Redfin to Supercharge Mortgage Business With $135m Bay Equity Home Loans Deal

January 12, 2022
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American brokerage and marketplace business Redfin has announced that it has signed a deal to acquire mortgage lender Bay Equity Home Loans for $135 million in cash and stock.

The deal to buy the Bay-area based lender will supercharge Redfin's existing mortgage operations with Bay Equity closing almost 10x the number of loans as Redfin's existing in-house mortgage team in 2021 (around 25,000) and see the business expand from 24 states to 42.

The deal will see Redfin consolidate its existing mortgage business under the Bay Equity brand and lay off or reassign some 120 employees from Redfin Mortgages.

With its latest acquisition, Redfin brings its dream of a true one-stop shop for real estate transactions a step closer. Redfin CEO Glenn Kelman had previously admitted that the performance of the company's mortgage business in 2021 was "too slow" with not as many Redfin home movers choosing the company's in-house mortgages as hoped.

“Bay Equity helps match the scale of our nationwide brokerage of approximately 2,400 agents, increasing the number of brokerage customers whose homes Redfin can finance. This acquisition accelerates our strategy to become a one-stop shop for brokerage, lending and other services.”

“Given its scale, Bay Equity can be more efficient at producing loans and can get better terms when selling those loans to investors,” the announcement reads. “These advantages will let Redfin generate more profit from each loan while keeping rates low for our customers.”

“With Bay Equity’s geographic presence and full product suite, we’ll be able to offer mortgages to a larger share of Redfin’s home-buying customers right away, including jumbo loans and loans for veterans and folks with lower credit scores,” Adam Wiener, Redfin’s president of real estate operations, wrote in the announcement.

Redfin is one of the big real estate companies at the forefront of the American drive for true end-to-end real estate transactions. Zillow, Redfin, Compass and others have spent hundreds of millions of dollars developing and acquiring services to market under one brand in order to simplify the consumer journey from search to closing.

Real estate portal businesses around the world have been moving further into the world of mortgages over the last twelve months. Australian market leader REA Group spent A$244 million to acquire mortgage brokerage Mortgage Choice in May, Brazilian unicorn QuintoAndar tied up a deal for ATTA Franchising in August and before that, British #2 Zoopla bought out leading online brokerage Mojo.

January 12, 2022
Edmund got to know the world of portals and marketplaces working at Mitula Group (which became Lifull Connect after the buyout in 2018). He worked directly with hundreds of portals across the world in his role in the content department for three and a half years before transferring to the SEO department to understand the inner workings of listings sites. He joined Online Marketplaces as Head of Content in March 2020.

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