Just a week after Rocket Mortgage exited Canada, parent company Rocket Companies has announced its intent to acquire Redfin.
The Seattle, WA-based real estate brokerage is one of the largest in the United States, as well as the most visited real estate platform on the web.
The acquisition will give one of the nation’s largest mortgage lenders a big leg up in the home purchase lending world, potentially allowing it to reclaim the top spot overall.
Rocket Mortgage had been the top mortgage lender for several years before being unseated by crosstown rival United Wholesale Mortgage in 2023.
With refinance volume falling in recent years as mortgage rates surged higher, it’s been clear that to rise to the top, you need to be originating a lot of purchase loans as well.
Given Redfin has more than 2,200 real estate agents under its umbrella, Rocket could once again find its way back to #1.
Rocket to Buy Redfin in All-Stock Transaction
In terms of the financials, Rocket Companies (NYSE:RKT) has agreed to pay $12.50 per share for Redfin (NASDAQ:RDFN) in an all-stock transaction, which values the company around $1.75 billion.
That’s quite a premium from its prior closing price last Friday of $5.88. At last glance, Redfin shares were trading around $10 this morning, signaling more upside to come if the deal closes.
The exchange ratio is 0.7926 of Rocket Class A common stock for each share of Redfin common stock.
Shares of Rocket were down about 14% this morning on the news to around $13.65, about $2 lower on the day.
Regarding the timeline, the deal is expected to close in the second or third quarter of 2025, pending shareholder and regulatory approval.
For reference, Redfin shares traded at nearly $100 per share back in February 2021, around the time of the pandemic housing and refinance boom, when mortgage rates were in the sub-3% range.
But Redfin struggled mightily of late, with shares slipping below $5 per share as mortgage rates surged and home sales collapsed.
Still, the real estate brokerage was able to facilitate 61,000 home transactions in 2024 alone via its vast network of real estate agents.
Regarding leadership, Glenn Kelman will remain as Chief Executive Officer of Redfin post-merger.
In a conference call this morning, Rocket Companies CEO Varun Krishna said, “Our agreement to acquire Redfin is a perfect fit with our mission to help everyone home.”
It will bring more consumers in the Rocket ecosystem, especially at the top of the funnel, when prospective home buyers first begin to view for-sale listings.
A More Streamlined Process That Combines Home Buying and Mortgage
Instead of having to go through a patchwork system to find a real estate agent, a mortgage, a title insurance policy, etc., consumers can enjoy a more streamlined process via this tie-up.
“By uniting search, buying, selling, mortgage, title, and servicing all under Rocket, we’re creating a modern, intuitive experience that puts the consumer first,” Krishna said in the call.
“With the entire journey under Rocket, we gain powerful economies of scale that benefit both Rocket and the consumer.”
While Redfin has its own in-house mortgage lender, known as Redfin Mortgage, with more than 200 loan officers, its attach rate has been pretty poor.
In 2024, Redfin buy-side customers only used the in-house lender in 27% of home purchase transactions.
In other words, while they may have used a Redfin agent, they were often going elsewhere for the mortgage
The company also has its own title and escrow unit, which had a slightly better 61% attach rate, but there’s still a lot of room for improvement.
Chances are Rocket will greatly increase that attach rate as it integrates the brokerage and pushes customers into its much more established mortgage network.
“We can introduce unique product offerings and pass value back to buyers and sellers because we earn revenue across multiple parts of the transaction,” said Krishna.
To that end, the company expects $200 million in run-rate synergies, and for the client, costs possibly dropping in half from $40,000 on a hypothetical home purchase to just $20,000.
“The opportunity to transform home buying at scale is here, and we’re ready to lead the way.”
The Merger Will Drive Purchase Mortgage Growth at Rocket
It’s very clear that Rocket wants more home purchase business. They’ve long been the king of mortgage refinancing, but once the market shifted to purchase loans, they lost out to UWM.
UWM took the mortgage crown in both 2023 and 2024 because it was able to fund a lot more home purchase loans via its large network of mortgage brokers.
The company recorded home purchase origination volume of nearly $100 billion in 2024 ($96.B), while Rocket only mustered $101.2 billion in total origination volume.
Overall, UWM funded $139.4 billion last year, with just $43.4B coming via refinances.
Meanwhile, Rocket’s purchase loan market share only increased from 3.7% in 2023 to 4% in 2024, despite efforts to boost share with innovative programs like Rocket Buy+.
By taking over Redfin, Rocket will gain access to 2,200 lead agents and 5,000 partner agents, along with 50 million monthly visitors to Redfin.
They also stand to gain one million more buy/sell contacts in the process, with $200 billion in “addressable purchase originations” annually.
Combined, their lead funnel could see them grab one of every six purchase mortgages, or a market share closer to 17%.
That could easily propel the company back to the status of #1 mortgage lender in the United States, despite UWM’s strong efforts of late.
And that appears to be exactly the plan.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 19 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.
