Seattle based Redfin is making two major announcements today.
First, they’ve closed an $8 million Series B round of financing, from Vulcan Capital, BEV Capital and Madrona Venture Group. This follows a (roughly) $1m Series A round in January 2006. New CEO Glenn Kelman, the founder of Plumtree, joined the company in September 2005.
Second, Redfin is expanding their service out of the Seattle area to include the bay area in California (and will be expanding to Los Angeles, San Diego and nationwide soon).
They have an intruiging and aggressive business model. Instead of providing useful real estate information to consumers and then pointing them to real estate professionals like competitors Trulia and Zillow, Redfin is doing their best to completely remove real estate agents and brokers from at least half of a home sale.
Redfin combines MLS listing information (homes for sale) with historical sales data (homes already sold) into a single map. If you find a home you like and want to place an offer, Redfin will represent you in the buying process (they have a call center with licensed real estate professioinals to guide you). Here’s the good part: They reimburse you 2/3 of the buy-side real estate fee directly on closing. The average amount reimbursed to the buyer is $11,402 (and that is based on relatively low Seattle home prices).
Redfin is also testing a seller-representation model, called “Direct for Sellers”, that will handle all aspects of a sale for a flat fee (currently $1,350). On a $500,000 home sale, this saves the seller $13,650.
Everything isn’t rosy for Redfin, though. They’ve been operating in Seattle for a number of years and have numerous war stories to tell about threats, stalkings and other disturbing behavior towards their employees and some customers from, apparently, angry real estate professionals. Hopefully things won’t get out of hand as they continue to disrupt this stubbornly inefficient market.
I haven’t met the Redfin team yet, but am looking forward to seeing them tonight at the TechCrunch Seattle party that I am co-producing with them, Farecast and Triphub.
Screenshot (showing $106,000 refund on a $5.3 million San Francisco house):