[The Turning Point] Why pay brokerage? The idea that led to real estate startup NoBroker
Saurabh Garg, Cofounder and Chief Business Officer (CBO) of NoBroker, knew Co-founders Amit Agarwal and Akhil Gupta for almost 20 years.
The idea of NoBroker was conceptualised after the trio faced a string of bad experiences in dealing with property brokers. They felt it was absurd for brokers to be charging such huge amounts of money just for connecting two parties. In cities like Mumbai, a broker charges brokerage even if the tenant is renewing his or her agreement with the same landlord.
“The problem statement was the information asymmetry in the industry. Once that is streamlined, there is very little value that a broker adds. Added to that were the pressures of selecting the house, based on the brokers’ biases,” Saurabh says.
Saurabh says the common pain point for all three co-founders was the frustration of paying brokerage for a service that was not commensurate to the cost they were paying. Apart from the information asymmetry, brokers often create artificial scarcity to push parties to close the transaction.
These imbalances made brokers the single biggest beneficiary in all deals struck between tenants/buyers and property owners. “Majority of listing platforms were flooded with brokers. Even if an owner lists a property, he is bombarded by brokers' calls.”
Amit is Saurabh's batch mate from IIM-Ahmedabad; they were in the same dorm. Akhil is his junior from IIT-Bombay and was also the same hostel. When the three met and discussed the idea for NoBroker, Akhil single-handedly coded the first prototype for the website.
The trio decided to build a platform that would be C2C and free of brokers. The intention was to build a solution that would be faster, cost effective, and simpler, and where only the interacting parties would be the beneficiaries.
Saurabh says, “We focused on building a solution that would address house-hunting hassles and give home-owners and home-seekers greater autonomy in the process, free from any biases. The one factor that makes us stand out is the complete absence of any kind of brokerage.”
Founded in 2014, NoBroker is an integrated platform where users can find solutions for real estate transactions across rental, sale or resale, post-transaction services like loans, packers and movers, cleaning and painting, legal documentation, online rent payment, and interiors.
The Bengaluru-based startup this month raised $30 million as part of its Series D funding round, led by Singapore-based private equity firm General Atlantic. General Atlantic had invested $51 million in NoBroker’s Series C round in June 2019. Four months later, it participated in another Series D funding round of $50 million, led by Tiger Global.
NoBroker now claims to be an end-to-end solution provider of all home search and settling needs. “We started listing commercial properties in 2019 and are getting stronger in the buy/sell category too.”
(Edited by Teja Lele Desai)