Today we announced an agreement to acquire Bay Equity Home Loans, a national, full-service mortgage lender for $135 million in cash and stock. Founded in 2007 in the Bay Area, Bay Equity is a licensed mortgage lender in 42 states and employs approximately 1,200 people. This acquisition accelerates our strategy to become a one-stop shop for brokerage, lending and other services. We expect the acquisition to close in the second quarter of 2022, pending customary approvals.
Why We’re Buying Bay Equity
At nearly ten times the size of Redfin’s existing lending business, 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. Given its scale, Bay Equity can be more efficient at producing loans and can get better terms when selling those loans to investors. These advantages will let Redfin generate more profit from each loan while keeping rates low for our customers. By using Bay Equity’s loan-origination system, Redfin will be able to reduce its 2022 investment in lending software. Bay Equity has generated positive net income for each of the last three years.
“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,” said Adam Wiener, Redfin’s president of real estate operations. “Perhaps most important of all, Bay Equity shares Redfin’s commitment to customer service. Our customers and agents have worked with Bay Equity to finance hundreds of purchases and the customer ratings are top-notch.”
After the deal closes, the Bay Equity management team will continue to operate under the Bay Equity name, originating mortgages for customers working with Redfin agents, customers working with other brokerages, and customers seeking refinances.
“This is a formidable combination,” said Bay Equity CEO Brett McGovern. “Redfin is a technology leader and the alignment positions us both to thrive in a changing mortgage market. In addition to our established book of business, we will benefit from the customers generated by Redfin’s more than $25 billion in real estate transactions each year. Plus, we will have the opportunity to present Bay Equity to Redfin’s more than 40-million monthly online visitors. It’s all about making it easier for our customers to go from mortgage loan application to closing.”
“For years, Redfin has talked about becoming a one-stop shop for brokerage, mortgage, iBuying and title services,” said Redfin CEO Glenn Kelman. “Just having one company offer all these services is more efficient, letting us keep customers’ lending fees low. But our long-term vision is to combine lending and brokerage services into new ways for people to move from one home to another. Buying Bay Equity not only gives us the scale to execute better on the first stage of this vision; it also gives us the latitude to start earlier on the second stage, which will let Redfin customers buy homes they couldn’t have gotten through a stand-alone broker or lender.”
Integration and Reorganization Plans
After the acquisition closes, all Redfin Mortgage lending operations will be consolidated under Bay Equity. Some Redfin Mortgage employees, including Redfin’s loan officers, will move to Bay Equity.
Redfin has also made the difficult decision to eliminate 121 Redfin Mortgage roles, which represent less than two percent of Redfin’s total staff, primarily in sales support and operations. Redfin has already notified the affected employees, who now have the opportunity to find another role at Redfin, especially in our growing real estate support, title and iBuying organizations. Employees who can’t find or don’t want new roles at Redfin will get between 12 weeks and 26 weeks of severance depending on tenure, as well as support finding new opportunities outside the company. There are no plans to reduce Bay Equity staff.
“Reorganizing our mortgage operations unfortunately means some colleagues and friends will be leaving Redfin,” said Adam Wiener, Redfin’s president of real estate operations. “Many of these people are the pioneers who helped build Redfin Mortgage from scratch and we owe them a debt of gratitude. Our transition team will deliver the white-glove service our employees deserve to make their transition to a new role at Redfin or a new company as seamless as possible.”
Key Business Metrics
| Redfin Mortgage | Bay Equity | |
| Headquarters | Seattle, WA | Corte Madera, CA |
| Employees (as of 12/31/21) | ~250 | ~1,200 |
| Total closed loans (2021) | 2,644 | 25,338 |
| Total origination volume (2021) | $985 million | $8.5 billion |
| Purchase origination volume (2021) | $982 million | $4.5 billion |
| # of states licensed | 24 | 42 |
| Products | Conforming loans only | Full product suite including VA, FHA and jumbo loans |
United States
Canada