Rocket To Buy Redfin For $1.75 Billion: “Accelerating Purchase Mortgage Strategy”

Detroit-based fintech firm Rocket Companies, which operates in mortgage, real estate, and personal finance, has expanded into the real estate services industry by entering into an agreement to purchase Redfin Corp. The all-stock deal, valued at $1.75 billion, will give Rocket a top real estate listing platform and further integrate its services for homebuyers. 

Rocket’s all-stock deal to purchase Redfin is valued at $12.50 per Redfin share, or $1.75 billion in equity. This represents a 75% premium over Redfin’s closing price on Friday.

In premarket trading in New York, shares of Redfin jumped from Friday’s closing price of $5.82 to as high as $10.80 per share. About 15.19% of the float is short, or about 18.5 million shares – days to cover around 3.6. 

Rocket CEO Varun Krishna commented on the deal: “Rocket and Redfin have a unified vision of a better way to buy and sell home. 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.”

“Rocket and Redfin’s approaches to lending and brokerage service have always been two halves of one vision to make the whole homebuying process magical,” said Glenn Kelman, CEO of Redfin. 

Kelman explained, “We want a customer to be able to check her phone to find out what she can afford, see which homes are just right for her, schedule a tour with a local, expert Redfin agent, and get pre-qualified for a loan, all 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.”

Rocket outlined the benefits of acquiring Redfin:

• Introduce more consumers to the Rocket ecosystem: Rocket Companies will benefit from Redfin’s nearly 50 million monthly visitors, 1 million active purchase and rental listings and staff of 2,200+ real estate agents across 42 states – with Redfin agents ranking in the top 1% of agents working at any nationwide brokerage.

• Drive Rocket’s purchase mortgage growth: The transaction will generate significant revenue synergies across search, real estate brokerage, mortgage origination, title and servicing. Rocket will match homebuyers with the best real estate agents and the best loan officers across the combined companies. In 2024, Rocket saw an 8% year-over-year increase in purchase market share and aims to further accelerate growth through this acquisition.

• AI, technology and personalization at scale: With more than 14 petabytes of combined data, Rocket gains unparalleled consumer insights, including information about homebuyers, seller and agents across a data repository of 100 million properties. This data will strengthen Rocket’s AI models enabling easier and more personalized and automated consumer experiences.

• Achieve significant synergies and earnings accretion: Rocket expects the combined company to achieve more than $200 million in run-rate synergies by 2027, including approximately $140 million in cost synergies from rationalization of duplicative operations and other costs. In addition, Rocket expects more than $60 million in revenue synergies from pairing the company’s financing clients with Redfin real estate agents, and from driving clients working with Redfin agents to Rocket’s mortgage, title and servicing offerings. The transaction is expected to be accretive to Rocket Companies’ adjusted earnings per share by the end of 2026. Rocket Companies will maintain its strong balance sheet and conservative leverage profile upon close of the transaction.

The deal comes as the housing market is off to a slow start this spring selling season, with a 30-year fixed mortgage rate hovering near 7%.

On the bright side, rate traders are pricing in three 25 bps interest rate cuts by the end of the year, driven by growth concerns, DOGE, immigration, and trade.

Meanwhile, elevated mortgage rates and record-high home prices have created the worst homebuying conditions in a generation. However, that could change if growth scares get more pronounced, and in return, rates begin to slide lower.