Don't want to pay property dealer? This startup has a solution
Tech-driven property listing platform NoBroker sounds the death knell for property brokers
If you use Google Maps to locate Bengaluru-based NoBroker Technologies, you are unlikely to find its office. It is not Google's fault. NoBroker deliberately misleads those trying to reach its headquarters. That is because in September 2015, its office was attacked by angry brokers who were losing their commissions paid by landlords and tenants. In the melee, an employee was injured and the office was ransacked.
Akhil Gupta, co-founder and Chief Executive, remembers the dark day. "What happened was atrocious, but it vindicated the work we are doing. Brokers felt threatened enough to attack us, showing that our work was having an impact and we had arrived." NoBroker has moved to a different location since that incident.
The company was set up by three friends from IIT-Bombay - Akhil Gupta, Amit Kumar Agarwal and Saurabh Garg. The concept was there as all three had a uniformly bad experience when they were trying to rent homes and found that the brokers were not punctual, asked for high fees and even misled them regarding property details. Due to spurious online listings and information asymmetry, brokers remain the single biggest beneficiary in all deals struck between tenants/buyers and property owners.
The trio decided to come up with a technology platform that would make "the entire exercise of renting/buying/selling properties a happy, convenient and cost-effective experience," says Agarwal.
Market Size, Revenue Model
NoBroker cites an assessment by the National Housing Board and a study by the Indian government to claim residential rental brokerage in the top 20 cities is estimated to be `36,300 crore. "Even if we get a small portion of that business, it will be a win-win for everybody," says Garg.
One such beneficiary is Chirag Patel. When he moved from Ahmedabad to Chennai, Patel was looking for a three-bedroom house for his family of six. A few brokers came up with a few properties but said they would charge 1-2 months of rent. Patel went online and registered with NoBroker. "I got the details of nine properties, which matched my metrics, and I was able to finalise on the third. I paid zilch for that."
For property owners too, NoBroker does a good job. For instance, Chennai-based Purshothaman owns a flat in Goregaon West, Mumbai. Every time a tenant leaves, he has to go there as the regulations in Maharashtra require every rental agreement to be registered. It means both tenant and owner have to be present and their biometric data will be verified.
But with the rental agreement and Aadhar identifications in place, NoBroker will now go to the owner's house and the tenant's place to obtain their biometric signatures via a simple authentication device. Post that, it will home-deliver a registered rental agreement within three working days.
Revenue comes from these value-added services and also from service packages. If one is not happy with the first nine free properties featured on the platform, he/she can pay `999 for viewing 25 more properties or go for a package worth `1,999 to appoint a relationship manager. This manager will not only find a suitable house based on one's requirements but will also negotiate the details of the deal on the tenant's behalf. For a sum of `5,999, the company guarantees to find a house within 45 days; otherwise, the money will be refunded.
"Nearly 95 per cent of our customers need not buy any package. We help them save about `25 crore in brokerage every month due to our extensive presence in Mumbai, Bengaluru, Chennai, Pune and Gurugram," says Agarwal.
Asked how it is different from other property listing portals such as MagicBricks, 99acres, Housing.com, PropTiger and CommonFloor (now owned by Quikr), Garg says the company's value proposition is different. "All our listings are verified; we do not have brokers on our platform, and there are no fake listings. We make the entire exercise hassle-free and that sets us apart."
NoBroker currently employs around 270 people and has raised $20 million to date from the likes of SAIF partners, Fulcrum Ventures, BEENOS, Qualgro and Asuka Asset Management. Several angel investors, including Vijay Shekhar Sharma of Paytm and Anand Chandrasekaran, a Facebook director, have contributed as well. The company says it has 2.3 million registered users and its app has reached a million downloads on Google Play Store.
AI, ML and Future Plans
The company identifies, sorts and showcases suitable properties, and also offers premium listings for a fee. But the key challenge it faced in the initial days was how to weed out brokers from the platform. By leveraging Google's artificial intelligence (AI) and machine learning (ML) platforms, the start-up claims to have developed a secret sauce, which is used at the back end to identify potential brokers. "We cannot reveal how it is done, but typically, a broker will browse all the categories, which is not the case with regular users with specific requirements," explains Agarwal.
Commenting on its growth prospects, Mayank Khanduja, Principal at SAIF Partners, says, "Intermediaries in real estate have worked on information asymmetry and charged hefty fees for exchanging information. NoBroker has disrupted this approach with the help of technology."
Another investor Teruhide Sato, founder of BEENOS (an Internet and e-commerce business incubator group) and venture capital firm BEENEXT, got attracted because of its scalable and capital-efficient model. "The current growth in revenue indicates customers are happy to pay for a service, which adds value," he says. Sato thinks the concept should also work in other countries of South East Asia.
Gupta claims the company will be profitable in the next 12-18 months. It will also expand to more cities before going overseas. "The growth opportunity is very large, and we know which market to enter. Whenever traditional players start ganging up on us, that market is ripe. We will get into residential resale and commercial rental as well. We believe we have barely started."