Redfin signed an agreement Thursday to buy RentPath, the Atlanta-based owner of ApartmentGuide.com, Rent.com and Rentals.com, for $608 million in cash. We’ll need the Federal Trade Commission and a bankruptcy court to approve the deal. When approved, this acquisition will bring together a leading site for buying a home with a leading site for renting a home, giving anyone trying to move a complete view of her options.
A Sea of Love
We’ll explain the thinking behind this acquisition to customers, investors and the public, but first we have to speak our hearts to the people in this deal who matter most: RentPath’s employees, the believers, the fighters, the hell-and-backers, the never-say-diers. We’re EXCITED to meet you. We LOVE your business. We’re mission-driven, so we know what it’s like to believe in a vision through thick and thin. We have a culture of dissent, so we want to hear all your ideas, especially the controversial ones. We believe that everyone sweeps the floors, so we’ll approach your business with humility. And we’ve got a lot of love to give.
In the Open Ocean, Only the Big Mola Mola Survive
Now let’s talk about how we win! Over time, RentPath can bolster Redfin’s traffic, by drawing a younger audience of renters to Redfin.com, but also by increasing our stature among homebuyers and renters as one of North America’s premier real estate sites. Redfin’s brand will get bigger. We’ll show up higher for Internet searches on Phoenix housing or St. Louis real estate.
Competing on Every Front
Redfin’s 2020 rapid traffic growth has already transformed our prospects, giving us a powerful channel for meeting customers and marketing listings directly to buyers. Together with RentPath, which grew traffic by more than 25% in 2020, Redfin will aim to compete with the largest portals on every front, for every visitor. It’ll be a wild battle.
RentPath’s Customers Will Reach Double the Audience
Redfin will also increase RentPath’s reach, creating more rental opportunities for the rental properties promoted on RentPath sites. We estimate that 10 million of Redfin’s 40+ million monthly online visitors may also be interested in renting a home. RentPath on its own got 13 million visitors in December 2020. RentPath’s rental listings should show up on Redfin.com in late 2022.
The First Order of Business: More Apartment Listings on RentPath
But even before Redfin.com almost doubles RentPath’s audience, RentPath’s first priority is delivering the best value to its customers, so more property managers list properties on RentPath sites.
No Financial Projections at Least Until May
We’ll welcome customers who pay RentPath a fee to list their communities on RentPath’s sites, but we’ll also pilot a program for property managers to pay only for a signed lease. No other site should match our reach and value. Since signing up new customers, not just revenue, is our first priority, we won’t be able to forecast RentPath’s financial performance until the two companies can work out our sales strategy a few months after the merger closes.
We Aren’t Going to Be Rental Agents, At Least Not in 2021
And of course, our long-term project isn’t just to get bigger but to make real estate better for the people buying, selling and now renting homes. With more than a third of North American adults renting rather than owning a home, showing rentals is an important expansion of Redfin’s mission. But at least for now, we aren’t going to hire real estate agents to represent renters. It’s common for real estate agents to represent renters in only a few North American cities, and we still have thousands of agents to hire for buying and selling homes in 2021.
What’s New for Redfin: Selling to Businesses, Not Just Serving Consumers
Even if we don’t employ rental agents, we’ll still need a rentals sales-force. What will be new for Redfin is having to serve both consumers on one side of a marketplace and businesses on the other. The local Multiple Listing Services used by real estate brokerages to share listings have been the main source of listings on Redfin.com, so we haven’t had to ask brokerages for their listings. But to get most rental listings, we need RentPath’s 250-person sales team to sign up thousands of new apartment buildings, one building at a time. We’re excited to see what that team can do when given room to run.
Our Mission Is the Same: to Redefine Real Estate in Consumers’ Favor
This doesn’t change our mission to redefine real estate in consumers’ favor. What rental consumers want first is to see all the properties for rent. Over time, we’ll figure out how we can make the whole process of renting a home better, not just the initial search. This deal is just the beginning of a new, exciting journey. The trust we have with consumers will guide our every step.