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Mortgage giant Rocket Companies closed its deal to acquire real estate brokerage Redfin Tuesday, and immediately rolled out “preferred pricing” to borrowers involved in deals in which the buyer or seller is represented by a Redfin agent.
The new program, Rocket Preferred Pricing, provides a 1 percent temporary rate buydown for the first year of a loan, or up to $6,000 in lender credits to homebuyers taking out a conventional, FHA or VA mortgage from Rocket.
The program is available not only to homebuyers represented by a Redfin real estate agent, Redfin partner agent or Rocket Homes Partner Agent, but is also offered on listings represented by Redfin agents.
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In announcing an agreement to acquire Redfin in March, Rocket executives said the deal could cut consumers’ transaction costs in half by trimming agent fees, mortgage gain-on-sale and title premiums.
By handling every aspect of homebuying and selling — from home search to mortgage financing, and title and closing — Rocket aims to cut transaction costs on the median priced home from $40,000 to $20,000.
Rocket: merger will cut transaction costs by $20K
Source: Rocket Companies investor presentation.
In a March 10 investor presentation, Rocket broke down transaction costs for a $430,000, median priced home price that included $15,000 in lender profits, $12,000 each to listing and buyer’s agent, and $1,000 in title insurance.
Although the company didn’t break down savings for each category, it says it intends to bring total costs of clients who use both Rocket and Redfin down by 50 percent.
Varun Krishna
“For far too long, the homeownership process has been outdated and disconnected,” Rocket CEO Varun Krishna told investment analysts in March. “Home search, brokerage, mortgage, title, closing, servicing, all exist in separate ecosystems, forcing consumers to piece together a complex and frustrating journey.”
Senate Democrats including Elizabeth Warren, Bernie Sanders and Cory Booker expressed skepticism about claimed benefits to consumers in a June 3 letter to antitrust regulators, claiming the Redfin deal and Rocket’s plans to acquire the nation’s largest loan servicer, Mr. Cooper, creates “the potential for Rocket to steer homebuyers to its own products, hike prices based on private data, and block competition.”
Rocket will retire its home search portal, hosted on Rocket.com and Rocket’s mobile app, on Aug. 4, in favor of Redfin’s site, which it’s rebranded “Redfin powered by Rocket.”
“I’ve used Redfin every day for the last 20 years. It helped me find and fall in love with my first home, completely changing how I thought about real estate,” Krishna said in a statement Tuesday. “The Redfin team is best-in-class in building a product experience focused on simplicity. It was a perfect fit for Rocket’s vision of what the homeownership experience should be.”
Redfin will remain headquartered in Seattle, with CEO Glenn Kelman continuing to lead the business and reporting to Krishna.
Glenn Kelman
“Rocket’s and Redfin’s approaches to lending and brokerage service have always just been two halves of one vision to make the whole homebuying process magical,” Kelman blogged in March.
After leading the nation in mortgage refinancing last year, Rocket hopes acquiring Redfin will help it do more business with homebuyers.
Rocket Mortgage was the nation’s second biggest mortgage lender in 2024, with $97.6 billion in funded loans accounting for 5.4 percent of originations by volume, according to Home Mortgage Disclosure Act (HMDA) data tracked by iEmergent.
Speaking at an investment conference in May, Krishna said Rocket has set a goal of handling 8 percent of purchase mortgages and 20 percent of refinancings.
Last week, Rocket Mortgage introduced a new bridge loan product that lets existing homeowners buy before they sell and make non-contingent offers to compete with cash buyers.
Rocket on Monday announced that it had completed a reorganization of its capital structure — a move that paves the way for the acquisition of its next big acquisition target, Mr. Cooper Group Inc., the nation’s biggest loan servicer, for stock valued at $9.4 billion.
Assuming that deal closes later this year as planned, Rocket will be collecting payments on about one in six U.S. mortgages with $2.1 trillion in outstanding balances — giving the company a leg up on recapturing homeowners’ business when they’re ready to refinance.
Editor’s note: This story has been updated to note that Rocket’s home search site is hosted on Rocket.com and Rocket’s mobile app.
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