It has been over a month since I landed in India. After a couple of weeks in Delhi, I have come back to Bangalore. To say I dont miss the US would be a lie. Struggling for the basics of life... water, getting to anyplace, electricity etc... is not fun. However, I see opportunity in almost anything that I see here.
One of the conscious decisions that I have taken is that I will not crib - about anything. Instead, for every thing that I do not like, I will ask the question: "
what can I do to change this." This attitude has helped me not only get back to a normal life here rather, it has opened my eyes to a whole world of opportunities in this country. Besides, it also keeps my mind fruitfully occupied.
Rest of the blog are some random thoughts that I had while looking for a rental place in Bangalore...
These days I am looking for a house in Bangalore. I contacted some brokers over the weekend who showed some houses. Some of the houses were really bad, and yet the broker quoted obsene rents. Clearly, there is an incentive misalignment between the brokers interests and mine. The broker's incentive is marginally aligned to that of the house owner. Both wish to escalate the rental prices. House owners, who do not use a broker, would also like more rent for their houses. A person looking for a house would take a house regardles... oftentimes there is an urgency, and the tenant needs to take up a place ASAP - this means he would settle for the higher price.
For a landlord, if his house remains vacant for long, he would want to lower the rent. However, the broker would not let that happen... and since the broker "owns" the customer, the landlord will find it difficult to get a tenant at the lower price - unless he has access to the market directly... besides, there is always this greed factor in humans (as in, the landlord would conider waiting for some more time to get a higher rent).
The reason why I would want to go through a broker is because he reduces my search effort. Coordinating with every house owner directly implies high cost of search for me. Therefore, the broker does bring in value... however, he also takes advantage of the information asymmetry to escalate real estate prices.
If we can have a real estate portal where landlords can upload details of their houses (including videos, pictures etc), and tenants can review houses without having to travel around much... that would be value to the customer. This is not a new idea.. and people are already doing this. However, this platform can also be used for effective price discovery of the rental value of a particular house.
If we create a closed bid reverse auction mechanism for every house wherein when a potential tenant comes in, he specifies a rental price he is willing to pay for the house... likewise all potential tenants specify their price. Likewise, landlords can bid for potential tenants, and tenants can bid for potential houses... in effect a rental real estate emarketplace. I dont know whether this is happening right now... or is feasible at all.... but from the look of it, this sounds interesting and derserves deeper thought.
