- Redfin is an online real estate broker utilizing tech solutions to improve the experience of buying or selling a home.
- Redfin is a member of the Multiple Listing Service (MLS), giving it access to a huge range of listings.
- Redfin makes money by charging listing fees, service fees, mortgage referral fees, and a concierge service. The company also earns revenue by flipping properties.
David Eraker founded Redfin in 2002, establishing the company's headquarters in Seattle, Washington. The company was listed on the Nasdaq stock exchange in July 2018, after spending 13-years as a startup. The company opened its share price at $15, with the stock closing the day at a share price of $21.72 for a 45% gain in a single trading session.
The company raised $138-million with its IPO. Giving it a valuation of $4-billion makes it part of the "unicorn club" of tech startups.
CEO Glenn Kelman called Redfin the "Amazon of real estate" due to its online business model.
The company operates in the US and Canadian housing markets.
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What does Redfin do?
Redfin is an online real estate brokerage.
The firm has a partnership with the Multiple Listing Service (MLS), utilizing its listings database to grow its business.
The company has the goal of simplifying buying and selling real estate in the American market.
Redfin offers to handle the deal for the seller, or it allows the seller to complete the deal through its virtual platform.
Redfin is one of the largest brokers in America and Canada, covering listings in over 1,000 cities.
The company earns by charging service and referral fees and commissions on the thousands of properties it sells every year through its online platform.
How does Redfin work?
Redfin is a virtual real estate brokerage implementing technology to enhance and improve the experience of buying or selling a home.
It serves the consumer market and agencies, catering to homeowners and agents in over 1,000 US and Canadian markets.
Buyers can purchase real estate directly from the seller or through Redfin directly.
Redfin's real estate agents accompany the buyer during the sales process, offering online or on-site support for the buyer and seller.
After completing the deal, Redfin shares in a portion of the agent's commission (between 2% to 3%).
Redfin offers the buyers suite of online tools to help them calculate mortgage costs, and it also provides workshops to educate buyers on the process.
Redfin operates a marketplace for buyers, allowing them to compare loans from more than 50 national lenders.
The site also offers real-estate-related services, such as stagers, handy people, professional photographers, and more.
The company provides access to its platform through its dedicated Android and iOS apps.
How Redfin makes money
Redfin makes money by charging listing and referral fees, flipping homes, and selling ancillary services.
The company has two revenue divisions, Services, and Products.
Each segment has independent streams of income.
When sellers advertise their home on Redfin, they pay the company a 1% to 1.5% listing fee for hosting the listing on its site.
It also charges a minimum commission on all sales made through its service.
These minimums differ depending on the state and location of the property.
Redfin claims sellers can earn $2,800 more on the deal by using its services over traditional real estate brokerages.
Buyers working with Redfin get a refund at closing, which applies to the closing costs of the agreement.
Redfin accounted for nearly 1% of all home sales in the US in 2019.
During 2019, Redfin saved its clients more than $180-million in listing and closing fees for buyers and sellers.
Redfin also charges service fees of 6% to 12% to its clients.
It also charges a further 1% for estimated closing costs and 0% to 3% for repair work.
RedfinNow makes money when it sells a home for more than the initial purchase.
The company makes instant offers on properties, flipping them in the market for a profit.
Redfin Mortgage launched in January 2017. The financing service offers mortgages and refinancing to homeowners. Redfin makes money on loan interest.
Redfin's concierge service assists in staging and preparing properties for sale.
The service is available for properties valued at $500,000 or more.
Future growth engine
The company sees its future growth coming from improvements to the UX of its site and the buying and selling process.
It aims to improve its concierge service to provide buyers and sellers with a seamless transaction process and a clean deal.
Redfin competes with other online real estate brokers.
Some of its top competitors include the following companies.
- G2 Deals
- BoldLeads CRM
- CoreLogic Matrix