In an announcement Monday morning, Rocket, the parent company of Rocket Mortgage, Rocket Homes and a handful of other mostly housing-focused entities, announced it is purchasing legacy portal and brokerage Redfin, marking a potentially significant power shift in the ongoing “portal wars.”
In a statement, Rocket CEO Varun Krishna described the $1.75 billion all-stock deal as the marriage of a “unified vision,” adding later on a conference call that the companies have long had a close relationship.
“Together, we will improve the experience by connecting traditionally disparate steps of the search and financing process with leading technology that removes friction, reduces costs and increases value to American homebuyers,” Krishna said.
The news comes as real estate mega-companies have sought to diversify and expand their reach into other elements of the home transaction process, with the so-called “portal wars” pitting Redfin, Zillow, Homes.com and Realtor.com® in direct competition for the first look from prospective buyers and sellers.
How the deal will affect the balance of power remains to be seen. Redfin gives Rocket access to 50 million monthly visitors and a brokerage boasting 2,200 agents, among other assets.
In its release, Rocket described the purchase as powering a “hyper-scaled homeownership platform” connecting the household brand of Redfin with the largest mortgage originator in the country.
Speaking to investors after the announcement, Rocket Chief Financial Officer Brian Brown emphasized the deal was a long time coming.
“We started this relationship a long time ago with the Redfin team…we’ve been longtime admirers of what they built, and we’re just super happy to get to this point,” he said.
Redfin recently laid off around 400 employees after striking a deal with rival Zillow to offload its rental business—an area where Zillow has seen significant growth.
Krishna said that as the new owner of Redfin, Rocket “supports” the Zillow deal, calling it “good (for) the industry.”
According to Rocket’s announcement, mercurial Redfin CEO Glenn Kelman will remain in his role, though no other specific details were announced as far as potential employee transfers or turnover. In response to an investor question, Brown described some “overlapping” costs between the companies, which he said could also result in “synergy value” particularly in “brand optimizations” and in the mortgage and search sectors.
Krishna responded to another question from an investor regarding how Redfin and Rocket Homes—the company’s agent referral portal—would potentially integrate, saying that Rocket would be “thoughtful” and look at “culture” as it hammered out specifics.
Rocket also claimed that using Redfin will save buyer clients money, without explicitly highlighting the discount brokerage’s lower commission rate options. According to its release, the total cost for a buyer from commissions, title premium and other costs will be cut in half.
The company also touted an acceleration in usage of AI through Redfin, with Kelman adding in a statement that the goal is to have potential homebuyers power through the first steps of pre-qualification and finding an agent “in a matter of minutes.”
“Varun and I see how much better real estate could be when AI guides customers not just through that first step in their search, but all the way home, through the sale, the loan and then a lifetime of accumulating equity and wealth,” he said.
The acquisition is expected to close in Q2 or Q3 of this year, according to Rocket.
