Redfin, a Seattle-based technology-powered real estate brokerage company that allows users to submit online offers to purchase homes, announced today that it has received $8 million in venture capital financing and has expanded its services to the San Francisco Bay Area.
The launch of services in the San Francisco Bay Area is the company’s first in a nationwide expansion plan, according to the announcement. The company has plans to expand into the Los Angeles and San Diego markets in the summer months, and to launch services in the East Coast by year-end.
In February, Redfin launched Redfin Direct, an online offer system at Redfin.com that provides information to users about the home purchase process and allows users to complete an online form that they can send electronically to a Redfin agent.
Redfin has handled about 40 pending or closed home-sale transactions since it rolled out this online offer program, which offers to rebate two-thirds of a real estate commission to buyers that Redfin assists in the home sale. Company agents assist in negotiations and closings for this program.
“We think the Bay Area is ground zero for online real estate,” said Glenn Kelman, Redfin CEO. “There are Internet-savvy home buyers who are eager to try out a disruptive business model.” The discount business model should appeal to people, as home prices “are out of control” in the Bay Area region, he said.
Redfin also offers home sellers the option of a discount, flat-fee program to place a home in a local multiple listing service and receive limited services from a Redfin agent. And for consumers who want full real estate services without discounts, the company offers to refer business to its network of full-service real estate agents.
Interactive property maps and related tools are a focus of the Redfin.com Web site, and consumers can view for-sale properties, recently sold properties, property boundaries, streets, schools, parks, and average property prices and other statistics for a given map view.
In the San Francisco Bay Area, Redfin subscribes to three MLSs and also gathers public property information for the region that it incorporates in property searches at its Web site. Redfin.com does not require any form of registration for consumes to search at the site.
Redfin’s coverage in the San Francisco region includes properties in Alameda, Contra Costa, San Francisco, San Mateo and Santa Clara counties. Kelman said that property information for Marin County will be available within a few weeks, and the company also plans to add coverage for Sonoma and Napa counties. Redfin has opened offices in San Jose, San Francisco and the East Bay as a part of its Bay Area launch.
The addition of the California market has been technologically complex because of the many data formats and the number of data fields involved in California property information, Kelman said.
So far, Redfin employs four real estate agents and a call center with six staff members. The number of agents is expected to double with the company’s expansion, Kelman said.
The $8 million round of financing, which was led by Vulcan Capital and also included investments from BEV Capital, The Hillman Co. and The Madrona Venture Group, will support Redfin expansion, as well as research and development, Kelman said.
David Eraker, Redfin founder, said in a statement, “Redfin has always been run on a shoestring. But the capital raised in this round gives us the resources to change a $61 billion market.”
There are plans to add new features to the Web site, such as more analytics on price appreciation, community feedback on properties, seller responses to electronic queries, neighborhood demographic data, and the addition of property information for for-sale-by-owner and foreclosure properties. “I think we can make the process more open and transparent,” Kelman said.