Eye Opener - Redfin Model Numbers vs. Reality

Guy Kawaski posted an insightful post comparing Redfin's financial valuation numbers to reality during two years of operation, courtesy of CEO Glenn Kelman.

I was surprised to see how accurately the model predicted some of the costs associated to operations, taxes and services, and in contrast how far off it was when it came to HR/ recruiting. and recruiting.

If you can’t build an engineering team through your own network, recruiting fees can become a significant expense at an early stage.

In the second part of the article, Glenn provides the lessons learned for building a financial model. I recommend reading the full post, but in the meanwhile here's the abbreviated version.

1. Focus on headcount.
2. Plan slow, run fast.
3. Run top-down sanity-checks.
4. Forget economies of scale.
5. Admit that revenues are a mystery.
6. Build from building blocks.
7. Take out "hope".
8. Flag your assumptions.
9. Hit $100 million in revenues within five years.
10. Keep market-share under 20%.

According to alarm:clock, since Redfin's last round of financing in May 2006, it claims to have completed more than $350M in real estate transactions, saved its home-buying customers nearly $6M in commissions, and increased revenues by more than 2,000%. They've raised three rounds totaling $20.8M to date.

Redfin combines MLS listing information (homes for sale) with historical sales data (homes already sold) into a single map. I mentioned Redfin in my post on Real Estate tools as one of the leading players in the market. Thanks for sharing Glenn and good luck.

Tools of the Trade - Real Estate

I usually cover Tech, Media and Energy but after reading a couple of books on Real Estate, I couldn't resist the temptation.

Whether you're a real estate investor or a single home owner, below is a short list of tools that will make your real estate work easier and more productive.

• Zillow - the leader of the pack. Allows users to get rough estimates of the valuation of their home by searching compatible properties in the neighborhood.
  
  
• RealEstate ABC - recent competitor of Zillow, owned by Internet Brands. RealestateABC allows users to adjust property values for a particular property and factor: Interior, Exterior, Lot Size, View, Privacy/Noise and Local Market Conditions. (see TechCrunch review)
  

• Cyberhomes - Owned by Fidelity National Financial, includes valuations, ownerships and mortgage records on over 100 Million properties. You'll also find an online home valuation tool, community info, school info, maps and more.

• vFlyer - A small start up in San Francisco, vFlyer enables users to quickly create professional-looking classified ads and post them to classified websites. Learn more through their product tour. Alternatively, check MyNeighborhoodAgent.

• HouseFront - The site was down at the time I wrote these lines, but I recommend taking a look. Housefront offers mobile access to house values. Simply text the address of any home to HOUSE (46783) and recieve a text message with the estimated value, bedrooms, square footage and year built - for FREE.
  

• Trulia - a real estate search engine. Trulia has some really cool features: find homes for sale from across the web, read the real estate city guides (i.e. New York), find popular trends by using heatmaps, and hear what people are talking about through Trulia's mini social network.
  

• Foreclosure Homes - detailed and useful foreclosure listings aggregator. The service is not free, but a 7 day trial is available.
  
  
• HotPads.com - if you are looking to rent an appartment, I would start from Craigslist, but Hotpads will put things in proportion. Find rental and corporate housing listings and post listings for free. Hotpads recently raised a $2.3 round, so there's probably more cool stuff on the way.
  

Special thanks to Nicole Nicolay (cool name) from Effektive Solutions, who dilligently helped in putting together this list. If this was helpful/ informative, let me know which "Tools of the Trade" you'd like to see in the future. Also, feel free to comment on sites that didn't make the list.

UPDATE: Pay attention to RedFin, who combines MLS listing information (homes for sale) with historical sales data (homes already sold) into a single map. As reported by TechCrunch this morning, RedFin will be on 60 minutes tonight. See the video coverage here.