From my personal experience, I can say that I hate house hunting.
There are 3-4 online portals available where I search according to my location, budget, etc. They throw some free listing. The property locations are mostly inaccurate, the facilities are half-filled. After that, I am asked to subscribe to their premium plans. They do not promise any cash-back in case I don’t find any house. They are not accountable for any issue I might face with the owner after moving in.
So here, I am reimagining the whole house hunting experience using the first principle, breaking down to the core of the problem that the platforms are trying to solve and brainstorming a solution.
Competitive analysis of existing house hunting platforms and their revenue models
- Freemium plan where prospective tenants get some free listing at the desired location. After that, the tenants have to pay a subscription fee for additional listing.
- Nobroker.com earns a referral fee through a partnership with various third-party vendors for services like packers and movers, cleaning, painting, etc.
- They have started freemium plans for prospective tenants as well. The visitors are allowed 3-4 properties and after that, they charge a subscription fee. They even block some properties to develop anticipation.
- Advertisements on their page. Magicbricks etc. gets massive footfall and sells their advertising space at a high cost.
- Dealers or real estate developers register at the Magicbricks. There are free and paid subscription plans available. The paid ones obviously get more visibility and additional information on who is viewing their properties.
- Real estate developers and dealers can advertise their properties.
Facebook groups like flat-and-flatmates
- These are closed groups on social media with people sharing property information available for rent directly. I have never used it but I don’t think participants are making money here.
- Anyone who needs to rent/ purchase a property with decent internet skills wants the convenience of digitization and has a smartphone or laptop.
- Real estate developers and agents who are looking for leads.
What is First Principle thinking?
A first principle is a basic, foundational assumption—one that cannot be deduced or broken down any further. It is a problem-solving and innovation framework that requires you to deconstruct a complex problem down to these most foundational elements.
Identifying user pain points
There are 3 main reasons people search for houses for rent online.
- Tenants don’t want to pay brokerage – If portals are listing dalals and real estate agents, then there is no point in searching online. People can directly visit the agents and pay the brokerage.
- Tenants don’t have any idea about the locality or area they are targeting. They are new to the city or the area. They are looking for a quick overview of the locality. Real estate portals just show the list of properties with some images, basic information, and contact details. But tenants face a lot of issues in rented apartments like water, electricity, security, neighbors, cleanliness, etc. Existing portals gently ignore those aspects. From my personal experience, in most cases, they oversell low-quality properties or make the tenants face the agents.
- Tenants want a quick resolution. They quickly want to shortlist some properties and move on. Even if you purchase a subscription and are not satisfied with the listing or service, it is hard to get your money back.
- The process of Facebook groups is slow. You have to rely on the provided listing only.
Breaking down to the first principle and brainstorming the solution
- Who are the stakeholders here? Based on the 1st pain point, if I remove real estate agents, there are 3 types of stakeholders in this business. Tenants, Owners, and the portal.
- What is the objective? The objective of the business is to help find the prospective tenants their next home easily.
- How to help the tenants find their next home? Apart from showing a list, if the portals can provide different information about the apartment like availability of electricity, water, the behavior of the owner, privacy, and information like security, and commutation in the locality, the prospective tenants will exactly know what to expect and take an informed decision.
- Who can provide such information? The ex-tenants who have already lived there.
- Why do they share these details? Maybe in exchange for some rewards which they can use in the future for subscribing to the real estate portal.
- Can owners interfere in the rating system? Of course, they can. A good rating can improve their chances of better visibility. So the owner will be respectful towards the tenants.
- Can owners rate the tenants? Ideally, they should. And the rating should be visible to the next owner to make a decision.
- What is the portal going to achieve? Retention and trust. Subscription with a discount using reward points can improve retention. And prospective tenants can make a quick and better judgment based on the feedback of the past tenants will improve the trust in the portal.
There is a high chance that a person looking for an apartment for rent is already living in a rented apartment. And the same goes for an owner as well. If he/ she is renting out an apartment, he had multiple tenants over the years and going to have many in the future. So a rating and feedback system for both tenant and owner can create an environment of trust and practical expectations.
A couple of years back, the Data science lab of Housing.com rolled out a feature of giving the locality a rating based on the facilities and amenities available nearby. Prospective tenants can filter areas by that rating. They had locality scores, neighbor scores, and connectivity scores, and based on these scores, they used to give areas color codes. It was a very useful feature, but for some reason, it is not working anymore. Read more about it here. This was a very important feature. A home is not just four walls, it is the surroundings that make an apartment a home.
Long term goal
- To build an ecosystem where people can easily search and choose an apartment based on the feedback and the trust on the portal.
- An ecosystem where owners can rent out their apartments after making an informed decision about their prospective tenants.
The Indian real estate market is growing at a fast pace. The market for real estate is expected to grow from ₹12,000 crores in 2019 to ₹65,000 crores in 2040 and contribute to almost 13% of the country’s GDP by 2025. As the Covid effect is fading away, more and more people are coming out of their home town to the big cities for work. But India’s real-estate market is notoriously flawed. The system is filled with brokers, low-quality housing, arbitrary rules, and an air of uncertainty. And the existing digital platforms are not helping at all. With a user-first approach, I see a great opportunity in this market. What do you think?
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