Redfin has bagged another $70.9 million in funding that the high-tech real estate brokerage plans to use to boost its expansion into new markets and develop new technology to make the homebuying and selling process better for consumers.
The raise was led by institutional investors including Wellington Management Company LLP, Glynn Capital Management and Brothers Brook LLC, an investment firm led by Jeffery Boyd, chairman of the board of directors of The Priceline Group.
Redfin’s growth, performance and ability to scale helped attract top-tier investors, the company said. The brokerage says it’s doubled the number of markets that it serves in the last year to 48, and plans to draw on its new pot of cash to sustain that growth.
Redfin CEO Glenn Kelman said grabbing more market share will help the broker pair buyers and sellers more efficiently.
“We have already seen this happen over the years in our most established markets, but now we can invest in accelerating that process in new markets,” Kelman said in a statement.
Redfin claims to have completed $20 billion in home sales, and saved customers more than $200 million through offering buyer rebates and charging discounted listing fees.
While Redfin has warmed to a number of traditional brokerage practices over the years, it has forged a business model built on innovative strategies including discounted fees, salaried agents, bonuses tied to customer satisfaction, lead generation, support staff and cutting-edge productivity tools.
In announcing the news, Redfin highlighted its status as an “end-to-end” and “on-demand” service.
Redfin has long fit the mold of such services, which blend technology with real-world experiences, but has likely received more recognition for it recently, amid the meteoric rise of services such as Uber, a taxi app with its own fleet of drivers, and Airbnb, a short-term rental platform.
Redfin claims to have invented map-based real estate search, and made “every step of buying or selling a home better” by offering technologies such as on-the-spot tour scheduling (Redfin uses freelancers to help its salaried agents show homes), an online deal room and a targeted digital campaign for each of its listings.
Redfin says it encourages its real estate agents to provide a better customer experience than traditional brokerages by paying them salaries and bonuses based on customer satisfaction. Critics say that claim is misleading since Redfin agents are paid a bonus on every sale that is tied to price point, not just customer satisfaction.
By providing logistical support and leads generated by its website to agents, Redfin says it frees up its agents time to work with more clients at once than a traditional agent.
Redfin claims its agents are four times as productive as the average agent, allowing the brokerage to refund up to half of its buyer’s agent fee, and charge sellers a lower commission rate than traditional brokerages, saving the typical seller an amount equal to 1.5 percent of their home’s sale price.
Before the latest round of funding, Redfin had raised $95.7 million.
The brokerage has accelerated its expansion since closing a $50 million funding round in November 2013 that valued the company at $500 million. That round was widely viewed as setting the company up for an initial public offering.
Annox Capital Management, led by Redfin board director Bob Mylod, and funds and accounts managed by T. Rowe Price Associates Inc. and Tiger Global Management LLC, who were among the investors from Redfin’s $50 million funding round in November 2013, also participated in the round.