How this start-up is changing the real estate game, one home at a time

NoBroker, which began with an idea as simple as its name, is now working to bring down hefty deposits demanded by landlords, apart from offering a host of other conveniences

Why pay someone for just pointing you in the right direction? NoBroker, the start-up that began with an idea as simple as its name, is now moving to a whole set of new domains.

From providing packers, movers and other logistics services, selling properties for individual owners and developers to even stepping into the commercial real estate space, the five-year-old firm is coming up with various plans to generate revenue. But in all this it, is staying true to its DNA of getting rid of the whole brokerage system in real estate in this country. The start-up is trying to solve the next big problem that many tenants face, which is paying fat security deposits.

Present in five cities at the moment, including Mumbai, Bengaluru, Pune, Chennai and Gurgaon, the company would be increasing its presence in these cities as well as adding a few more to the list such as New Delhi, Kolkata and Hyderabad. The company is doing 15,000 transactions every month for rent as well as sale. It has over 125,000 properties listed on its platform.

“In rentals, Indians pay over Rs 50,000 crore in brokerage, for selling properties they pay around Rs 30,000 crore in brokerage and commission. Huge money is going in this intermediation. In no other sector there is so much of brokerage involved. For an 11-month contract, one month's brokerage is charged, which is mind-boggling,” said Saurabh Garg, founder and CBO, NoBroker. 

No security deposit please

Having able to solve one problem for its customers, the company is now trying to figure out the next big hurdle many tenants face -- fat security deposits which sometimes can be as much as 10 months' rent in advance. The problem is more severe in southern India, in cities such as Bengaluru and Chennai.

“This is something which we have been thinking about for quite a long time now. We are working on multiple options to solve this. Globally also, there are similar problems that people face as far as security deposits are concerned. This is our next big problem, to which hopefully we will find a solution soon,” said Garg.

A stop-shop approach

According to Garg, it was the feedback from customers that led them to start other services in the rental space. “People loved the concept of no brokerage, but they wanted more than just cutting the middleman out. So we started with helping them with the rent agreement. Then they wanted reliable movers and packers. So we got into partnerships with various logistics firms. That is how we have been adding services,” he said. The platform has even tied up with interior designers so that home owners can use their services before they move in.

The company is now seeing massive growth in the resale as well as first time sale of real estate market. It has also got onboard NBFCs for loans and mortgages. NoBroker is currently selling close to a thousand units including secondary and primary sale.

The company is now working with developers to help them sell houses. This, according to Garg, could be the next big business for the firm. This business, which started just six months back, is at the moment working with as many as 50 top developers. The company is facilitating almost 1,000 site visits every month.   

“We charge the builder only for site visits. So these developers have realised that this is a much more cost effective way of selling. Our estimate is that for every five to six site visits they would be able to convert one,” said Garg.

The company is aiming at doing 10,000 site visits in a month going forward and aiming at Rs 100 crore in transactions.

Next stop: commercial property sale

The company is now getting into the commercial rent and sale space. “In commercial property, the advantage is that the yield is much better, at almost 10 per cent. Investors understand it and many are using our platform to first buy the property and then renting it out. A lot of NRI investors are doing this,” said Garg. The company believes that by December this year it would be transacting for at least 4,000 commercial properties per month.