Daybreak - Nobroker is no longer no broker

Episode Date: July 2, 2024

Demand for high-end living is on the rise and Nobroker's subscription plan just doesn't cut it anymore. So it introduced a new postpaid plan to entice wealthy property owners. Funnily enough, the way it works is pretty much how traditional brokers earn their brokerage. This goes against the basic premise with which Nobroker was started almost a decade ago. So why has Nobroker switched up its strategy? And why is it going down the road it was so fundamentally against? Tune in to find out. 

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the same. secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they managed to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into.

to the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get an alert, as soon as we release our first episode, please follow Intermission on Spotify and Apple Podcast. or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode.

About a decade ago, no broker set out with a pretty straightforward agenda. They wanted to connect property owners with prospective renters directly, meaning they wanted to remove the middleman, in this case, the notorious real estate broker, from the equation entirely. Now, this was a revolutionary concept at the time, because if you've ever tried buying, selling or renting property, you would know that real estate brokers, well, they just aren't the most popular people. This mainly has to do with brokerage.

You know, the fee they charge once a deal is through. Generally, for a rental, you're looking at paying an additional month's rent in brokerage fees, which a lot of people aren't too happy about usually. So no broker came in and said it would hook you up with a home without a broker. And if the name of this unicorn status startup is anything to go by, this was a premise they took pretty seriously. Cut two now. Ironically enough, no broker seems to be going down the conventional broker route.

It recently, very discreetly, rolled out a new post-paid plan for homeowners looking to rent their houses. And funnily enough, the way it works is pretty much how traditional brokers earn their brokerage. Basically, homeowners pay a fee to no broker only after locking down a renter which of course the platform guarantees to find it sounds a lot like, well, a broker. But of course this postpaid plan is significantly cheaper, about 50 to 80% cheaper to be exact.

Now the catch here is that not everyone has access to the postpaid plan. So far, no broker has been offering it only to handpick clients, all of whom own premium properties in cities like Bangalore and Chennai. And of course, this is no coincidence. No broker seems to be deliberately limiting the plan to high value clients. So why has no broker switched up its strategy so much? And why is it going down the road it was so fundamentally against?

Welcome to Daybreak, a business podcast from the Ken. I'm your host Rahel Philippos. I'll be joining Sidda every week to bring you one business story that is worth understanding and worth your time. Today is Tuesday, the 2nd of July. One thing no broker has really struggled with is breaking into the high-end property market. And there are many reasons for that. First and foremost is that this is a space dominated by well-connected local brokers. Or well, real estate consultants, like a lot of them prefer to be called.

But things do seem to be changed. The Ken reporter Gordov Bagur spoke to Prashan Thakur, head of research and advisory for Anurok property consultants. He said exactly that. He said that in the last three to four years, property tech or prop tech firms like No Broker have managed to make some inroads. But of course, 80% of the market is still controlled by offline brokers. So tech startups like No Broker have been looking out for their big break to get into high-end real estate. and now may just be their time to shine. We are currently in the middle of a boom in the high-end real estate market.

Now, what this means is that luxury homes have been overtaking the affordable segment. It also means people can now afford to rent more expensive homes. Now, an unfortunate byproduct of that is the insane increase in rent prices that we've seen in prime neighborhoods across the country. But of course, no broker sees this as an. opportunity to finally break into the high-end property market and add wealthy property owners to its lists of clients. And that's exactly why it introduced its postpaid plan. You see, it's a way for the company to acquire customers in this segment. But it's also much more than that. It means

more money for no-broker, because typically an owner will end up paying about two to five times the price of a no-broker subscription, which ranges between $3,000 to $10,000. but Nobroker is not going all out with a new plan. That's because if it was widely available, then more users would opt for it and forego No Broker's subscription plan. And then subscription revenue would take a hit. So it's being very deliberate with its post-bate plan

and only offering it to a few wealthy property owners in higher-end neighborhoods. But here's the thing. The high-end real estate market is not for the faint-hearted. It's sort of like a very, very, exclusive club. Of course, you have a bunch of high-value patrons, but it's also got a bunch of bouncers and management keeping the strays out. And the bouncers in that analogy are the OG offline brokers. And they are proving to be no broker's biggest threat at the moment. Stay tuned. One thing about the property market that still holds true is that it is heavily broker-dependent.

In many ways, no-broker still hasn't been able to replace. the broker. And when it comes to high-end real estate, brokers are an even bigger roadblock. That's because in the affordable and mid-range segment, brokers are less professional in their conduct and are more motivated by earning their commissions than by understanding a client's needs. When it started out, no broker capitalized on this opportunity by enabling frustrated renters and landlords to bypass these middlemen. And so far, it claims to have helped them collectively save 15,000 crore rupees in brokerages across the six markets it is in. But now it needs more growth.

And that's why, like I said earlier, it's looking to acquire high net worth customers through its prepaid plan. But the same rules just don't apply here. Because as properties get more expensive, the brokers dealing in these properties get more suave and professional. There are generally not too many other property consultants either. only about 60 to 70 in a big city like Bangal. So these brokers have a deep understanding of the micro markets,

they've made a name for themselves over the years, and have established strong relationships with owners of premium properties. And that's exactly why such properties are hardly listed on no broker. Basically, no broker's post-paid plan may look attractive in financial terms, but it fails to deliver on other aspects. You see, owners of more expensive properties expect, a certain service quality, something that no broker still has to work on. Take for instance the Ganapati family. The family agreed that they would pay no broker a fee if its staff

helped them show the property to prospective tenants who came even via other rival platforms like magic bricks. But around a week after the initial call, they couldn't get in touch with the company provided field manager. Ganapati then thought it was best to find a tenant by other means. But after he closed the listing, the no-broker manager demanded that Galapati pay the fee, regardless of the service. So clearly, no-broker has some catching up to do. Because beating sophisticated professional brokers at their own game will take more than just its tech jobs, which thankfully no-broker has plenty of. What it has to work on is the absence of both brokers and brokering skills, proving that it's still humans who trump machines in this business. Daybreak is produced from the

Newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted by Rahil Filippo's, produced by me Snigda Sharma and edited by Rajiv Sien.