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:
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.