Disruption in the Residential property Resale segment
— PropTech Version 3.0.
Why we Invested in HouseEazy ?
Anoop Menon
Sep 04, 2024
Disruption in the Residential property Resale segment
Founders are always asked their backstory — reasons to startup in the specific space they have chosen. Investors are not immune to the same. A platform like Chiratae looks at anywhere between 3500–4000 ‘qualified deals’ a year and definitely the investment teams of all funds look for something in the presentation/pitch/reference to stand out before setting up the first call. A backstory for the investor, is only an added icing on the cake. And here goes mine.
In 2021–22, I decided to put the property up for sale in Chennai while stationed in Bangalore, marking the beginning of an agonising 9–10 month ordeal. Thinking I had the wherewithal to manage the entire process end to end remotely through a neighbour / security guard turned out to be a nightmare. I went ahead and listed the property on the existing “technology platforms” only to be chased by the platform sales folks instantly nudging me to pay up in the garb of “premium services”. Little did I realise that premium services actually were premium to them, and sub-standard to the homeowner as it merely opens the Pandora’s box to both the sales folks to upsell more “services” and random broker calls. I even tried nudging a couple of platforms to take a transaction fee rather than advertising revenue and give me end-to-end service from buyer discovery to sale document closure — but none were ready. It would upset their apple cart of milking advertising revenues from homeowners and broker networks alike.
Key concerns for a homeowner looking to sell a residential property remained:
- 6–9 months to close a transaction
- Intermediary management
- Price discovery
- Repairs and Maintenance
- Documentation review, and transaction closure
- Clean and compliant transaction
- Significant tailwinds in home ownership both as a first purchase for the aspiring young Indian in all Tiered cities
- Home as an Investment for the more affluent segment and the potential rise of alternate revenue streams from smart financial modelling/securitisation
- Broken processes in home ownership, property management, transaction services, maintenance services
- Home as a statement of lifestyle leading to rising spending on refurbishment/home decor
- Specific TG-focused home solutions such as elderly care
A personal harrowing experience, got me looking at the space more deeply starting with some of the new-age players in the Bangalore market and tracking them over Quarters. Speaking to existing large platforms the need-gap was clearly established and confirmed that it would take a lot for the market leaders to switch their models and address the concerns here.
As I track the Consumertech sector at Chiratae, we have focused discussions with pre-seed funds and incubator platforms on early signals they are witnessing in the B2C domain and one such reference from an Angel Investor followed by our friends at Antler was HouseEazy. The first discussion with the HouseEazy team itself reaffirmed the pain points in the industry and how the existing large Proptech players had little or no incentive to solve for these due to the choices made by them.
Leveraging the founding team’s extensive experience in building the sales channel for one of India’s largest property developers, they established HouseEazy by harnessing their core strength in partner community development. The trust and faith they have garnered was evident when we visited HouseEazy partners on the ground in Delhi NCR. Even at higher commission fees, none of the brokers were ready to change their loyalty from working with HouseEazy. Who said Loyalty in Realty partner channels was difficult to establish !!!
As we delved deeper into the company, the key question remained – where is the money to be made? And the answer was there in their Technology Platform (Pricing algorithm and User Experience enhancement) which helped them price assets at just the “right” value to allow a seller to commit their home exclusively to them, and a buyer to trust the quality of the property (legal documents, basic hygiene in asset quality) that made a buyer identification TAT crash from 90–120 days to just merely 15 days on average.
Working on HouseEazy also played a key role in shaping and advancing our Proptech thesis. Chiratae’s Investment Thesis in the PropTech space overall focuses on:
After all this work and conviction building, the deal did almost slipped out of our hands; but as a strong believer of Destiny and the saying “Destiny is no matter of chance” — the Founders unexpectedly came back to us. They had seen the groundwork we put into understanding the potential and, after a 2–3 week break, re-engaged with us to close the term sheet.
The space where HouseEazy operates has multiple other venture-backed startups playing in other geographies; some of them whom we have great respect for as well. We believe the secondary market is big enough for multiple players to coexist if the cards are played right and a balance is obtained to make the buyer, seller, partner channels and the startup feel a win-win.
HouseEazy, continues to scale month-over-month in terms of traction and the rising community of partners and buyers has made them take market share in the micro-markets of NCR. Looking forward to an exciting journey with HouseEazy in the years ahead.