Seattle based Redfin, an online real estate startup, has raised another $10 million in a venture capital round led by Greylock Partners. Existing investors Madrona Venture Group, Draper Fisher Jurvetson, Vulcan Capital and The HIllman Company all participated in the round, and Greylock’s James Slavet joins the Redfin board of directors.
This was a safety round, as Redfin announced profitability over the summer and have now exceeded a $20 million in revenue run rate (it was just $15 million last summer). They’ve roughly quadrupled in size since 2008, even in a down real estate market.
I used Redfin as a buyer over the summer when I was looking for a house. Here’s how it works, and why it’s so attractive compared to normal real estate broker deals: As a buyer you spend a lot of time on the Redfin site, looking at available houses and a rich set of data on previous sales, comps in the neighborhood, other homes listed in the same price range, etc. (or you can use their iPhone app, which the company says is the highest rated real estate app).
If you want to view a home you schedule online. They set it up for you and meet you at the house.
In all, it isn’t much different than the standard buying a house procedure. Except at the end they refund 50% of their commission to you. On a $500,000 house, you get a check for $7,500 at closing.
Sellers who use Redfin pay a flat a $5,000 – $7,000 fee, depending on services ordered. And if you’re also using Redfin to buy a home while you are selling, that fee drops by $1,000.
As you can imagine, real estate professionals aren’t thrilled. Nor do they love CEO Glenn Kelman, who said In an interview with 60 Minutes: “Real Estate is by far the most screwed up industry in America.”
But customers clearly love the service, and they have closed more than $2 billion in home sales since launching in February 2006. The total U.S. home real estate market is around $1 trillion, so they have some room to grow.
Redfin is currently available in Boston, Chicago, Seattle, Washington DC, Baltimore, New York’s Long Island and Westchester County as well as most of California, including the San Francisco Bay Area, Southern California and Sacramento.