These engineers were harassed by real estate brokers. So they started NoBroker.

Finding accommodation can be tough in India. Most often than not, you have to deal with a property broker and pay hefty commissions. Sometimes, even after paying heavy brokerages, you end up in a pigeon-hole. Most people would just complain to friends and accept the fact that they were cheated by a broker. But not Amit Agarwal and Akhil Gupta. Instead, they spotted an opportunity and founded NoBroker – a brokerage-free marketplace which connects house owners and tenants.

Both Agarwal and Gupta had bad experiences with brokers while hunting for houses in Mumbai and Bangalore. They had to do their rounds of cramped flats before finding something suitable. They also had to shell out a high brokerage fee – equal to two months’ rent.

Agarwal, who had rented a flat in Mumbai, got a double whammy when he wanted to renew the lease of the property after 11 months. Although the owner and Agarwal wanted to do it by themselves, the broker interfered, threatened both parties, and forced a commission equal to two months’ rent simply because he had initiated the deal.

These experiences inspired both Gupta and Agarwal to address this problem and start NoBroker.

Saving the pound of flesh

NoBroker offers a platform for home-seekers and home-owners to connect without having to deal with brokers. The company makes sure that properties on the site are genuine by verifying each listing for its content, photo, location, and broker-free ownership. “Our algorithm is designed to keep the broker out of the system. When a new customer registers on our site, the algorithm works in the background and validates the user in around two minutes,” says Agarwal.

It even offers assistance with the rental agreement registration. Owners or tenants can create the agreement by filling up the required information online. A team from NoBroker would visit the owner and tenant and get the registration done; all the required formalities are handled by the company. The hard-copy of the registered agreement is delivered to both the parties within three days.

The company focuses on brokerage-free rentals and targets every person in the country who either lives in a rented home or has a home to rent-out. According to Agarwal, the residential rental brokerage amount globally is US$200 billion per annum. In India, annually, around US$4 billion is paid as brokerage across the top 20 cities. He believes there is a huge information asymmetry in the rental space and his startup aims to bring order in this unorganized sector.

Talking about the company’s revenue model, Agarwal states, “currently, its services are free. Once we start monetizing, we will be charging a service fee from registered customers. Since it is a marketplace and not a low-cost brokerage model, we would never charge our customers on deal closures.”

Last month, NoBroker launched its mobile app with features for both tenants and home-owners. Tenants can search properties by location. For owners, the process of creating a property listing was made simple.

With this app, the company also introduced a new feature of crowdsourcing the property listing. With its feature “click n earn,” anyone who comes across a “to-let” board outside a house can click and upload the picture of the board along with the genuine owner details to earn rewards from the company.

In India, “to-let” boards are used by homeowners seeking tenants without the help of a broker. They hang the board outside their homes to spread the word and seekers can directly approach them. Usually seekers, who want to avoid brokers, have to roam around the locality for hours to spot such boards. The new “click n earn” feature of NoBroker addresses this pain- point.

NoBroker was angel-funded by Saurabh Garg, co-founder of Four Fountains De-stress Spa. He is one of NoBroker’s mentors. Earlier this year, the startup raised series A funding of US$3 million from SAIF Partners and Fulcrum Ventures. The initial investment was spent on setting up operations.

After strengthening its position in Mumbai and Bangalore, it recently expanded its operation to Pune and Chennai. “We will have operations in 20 cities by the end of December this year,” says Agarwal.

Battling legal notices

A crowded space