Redfin's (NASDAQ:RDFN) home-flipping business is taking off.

The technology-powered residential real estate company saw revenue in its "product" segment grow to $80.2 million, up from $11.4 million in the prior-year period. Redfin is expanding its home-buying and -selling business to new markets, as explained by CEO Glenn Kelman: 

We're investing more in better service, but also in disruptive technologies that let people tour and buy homes without an agent. We've expanded instant offers for homeowners from six to ten markets, and are now showing homebuyers the commissions that a seller is offering their agent. These are big strides toward our long-term goal of redefining real estate in the consumers' favor.

Better still, Redfin's core real estate brokerage business continues to grow at an impressive clip. The company's market share improved to 0.96% of U.S. existing home sales market in the third quarter, up from 0.85% in the year-ago period.

Redfin is gaining share due in part to the significant cost savings it can provide to its customers. While the typical seller agent fee is 2.5%, Redfin charges home sellers commissions as low as 1% of the sale price of their home. For a $250,000 home, that 1.5% difference equates to savings of $3,750. Redfin estimates that it saved its customers more than $57 million in commissions in the third quarter alone.

Redfin is also benefiting from the leads generated from its top-ranked website. The company operates the most-visited brokerage site in the U.S., and it continues to grow more popular among homebuyers and sellers alike. Visitors to its website and mobile application jumped 22% year over year in the third quarter.

People standing behind a for sale sign with a sold sticker on it.

More people are turning to Redfin for their home-buying and -selling needs. Image source: Getty Images.

In all, Redfin's revenue surged by 70%, to $239 million, while its net income soared 95%, to $6.8 million, or $0.07 per share. That was well above Wall Street's estimates for revenue of $230 million and earnings per share of $0.04.

"Redfin's third quarter was strong across the board, with accelerating revenues and year-over-year gross-margin gains in every one of our businesses," Kelman said.

Looking ahead

Redfin expects its growth to remain robust in the coming quarters. Management is guiding for fourth-quarter total revenue of $211 million to $220 million, which would signify year-over-year growth of 70% to 77%. Yet the company's investments will continue to weigh on its profitability; Redfin expects to generate a fourth net loss of $9.5 million to $12.8 million.

Looking further ahead, Redfin is in a prime position to disrupt the $80 billion U.S. real estate brokerage industry. As my colleague Nicholas Rossolillo notes, Redfin is using cutting-edge technology such as machine learning to optimize the pricing of its home offers. This, combined with the vast amount of data it collects from all the real estate transactions it facilitates, should give Redfin a powerful edge in terms of knowing what properties to buy, when to buy them, and for how much. This, in turn, should help Redfin generate larger profits from its home-flipping business than smaller competitors, particularly as it scales its operations over time.

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