And Redfin says...
we've secured an additional $12 million in financing. Really... and for what purpose?
Redfin's business model has been called many things, the President and CEO Glenn Kelman seems to like acting as a "revolutionary" or "rebel" or even "bad boy" when positioning himself with the "traditional" real estate industry. On the other hand, I would call him "big spender" since their business model is sucking money from their corporate coffers faster than the Titanic took on water and sunk.
A little about their business model from Jay Thompson writing at The Phoenix Real Estate Guy.
"If you find a home you like and want to place an offer, Redfin will represent you in the buying process (they have a call center with licensed real estate professionals to help you. Well…. telling the buyer to call the listing agent and talking them into showing you the home, and then having YOU the buyer complete an on-line 'Wizard' to fill in a purchase contract hardly qualifies as 'representation'..."
From Greg Swann at the Bloodhound Blog, "Since its launch 17 months ago, more than 500 homes — valued at more than $350 million — have been bought and sold through Redfin... a capital investment of $40,000 cash-American per closed transaction, Redfin.com is somewhat less efficient... Pay no attention to the man behind the curtain! Redfin will be profitable any day now."
The fact of the matter is that Redfin needs the traditional real estate industry more than the real estate industry needs Redfin. Lower commissions equals lower revenue for Redfin's side of the transaction and agents who are affected by Redfin (currently, they are not operating in the Charleston South Carolina real estate market and their current plans do not call for them entering this market in the immediate future) are starting to offer a lower commission when the "buyers representative" does little to nothing in the transaction to earn a buyers commission other than to have a slip of paper saying they represent the buyer.
As Jay says, the Internet is not going away and real estate agents can and must change and adapt to new business models. Redfin just doesn't appear to be the right model.
And Redfin says... did you hear about this great new car called the Edsel.