Online real estate brokerage Redfin raises $50 million

Steven Loeb · November 14, 2013 · Short URL: https://vator.tv/n/3336

Funding was led by Tiger Global Management, company has now raised over $97 million

Buying a house is the dream for a lot of people. Given how difficult it is to make happen, though, I can only imagine how hard it must have been in the days before the Internet. At least now there is a single place to go to see all of the listings in the place you want to live.

Online real estate company Redfin has raised $50 million in new funding, it was announced late Wednesday.

The round was led by Tiger Global Management LLC and by portfolios managed by T. Rowe Price Associates. Previous Redfin investors Greylock Partners, Globespan Capital Partners, DFJ Venture Capital, Vulcan Capital and The Hillman Company also participated, along with Austin Ligon, co-founder and former CEO of CarMax and Redfin board director.

This latest funding round brings the company's total amount raised to just under $96 million. Redfin most recently raised a $14.8 from Globespan Capital Partners, Madrona Venture Group, Vulcan Capital, Draper Fisher Jurvetson and Greylock Partner in October 2011.

The company says it will use the money to beef up its technology, which it uses to promote listings faster, to allow agents to make better recommendations and to let buyers see the status of their deal at every stop.

Founded in 2004, the Seattle-based Redfin is an online brokerage for residential real estate that represents people who are both buying and selling homes.

It works by having customers search for homes on the website, then arranges home tours with Redfin. Once they have found a home they like, they can get started on an offer via our website. For each transaction, the same Redfin real estate agent handles the negotiations, contingencies and paperwork.

Redfin makes money on commission and referral fees. Agents also earn a bonus based not on the sale, but on how satisfied the customer is with the sale. Redfin agents tell customers when to walk away from a bad deal, in addition to getting them a good one.

The company also announced some growth milestones.

Redfin revealed that it is seeing annual revenue growth of more than 50%, and has seen an increase of more than 100% in home-selling transactions.

Redfin currently serves 22 major U.S. markets, including five markets that it expanded to this year, including HoustonCharlotte, and Miami.

It has closed more than $13 billion in home sales. It says it has saved its customer more than $175 million on real estate fees. The average customer saves more than $10,000 in commissions. 

Given that a few of Redfin's biggest competitors, including Trulia and Zillow, have recently gone public, there is plenty of speculation about Redfin being next. Redfin CEO Glenn Kelman told Bloomberg that "we expect to be public in 2014.”

In the meantime, this newest funding will help the company solidify its position in the real estate market. 

We reached out to Redfin for further information

(Image source: https://www.redfin.com)

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Redfin is the industry's first online brokerage for residential real estate. We believe that technology and a consumer-centered business model mean that we can get better results for our customers, at a completely different price.
How it Works: Buying a Home

Customers search for homes on our website, arrange home tours with Redfin and, when they've found a home they like, get started on an offer via our website. For each transaction, the same Redfin real estate agent handles the negotiations, contingencies and paperwork. The average customer saves more than $10,000 in commissions.
How it Works: Selling a Home

Customers use our website to tell us they'd like to sell a home, and then begin working with their Redfin team to get the home ready to sell and set the price. Once an offer comes in, Redfin negotiates on behalf of the customer and makes sure all the paperwork is taken care of. The average customer saves more than $10,000 in commissions.
Our Business Model

Our service is half on the Internet, half personal. Redfin's technology combines listings with objective data, including maps, property outlines, third-party appraisals and tax records. We base our service on data-driven best practices for buying and selling a home. Our business model focuses our personnel on customer service. We employ agents directly, and we compensate agents based on customer satisfaction. We believe this approach is not only more efficient, but leads to better service.

Our core value is consumer-driven innovation. We were the first to launch a map-driven search application in 2004, and the first to offer an online home-buying service in 2006. By January of 2008, we had refunded more than $10 million in commissions to home-buyers. According to MLS records, we were also able to negotiate a lower price for our customers than other brokerages could. We offer a 100% satisfaction guarantee.

Redfin earns fees from buyers or sellers that we represent in a real estate transaction. In Seattle, we have begun an experimental program to provide a mortgage service, charging a flat fee to act as a mortgage broker. These are the only ways today that we generate revenue.
Our History

The company is led by technology entrepreneurs from Plumtree Software and Applied Discovery, and backed by Madrona Venture Group, the original investor in Amazon.com. Other investors include Draper Fisher Jurvetson, Vulcan Capital, BEV Capital and The Hillman Company. We offer local service in Seattle, San Francisco, San Jose, Los Angeles, Orange County, San Diego, Boston and Washington, DC; we are expanding nationwide over the next two years, moving next to Chicago.

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Donald DeSantis, Seattle
"After spending years at big name brokerages, I wanted something fresh. This company spearheads change and makes the industry perform better. I’m proud to be part of the team."

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Broker records show that Redfin agents and their customers negotiate a better price when buying a home.

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