Real Estate Brokerage Redfin Acquires Bay Equity Home Loans For $135M: What You Need To Know

The Seattle-headquartered real estate brokerage Redfin RDFN has acquired Bay Equity Home Loans, a national, full-service mortgage lender, for $135 million in cash and stock.

What Happened: Founded in 2007 and headquartered in Corte Madera, California, Bay Equity operates in 42 states and employs approximately 1,200 people. During 2021, it closed 25,338 loans with a total origination volume of $8.5 billion – $4.5 billion of that sum came from purchase loan originations.

After the acquisition closes, the Bay Equity management team will continue to operate under the Bay Equity name and will work with Redfin’s 2,400-broker network along with other brokerages and borrowers seeking to refinance their mortgages.

Why This Happened: While Redfin operated its own mortgage origination business, its output paled against Bay Equity. Redfin Mortgage was only operating in 24 states and closed 2,644 loans last year for a total origination volume of $985 million – all but $3 million of that volume came in purchase loans.

Furthermore, Redfin Mortgage was limited to conforming loans, whereas Bay Equity offers a wider product range including jumbo mortgages plus FHA and VA loans.

“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.

“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,” added Bay Equity CEO Brett McGovern. “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.”

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What Happens Next: Following the completion of the acquisition, all Redfin Mortgage lending operations will be consolidated under Bay Equity. While some Redfin Mortgage employees will move to Bay Equity, 121 employees will see the elimination of their jobs; no Bay Equity positions are being terminated

In a press statement, Redfin said the impacted employees will “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.”

"Reorganizing our mortgage operations unfortunately means some colleagues and friends will be leaving Redfin,” said Wiener. “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.”

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Photo: Redfin