As the real estate market regains some life after an extended dip, people are beginning to get comfortable with the idea of selling their home again and, in turn, getting comfortable with looking around for that special place. To help in an increasingly fast-paced market, technology-powered real estate brokerage, Redfin, has been on a mission to help people not only find the right house, but to help potential sellers get feedback on the price of their home from hundreds of potential buyers.
On the heels of launching a series of these “Price Whisperer”-like tools that aim to reduce the cost of the real estate search process for both homebuyers and sellers, Redfin is doing a little price whispering of its own. The company today announced that it has raised $50 million in late-stage growth capital from a handful of investors, beginning with Tiger Global and T. Rowe Price Associates.
The new round, which also includes contributions from the company’s existing investors, like Greylock Partners, Draper Fisher Jurvetson, Vulcan Capital, Globespan Capital Partners and The Hillman Company, brings the company’s total funding to just under $100 million. In addition, from what we’ve been hearing from sources, the round values its online brokerage and search business in the ballpark of $500 million. Fortune also reported a similar valuation.
With the new injection of capital, Redfin becomes yet another addition to the list of companies pursuing growth capital from backers outside the usual confines of the venture capital world. The investment is the second of its kind that T. Rowe Price has made in recent months, following its investment in MongoDB last month, for example.
Furthermore, a raise of this size, at this point in Redfin’s growth, seems to give credence to and provide further supporting evidence to recent reports that have pegged Redfin as a potential IPO candidate in 2014. However, while an IPO is very likely in Redfin’s future, this could also buy the company some time.
With the help of firms like Tiger Global, which have plenty of experience investing in mature companies in later stages of growth, the round also allows Redfin to extend its runway as a private company and delay an IPO for that much longer if it so chooses. In either case, the new capital allows Redfin to focus on increasing its existing marketshare, increase marketing and spend on boosting consumer awareness, which according to Fortune, currently sits at around 3 and 4 percent in the company’s hometown of Seattle. Collectively, Redfin currently operates in 22 cities, and, with its new round, the company will no doubt be looking to increase its footprint in its more active markets.
While Redfin competes (at least nominally) with the likes of Trulia and Zillow, the company has aimed to differentiate itself by becoming more of an online search and brokerage platform. Rather than take the Kayak-style approach (becoming a lead generation funnel for other brokerages), Redfin is a listing service that combines traditional search listings that one might anywhere with those of its own brokers.
In other words, the company employs its own fleet of brokers, enabling it to offer access (in some markets) to live agents and to better control and optimize customer satisfaction. By combining typical listings with those of its agents, the more appealing its search results and recommendations will be, or so the thinking goes.
As a result, the company claims that it’s able to save homebuyers an average of $7,500 — in part by giving them access to additional information, better listings and online tools that help reduce the buy-side real estate fees usually incurred at closing.
Over the last year, Redfin has been moving to round out its platform with the addition of a handful of new services that aim to increase its value on both sides of the real estate transaction, including tools that both help those selling their homes to get a better feel for market prices and conditions, as well as those that allow buyers to better understand when to buy and when they’re about to step into a bidding war.
Because Redfin employs its own local agents, it also has access to more transaction and listing data than the average real estate listings site. This data has already begun to fuel the products mentioned above, on the one hand, and on the other, it can potentially become the engine behind a suite of tools that could provide better insight into local real estate trends and what’s happening at different stages of the process. The more it can develop this data in its key local markets, the more accurate and valuable its platform becomes, and the more its business stands to thrive as a result.
Of course, whether its new $50 million will help it get there is another story altogether.
For more, find Redfin at home here and watch the video embedded below to see Glenn Kelman and Redfin investor from Greylock James Slavet discuss the new funding with TechCrunch’s Colleen Taylor: