Redfin Out of the Red

US online real estate broker redfin.com have revealed some news that will have traditional brokerages just a little bit worried: last month the company earned its first monthly profits.

Writing on the company blog CEO Glenn Kelmann said:

“The business has been growing by leaps and bounds, in part because the real estate market has had a small rally this summer, but in part because we’ve started to figure out how to prosper in down markets too. What has made the difference for Redfin hasn’t been any one breakthrough that we could have pinned our hopes on, but a combination of small adjustments:
1. Giving consumers a choice of agent, and unlimited home tours.
2. Publishing agent reviews, which increased demand 36% in a single month.
3. Simplifying the agent choices we offer consumers, which increased demand a further 16% in a single month.
4. Generating referral revenues from customers in outlying areas that we can’t afford to serve ourselves.
5. Figuring out Google optimization, which drove a 300% increase in traffic year over year, though that growth is now slowing.”

In his candid post, Kelmann also said:

“The difference now is that even if Redfin goes back down, we’ll always know that we can go back up. And knowing that is a huge salve for what’s most unbearable about startup life: the aching possibility that it can never work, that the game is so stacked against you it doesn’t even matter what moves you make. Well, Redfin has plenty of problems, and we could still easily fail, but we know now how we can win, too.”

Both TechCrunch and The Washington Post reported the news, saying that Redfin’s 2007 revenues were $5 million while the 2006 revenues were $1 million.

Redfin says that not only were they profitable in June, but they achieved 97% customer satisfaction. A press release says:

“With 300+% year-over-year growth in unique visitors, Redfin has been the fastest-growing major real estate website in the U.S., but the company’s revenues have, until recently, grown more slowly, at 41% year-over-year.”

Redfin’s model is to represent buyers and sellers in home real estate transactions for far less than standard industry commissions. The company pays its agents customer-satisfaction bonuses, not commissions, and surveys every client, publishing each survey as well as details on the agent’s negotiating performance and deal history.

The journey to this milestone hasn’t always been easy for Redfin. TechCrunch reports that the company has been plagued by “threats, stalkings and other disturbing behavior towards their employees and some customers from, apparently, angry real estate professionals”. In addition, the company was also forced to layoff 20% of their staff last October.

redfin.com joined the Hitwise top 20 real estate website in May this year at number 20.

1. redfin.com Upgrades for Users and Agents

   US online real estate broker redfin.com has announced a string of upgrades, aiming to benefit both partner agents and redfin.com users...

2. redfin.com Updates and Expands

   Online real estate broker redfin.com has expanded its reach to Long Island and Westchester County in New York and California’s Central Valley, including Sacramento....

3. redfin.com Creates Agent Marketplace

   Online real estate broker redfin.com has revealed the latest in a series of major changes to its website. ...

4. Mixed Response to redfin.com’s iPhone App

   The response to redfin.com’s new iPhone application has come in two categories: quiet one-star reviews and noisy five-star raves. ...

5. $10 Million Funding Boost for redfin.com

   redfin.com are celebrating the completion of a US$10 million round of funding led by Greylock Partners’ James Slavet and David Thacker. The US online brokerage’s group of existing investors – Madrona Venture Group, Vulcan Capital, DFJ and The Hillman Company – also contributed....