The Seattle-based brokerage’s expansion into a third market comes after a successful second quarter for Redfin Now, more than doubling purchases and sales, as well as a 36 percent year-over-year increase in overall revenue.
Redfin reported revenue of $142.6 million during the second quarter of 2018, a 36 percent year-over-year increase. Net income for the technology-focused brokerage was reported at $3.2 million, compared to net income of $4.3 million in the second quarter of 2017.
At the same time the company announced it’s investing deeper into its direct-to-consumer home buying and selling program, Redfin Now, to compete with similar offerings from Zillow, Opendoor and Offerpad. The offering is expanding to Orange County, California, its third market after the Inland Empire region of Southern California and San Diego.
The program offers homeowners an offer within 48 hours of a Redfin Now buyer visiting the home. Homeowners then receive cash in as few as seven days, if they chose to accept the offer. Like other iBuyers, Redfin Now prepares the home for market then lists it online with the goal of quickly turning it around for profit.
Purchases through Redfin Now grew from $6 million to $17 million in the second quarter, with sales growing from $3 million to $9 million. All 17 of the Redfin Now purchases from the first quarter have been sold, and every home has been sold for a higher price than Redfin paid, a company release says.
“After more than a decade of selling homes through a combination of local service and technology, Redfin has become one of the best in the business at getting a high home price for a low fee,” said Redfin CEO Glenn Kelman, in a statement.
“Most institutional buyers don’t have the online audience we do, and pure websites don’t have as much operational expertise.”
“All of this should let us give homeowners more money, and buy and sell more homes,” Kelman added. “As more and more homeowners look to choose between an immediate sale and a brokered sale, offering both choices ourselves is how we can be the first company homeowners call when considering a move.”
Once you account for cost of labor, renovation and capital, Redfin Now has about broken even, Kelman told investors in a call on Thursday. But as it expands beyond Southern California, and hires more software engineers, he expects it will start to make a profit.
Operating expenses for the company reached $42.8 million – an increase of 31 percent, year-over-year. Overall, Kelman said Redfin expects to still operate at a loss in 2018. The company is forecasting slower revenue growth, slower traffic and a weakening housing market.
“We also saw the first improvement in homebuyers’ engagement with our agents in nearly three years, a sign that our increased levels of personal service will pay off,” said Kelman in a statement. “We expect U.S. home sales growth to slow and even perhaps reverse in August and September, but believe Redfin will continue to gain share at a high rate because of our service quality and pricing, as well as consumers’ increasing Redfin awareness.”
Last month, the Seattle-based company announced a new public stock offering of $240 million in a combination of 3.5 million shares of common stock — at a max of $23.69 per unit according to SEC filings — and $125 million in senior notes due 2023.
The company stated in the press release that it may choose to use a portion of the proceeds to invest in or acquire third-party businesses, products, services, technologies or other assets, but it has no agreements or plans in place to make any investments or acquisitions at present.
Redfin went public in July 2017 with shares opening at $15 and closing at $21.70 on its first day of trading. Shares closed the day on Thursday at $23.14.