Redfin announced today an $8 million dollar cash infusion from the likes of Paul Allen’s Vulcan Capital, Madrona Venture Group, BEV Capital and The Hillman Co. Total financing now stands at nearly $9 million dollars to expand the online discount brokerage.
John Cook’s article “Redfin closes on $8 million funding” has the details and background. It states “Since starting the service earlier this year, Redfin has helped Seattle-area buyers purchase more than 40 homes valued at about $18 million.”
However, when I just did a search on the NWMLS, as of 9AM this morning, there were only 13 closed sales valued at only about $7 million dollars since they’ve started their new sales model. If they’re getting a 3% sales commission and refunding 2% of that and keeping 1% for themselves, they’ve made about $70K so far this year. Is that enough to justify a $9 million dollar investment?
I imagine they’re poised to make this announcement at their big party tonight (I guess that’s where part of that $9 million is going….) Tonight’s the big Tech Crunch shindig at Conworks to toast Michael Arrington, sponsored by Redfin. Arrington comments today on the news in Tech Crunch “Redfin to change the rules of real estate sales“.
(I’m not sure that place is such a good choice for a party. Conworks is the art space hijacked by the staff from the founder, Matt Richter, and I think they’ve lost most of their subscription base and have had to resort to renting out their space to the highest bidder. I have been unable to support the organization since Richter’s ousting, but haven’t found it to be much of a sacrifice since their programming sucks since he’s left.)
I ran across this interesting piece on Redfin from Mortgage News Daily, Redfin lacks Zillow’s hype but may ultimately have more impact The author seems pretty well-informed about the company and offers this interesting observation on the dilemma faced by listing agents asked to show listings to Redfin clients:
In some states the listing agent would be within his rights for liability reasons to insist that the buyer be accompanied by his buyer’s agent on any visit to the listed property.
Actually, no agent in any state must show a house to a stranger. Nothing in any state law compels an agent to place themselves in harm’s way, if they feel that accompanying a stranger or meeting a stranger at a house will or could harm them.
Rain City Guide
John Cook’s Venture Blog
San Jose Mercury News (There’s an interesting bit of misinformation in this article “… considering Redfin’s progress in the Seattle area, it has promise. Redfin’s sole agent there has completed about 20 transactions since its February launch — a quick pace for the industry — mostly by working with the tech-savvy, do-it-yourself crowd” Actually, the NWMLS lists 6 licensed agents hanging their hat at Redfin.)
More Redfin buzz….