Amazing article by Brad Stone. He’s analyzed the US Real Estate brokerage scenario very well in this article. Will the same apply to India as well?
Bangalore is not ‘Bachelor Friendly’ any more (apartment rentals wise). With each passing day, it’s becoming increasingly clear that home owners are showing a strong preference towards families and spinsters while renting out their property. What’s more, they’re ready to go lower on the rent for these people! The irony is that a lot of these apartment owners were living as bachelors with their friends merely a decade ago J
Having lived here for a couple of years, I’ve heard many reasons from owners on why they don’t prefer bachelors. Amongst other things, bachelors tend to –
è Throw wild parties which damage the house and disturb the neighbors
è Delay rent payment
è Overuse club-house facilities in gated communities (really??)
è Default on rent when one individual moves out of the house
è Not able to pay the deposit for the house
Close to 80% of landlords use the above reasons and reject bachelors from renting their apartment. I, for one, am stumped by this behavior. Letting bachelors lease your house can be a good thing. Having bachelors live in your house will –
è Get your more rent for the same property (atleast 10-15% more)
è No problems in asking them to vacate your house – they don’t have too much of furniture or heavy objects (like fridge/AC, etc.). Plus, they don’t put up too much of resistance when asked to move
è Easier to get bachelors to move in – You don’t need to hunt for weeks for finding a tenant, there’re always a group of guys looking for a place to stay
Plus, any damage to the property they cause can always be deducted from the deposit (in Bangalore, the deposit taken from the tenants for a house is close to 6-7 months of rent!!).
The supply of apartments for families is growing but the number of families is not. The demand for apartments from bachelors is increasing, but the supply is not. Since we can’t change the fact that a majority of the people moving into the city are bachelors, the owners should start opening their houses to this demographic of people. Is the situation similar in other cities as well?
“Real estate brokerage is an unorganized sector” – the picture says a lot about the phrase. Amazing that players like this still exist in the market!
There’s no denying that they’ve changed the way the world works. Life 10 years back was not the same as life today. Internet has penetrated every strata of life as we know it, and dare I say, left it in a better state.
It’s definitely easier to order food through the JustDial app than go to the local restaurant and pick it up. Sulekha and OLX have made searching for things in your locality a lot easier (and have left the classifieds section of newspapers redundant in the process). Makemytrip and Redbus have practically eliminated travel agents and have given users the comfort of making their own travel arrangements. Flipkart is revolutionizing e-commerce in India (the joy of visiting a bookstore is offset by the comfort of getting it delivered to your doorstep). Google.
When so many things have changed, and with customer service and customer satisfaction levels increasing in industries across the board, I keep wondering why we hear so many complaints about the services in real estate. Sure, there’re some awesome property-listing websites that are coming up and making life a lot easier. Commonfloor.com and housing.com (check them out, they’re pretty cool) are years ahead of their competitors in terms of information provided and user experience. But that’s just half the story. The other half, the brokers, is where invariably where people are let down.
Brokerage in India isn’t the same as the rest of the world. I look at other countries and see brokers as smartly dressed, educated individuals who help their customers make a choice about their real estate needs, rather than just push the apartments they have on their portfolio. In the US, there’re courses that agents compulsorily need to take before registering for a real estate agent license (not to mention a 3 year compulsory internship under a licensed real estate agent in most states). The situation here, well… you know the story. Though we have qualms with the brokers who’re in the market today, we can’t really eliminate them from the equation. Why?
Real estate is fundamentally an offline business model.
It’s not a ‘Click-n-Pay’ domain. Websites can give a LOT of information regarding a property listing – Cost of property, descriptive metrics about prices in the area, pictures (videos even), position on a map, Google Street view, etc. These websites add a lot of value but can you imagine making a real estate purchase without physically seeing the property? No! For most people, real estate is the single biggest financial transaction of their lives. The entire process is time consuming, confusing and complicated. You need the help of someone who can give you advice on the choice you’re about to make and guide you through the process. The middle man is there for a reason, and it’s not wise to think he can be eliminated.
All of this begs the question, what am I trying to do?
Simple. Establish equilibrium between the online and offline aspects of real estate – Be the online portal where people start their hunt for real estate. And be the real estate agent who helps them close the deal at ground 0.
Are you trying to eliminate the existing brokers from the equation altogether? Will they work with you on this? How will your website be different from others? Will you be providing any value added services? How will your brokerage be different from others in the market today? Are there any advantages for a home owner in approaching you directly without going to the existing brokers? How do existing corporate companies benefit from your presence in the market?
All are valid questions. Questions which I will answer, but not right now.
For the moment, I’m trying to enter the industry through rental brokerage in Whitefield, Bangalore. The website is not yet in production and atleast a few months away from going live. So till then, if any of you are looking for an apartment for rent in this area, gimme a call @ 7406-11-22-11 🙂