Redfin has agreed to acquire mortgage lender Bay Equity Home Loans, a move the company says will help advance its efforts to create a complete real estate solution.
The San Francisco Bay Area mortgage lender is licensed in 42 states.
Estimated purchase price of $135 million in cash and inventory, According to the company’s announcement. Redfin said the acquisition will accelerate its move to become “A one-stop shop for brokerage, lending and other services.” The acquisition is expected to close in the second quarter.
Bay Equity is nearly 10 times the size of Redfin’s current lending business, according to the announcement. The acquisition will help to keep pace with Redfin’s nationwide brokerage volume of 2,400 agents by increasing the number of brokerage clients the company can finance their homes.
“With Bay Equity’s geographic presence and full product suite, we will be able to offer real estate loans to a larger share of Redfin customers who buy homes right away, including mega loans and loans to veterans and people with low credit scores,” said Adam Weiner, president of Redfin real estate operations. “Perhaps most of all, Bay Equity shares Redfin in its commitment to customer service. Our clients and agents have worked with Bay Equity to fund hundreds of purchases, and customer ratings are top notch.”
The Bay Equity management team will continue operations under the Bay Equity name after the closing of the transaction. All Redfin mortgage lending operations will be consolidated under Bay Equity, and some Redfin Mortgage employees will move to Bay Equity, according to company officials.
“This is a massive combination,” said Bay Equity CEO Brett McGovern. “Redfin is a technology leader, and aligning us together allows us to thrive in the changing mortgage market. In addition to our well-established business book, we will benefit from the clients that Redfin real estate transactions generate in excess of $25 billion annually. In addition, we will have access to The opportunity to bring Bay Equity to Redfin to over 40 million online visitors per month. It’s all about facilitating our clients’ transition from mortgage loan application to closing.”
The acquisitions will also mean the cancellation of 121 mortgage centers in Redfin, or less than 2% of the company’s total staff. The positions to be cut are primarily in sales support, capital markets and operations.
“Many of these people are the pioneers who helped build the Redfin mortgage from scratch, and we owe them a debt of gratitude,” Weiner said. “Our transition team will provide the white glove service our employees deserve to make their transition to a new position at Redfin or a new company as smooth as possible.”