Redfin agreed to acquire mortgage lender Bay Equity Home Loans, a move the company says will help drive its efforts to create a complete real estate solution.
The San Francisco Bay-area mortgage lender is licensed in 42 states including Massachusetts.
The purchase price is estimated at $135 million in cash and stock, according to a company 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 existing lending business, according to the announcement. The acquisition will help match the scale of Redfin’s nationwide brokerage of 2,400 agents by increasing the brokerage customers whose homes the company can finance.
“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.”
The Bay Equity management team will continue operations under the Bay Equity name after the deal closes. 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 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.”
The acquisitions will also mean the elimination of 121 Redfin Mortgage positions, or less than 2% of the firm’s total headcount. The positions to be cut are primarily in sales support, capital markets and operations.
“Many of these people are the pioneers who helped build Redfin Mortgage from scratch, and we owe them a debt of gratitude,” said Wiener. “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.”