[Tech30] How Bigdeals is mitigating risks for property buyers and sellers
Gurgaon-based real estate tech startup, a Tech30 company, offers a secure mediator account through Escrowffer, India’s only online escrow account for small value transactions in real estate.
Buying property is the biggest purchase a person makes during his or her lifetime. But it isn’t easy for the majority of us.
The real estate industry in India has, so far, been a very unorganised and unregulated sector. One of the major problems is the trust deficit between the various parties involved.
Typically, in a resale transaction, the buyer pays about 10 percent of the property value as an advance to the seller at the time of agreement. In case the deal falls through for any reason, the buyer finds it extremely difficult to get his money back. Similarly, with a default on the buyer’s side the seller often faces the risk of his property getting litigated.
The disputes can linger for years. In fact, close to 60 percent of court cases in India are related to property matters, and often take decades to resolve.
Bringing about a change with an organised product commonly used worldwide is not easy, but Bigdeals hopes to solve this tough one.
Launched in February 2014, Bigdeals is an end-to-end platform for buying real estate online. The site, India’s first cashback platform for real estate and property loans, offers a start-to-finish process that is simple, efficient and transparent.
Bigdeals is now – through its Escrowffer service - using escrow, a contractual agreement used worldwide but missing in India, to safeguard interests of both buyer and seller during resale of any property or secondary market transactions.
Powered by ICICI Bank, Escrowffer acts like an insurance and protects the buyer’s advance at a nominal cost.
Bigdeals claims that Escrowffer is a disruptor in the sense that it brings about “a paradigm shift in an established process and system of transacting in property”.
Ashwin Chawwla, the CEO and Co-founder of Bigdeals, says: “Escrowffer secures the buyer’s advance and the seller’s title till the duration of the transaction. Additionally, we also offer pre-approved documentation, which reduces deal completion time and makes property buying easy and stress free.”
The platform also provides mortgage financing for property buyers who often need the service as an add-on.
Making property dealings more transparent
“The biggest challenge has been to get people within the industry to accept this change. The only way to overcome this is through regular communication and education. There is bound to be huge word-of mouth-publicity and popularity once buyers and sellers start using Escrowffer,” Ashwin says.
How does it work? Both buyer and seller need to create an escrow account with ICICI Bank through the website or app. Once registered, the property buyer deposits an advance, generally 10 percent of the property value. The seller has no access to these funds until the sale deed is done. This ensures safety of the capital deposit as well as the property title.
Till now, escrow services were used only for large transactions. Big banks offer escrow accounts only for large transactions. Some banks make it an only offline process, making it difficult to scale up and expand business.
However, Bigdeals’ Escrowffer – an online service - can deal with transactions of any value. The company has tied up with ICICI Bank, planning to reach out to its 6 million account holders.
“We have identified the top 10 cities in India, with over 350 sub-registrar offices (where property documents are registered). We plan to target 1,200 Escrowffer transactions in our first year of operation,” says Manoj Manohar, the COO and Co-founder of Bigdeals.in.
The back story
Ashwin and Manoj established Bigdeals in 2015. Ashwin has nearly 14 years of experience in residential sales and specialised land transactions across all major cities in India. With three decades of experience in the real estate segment, the duo, friends for over 10 years, joined hands to launch Bigdeals.
“An escrow account was used when we were doing our largest transaction by far - a Mumbai land deal of over Rs 2,700 crore for DLF & Lodha Group. After the transaction, I went to the drawing board wondering if such a product could be used for retail transactions (deals lower than Rs 5 crore value), which comprise about 70 percent of the total deals in India. This was the Eureka moment for our business.” Ashwin recalls.
Ashwin says he nurtured the Escrowffer the idea for “quite some time” till he managed to convince Manoj to join as Co-founder.
Manoj has experience of over 17 years in real estate, mainly in the commercial segment. Before Bigdeals, he was associated with DLF, India’s largest real estate developer.
Ashwin later roped in G Kalyan, who has over 12 years of experience, to head technology for the venture.
What’s up next?
Bootstrapped for the first 12 months of its inception, the startup has raised Rs 42.5 lakh from five “C” suite investors and some big names from the real estate industry.
Backed by a small team of five members, the brand is also in active discussions to forge multiple alliances to market Escrowffer pan India. It plans to reach out to over 1 million property brokers, empowering them as Escrowffer fulfilment centres.
The brand’s revenue comes only from the buyer, who pays 0.25 percent of the property value as the Escrowffer transaction fee. The company claims to have generated revenue of Rs 62 lakh last year.
“Our revenue has gone up 10 times since last year. We expect to grow our business to new heights this year. We have been a profitable business since inception in 2015,” Ashwin says.
Going ahead, the brand aims to make Escrowffer the de facto mode for all resale transactions. For Ashwin believes that Escrowffer is not a “good-to-have product” but a “must-have product” for the Indian market.