On a day when everyone will be posting links to press releases about Rocket acquiring Redfin, I thought it would be interesting to rewind to the start: Redfin's IPO. "Kelman characterized Redfin as the 'Amazon of real estate' because he wants his company to be a one-stop shop for all things real estate. Redfin has grown into a large marketplace for home listings, but it recently began originating mortgages, too. We can’t 'just reinvent half of it, we gotta do the whole thing,' he said about building a comprehensive real estate business." It's interesting to see how things started and how they ended up. Interesting observation: Redfin's 2017 IPO valued the company at $1.73 billion, and 7+ years later it's acquired for $1.75 billion.
Redfin’s push to reduce commissions has been impressive. In the luxury sector ($5M+), we’ve reduced them to 1%, but at this level, human connection remains essential—these clients are too busy to manage every aspect of RE investing. On the other hand, automation and AI will significantly benefit lower price point transactions, where buyers and sellers have more time to engage in the process. It will be interesting to see how Rocket leverages Redfin’s model moving forward.
Rocket still looking to make the connection to "the last mile". Best of luck to them!
Kurt Carlton
1d
I was just posting about this too. Legendary Hail Mary moment!
Wow, this is nostalgic to think back to the IPO!
Most big players in real estate are after the same thing (brokerages, mortgage, portals) - leverage the collective networks of agents and loan officers plus improving tech to monetize more of the transaction. This acquisition is a public statement about that intent.
What's truly wild is they were nearly $100/share back in February 2021 and today valued at around $1.2B. Huge win for Rocket to get 50M high-intent monthly visitors at this price.
Lior Abramovich🏡
14h
Talk about timing - Literally days after we talked about this😅
Anthony S.
1h
Well, if you’re a mortgage broker submitted files to Rocket mortgage, your days are numbered! They are going to close their whole channel and reroute everything to thier internal customer service reps “LO’s” as they will no longer need the mortgage broker channel, as they now control the lead gen portal to their internal loan officer (a.k.a. glorified customer service reps) that they can pay peanuts too!
Here's to two class act CEO's at the helm of a milestone merger for the industry. They have their task cut out for them, combining two ~20 year old cultures (plus tech integrations over the entire consumer experience) is going to be hard. It will take at least two years for them to settle out into a new brand/process both internally and externally. Meanwhile AI powered progress will ramp without tech and culture debt, and so will consumer expectations and appetite for it. #andonward
Fractional COO | M&A Specialist | Board Advisor | Business Growth Strategist for Real Estate and Franchise Owners
1dThat's great insight Mike. By that token, Rocket got Redfin for a bargain. Let's be honest, no matter what Redfin did, it seemed they couldn't get out of their own way. 6 rounds of layoffs in 18 months yet they have 2,200 agents that have the highest per person productivity in the industry. Even with that, they couldn't get profitable. This is a huge win for Glenn as someone, to a certain extent, bailed them out. What Redfin has is the best real estate website on the planet. The reason they have agents with the highest PPP is because of their lead gen and cultivation from their website. They know how to fill their agents calendars. The challenge is that their agents, compared to the industry, are woefully underpaid based on where commission splits are today. The next 24 months will be amazing to watch as this is I believe the first mortgage company to buy a brokerage.