- What is Redfin, and how does Redfin work?
- How does Redfin make money?
- Brokerage Commission Fees
- Partner Fees
- Selling Homes
- Other Services
- Redfin’s profit and revenue
- What is the Redfin business and revenue model?
- Redfin’s funding and market cap
- Redfin’s Subsidiaries, Acquisitions, and Exits
How does Redfin make money? Here is a full, in-depth, breakdown of their four (4) revenue streams and the different products and services they offer, as well as the Redfin business model, their year-over-year revenue, and how Redfin works.
What is Redfin, and how does Redfin work?
Redfin is an online real estate marketplace that connects homeowners and buyers.
Founded in 2004 by David Eraker, Michael Dougherty, and David Selinger, Redfin now attracts more than 42 million monthly average visitors to their website and mobile app and transacted more than 310,000 homes worth more than $152 billion in 2020.
How Redfin works is: Homeowners can list their properties for free on the platform and will incur a small fee once the home sells. Additionally, homeowners and buyers can work with Redfin agents and partnering agents to help assist in the process.
Some of Redfin’s competitors include Zillow, Compass, Opendoor, Trulia, and other online real estate marketplaces.
How does Redfin make money?
According to page 1 of Redfin’s 2020 Form 10-K, Redfin helped customers buy or sell more than 310,000 homes worth more than $152 billion in gross transactional volume in 2020. So how does Redfin make money off of all those purchased and sold homes?
Below is a breakdown of how much money Redfin makes and its revenue model. Including all revenue streams and how much they charge for their services.
Here are the 4 ways of how Redfin makes money (in 2021):
Redfin has a revenue model that makes money in four (4) ways: brokerage commission fees, partner fees, selling homes, and other services.
#1. Brokerage Commission Fees
Redfin makes the majority of its money from commissions collected from brokering sales on its platform. In fact, $607.5 million or 68.5% of Redfin’s total revenue came from commissions in 2020.
As noted above, Redfin’s marketplace facilitated the purchase and sale of more than 310,000 homes worth more than $152 billion in 2020. Of which, they received a 1% to 1.5% commission fee on all of it.
- 1% to 1.5%
Note: 68.5% of Redfin’s total revenue came from commissions and fees in 2020.
#2. Partner Fees
The other half of Redfin’s “Real Estate Services” revenue comes from partner fees, which generated $43.7 million in revenue for Redfin in 2020.
These fees are charged on each real estate transaction closed by the more than 6,800 partner agents Redfin has and partners with.
- 30% referral fee
#3. Selling Homes
In addition to the revenue Redfin makes from commissions and fees, Redfin also makes money selling homes. Which was Redfin’s second largest revenue stream in 2020, bringing in a total of $209.7 million.
The way this works is: Redfin buys homes directly from homeowners through their service RedfinNow, then turns around and resells them to homebuyers.
To date, Redfin has put forth more than 40,000 cash offers to homeowners, according to RedfinNow’s homepage.
Note: This was Redfin’s second largest revenue source behind commission revenue in 2020. Together, they accounted for $817.2 million or 92.2% of Redfin’s total revenue.
#4. Other Services
Lastly, Redfin makes the rest of its money from an additional four (4) services Redfin lumps together on their financial statements as “other services”. Collectively, these four (4) services totaled $28.2 million in revenue for Redfin in 2020. Just 3.2% of their total revenue.
According to page 25 of Redfin’s 2020 Form 10-K, Redfin recognizes the revenue of these four (4) other services as “fees earned from mortgage origination services, title settlement services, Walk Score data services, and advertising.”
Redfin’s profit and revenue
In 2020, Redfin reported $886.1 million in revenue.
Note: Because the Redfin Corporation is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Redfin’s publicly released financial reports, including annual reports, through Redfin’s investor section on their website.
What is the Redfin business and revenue model?
Redfin makes money through a few revenue models that they combine within their company, they are:
- Commission based business model
- Fee-for-service (FFS) business model
- Advertising business model
- Transaction based business model
- Mergers & acquisitions (M&A) business model
Redfin’s funding and market cap
According to Redfin’s Crunchbase profile, Redfin has raised $319.6 million over 12 rounds and has a market cap of $5.39 billion as of September 2021.
Redfin’s Subsidiaries, Acquisitions, and Exits
To date, the Redfin Corporation has made a total of 2 acquisitions.