensure no broker is able to list property, the platform uses an algorithm that identifies and removes the infiltrators.
NoBroker also provides home services such as packers & movers, painting, cleaning, and interiors. The firm has four product lines – NoBroker, Home services, NoBrokerHood, and NoBroker Pay. While NoBrokerHood is a community and payment management app to make living in society a hassle-free experience, NoBroker Pay ensures smooth rental payment for tenants via credit cards, debit cards, and UPI wallets.
Two-third of its revenue comes from the rental and sale transaction services, while one-third is generated from home services. Under home services, the contribution of packers & movers and painting-cleaning is almost equal.
In the past year, the start-up has raised $131 million. In terms of profitability, it has already broken even in Mumbai and Bangalore, growing revenue three times every year.
The COVID Impact
No industry or sector has been immune to the catastrophe of the pandemic. However, NoBroker has managed to raise funds even during these trying times.
“We saw this as an opportunity to efficiently use video walkthroughs to help our customers finalise a deal from the comfort of their homes,” said Agarwal.
During the lockdown, NoBrokerHood partnered with ITC and BigBasket to facilitate home delivery of daily essentials and groceries for residents of societies . In order to make rent and maintenance payments more rewarding to its customers, the firm partnered with HDFC and SBI and offered cashbacks.
The company also announced hiring more than 300 people. Agarwal attributes this to expanding into multiple areas during the lockdown. For instance, NoBrokerHood which was on boarded by less than 1000 societies before March 2020, is now being used by 4500 societies. The demand for their in house cleaning services has escalated since sanitisation is the top priority right now. The company is also working with builders as consolidation in the industry is a way forward.
“We are closing transactions at a good rate despite the lockdown and business is going well for us. Being frugal, agile, and equipped with technology has helped us in these trying times,” noted Agarwal.
Making Life easy for NRIs and Owners with Property in Other Cities
Coming down every time to India to rent out their property was not always feasible for NRIs and the current pandemic made it certain that they couldn’t. To address this issue, NoBroker launched a property management service to cater to NRIs and owners who have a property in a city other than the one they are residing in. The company also looks after the damages and carries half-yearly inspections.
“We charge 8% of the amount of rent from the owner and ensure an uninterrupted rental payment to the owner even during the months that the house is vacant so the owners can just relax,” mentioned Agarwal. “We have taken a risk here but the feedback for this service has been phenomenal,” he added.
NoBroker is already servicing over 1000 apartments across Mumbai, Bangalore, Chennai, Pune, Hyderabad, and Delhi-NCR. Nearly 40% of the customers using this service are NRIs living in the US and the Middle East and the rest are those who have houses in other cities.
Reducing Dependency on Brokers
Agarwal has observed that the problem is not the high price of properties but the manipulation by the brokers to push their own agenda. They have a tendency to influence home buyers to purchase a property that offers higher commission to them. While the current situation has necessitated the need for technology in the home-buying process, the lines of transparency could be blurred.
The challenge is also in changing the traditional mindset of being dependent on brokers, mostly family brokers, for decades. Albeit, the change is happening gradually and new-age consumers are more open to finalising a deal without a broker and in opting for a more autonomous home-search journey.
“Our latest survey on consumer sentiment shows that over 70% of people prefer to buy a house without brokerage,” shared Agarwal.
On NoBroker facing competition from established builders moving online during lockdown, Agarwal said that there cannot be competition unless what is being offered is 100% in consumers’ interest. Infact NoBroker already has a builder channel where it helps builders get curated and genuine leads.
The company recently faced data-theft allegations from the rival, MyGate which turned into a nasty affair after both the firms registered FIRs against each other. Speaking on the same, Agarwal said that ethics have always been at the core of their business and all employees are inducted with best professional practices.
“We work within a legal framework and strongly deny MyGate’s unsubstantiated claims. While MyGate has been rapidly losing market share, NoBrokerHood has experienced 8x growth in recent times, validating our model and ethical practices,” he concluded.
(Edited by Anu Choudary)
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