Redfin has announced that it has completed its acquisition of Bay Equity Home Loans for $137.8 million in cash. Under terms of the transaction, Bay Equity will continue to operate under its own name and current leadership, originating refinance and purchase loans for customers working with Redfin agents, as well as customers working with other brokerages. In addition, Bay Equity will maintain its headquarters in Corte Madera, California.
“As homebuyers struggle with affordability and bidding wars, it’s more important than ever for lenders and brokers to work together on every customer’s offer,” said Redfin CEO Glenn Kelman. “In dozens of markets, Bay Equity and Redfin field organizations have already met, and the difference in our agents’ enthusiasm about recommending a Redfin mortgage to their customers is night and day: because Bay Equity has hundreds rather than dozens of loan officers, because Bay Equity supports every type of loan, because Bay Equity was already one of Redfin customers’ top-rated lenders.”
Under the terms of the deal, Redfin agents across 91 markets can use Redfin software to refer their customers to a local Bay Equity Loan Officer. Brokerage Agents and LOs will be partnered based on where they work and how many customers they serve.
“Our first priority is connecting Redfin’s approximately 2,400 Lead Agents to our 400 Loan Officers, so we can help Redfin's customers win in this competitive real estate market,” added Bay Equity CEO Brett McGovern. “Being a part of Redfin will help us meet customers more efficiently, which means we can give Redfin homebuyers competitive rates while delivering a seamless experience from pre-approval to close. We don’t expect Redfin’s agents to recommend us to customers because we’re part of the same company, but because of the value and service we deliver. Aligning with Redfin recognizes our 14 years of strategic growth nationwide and puts us on a trajectory to become a top 10 lender.”
The purchase price of the deal is estimated at $137.8 million—a $72.5 million premium over Bay Equity’s tangible book value as of February 28, 2022. The final purchase price of the transaction will be subject to adjustment based on the tangible book value of Bay Equity as of the closing date of the deal, as well as certain other transaction-related adjustments.
“The biggest reason we expect to hit the ground running is just how much the two teams have already enjoyed working together,” added Kelman. “Redfin folks have come out of every meeting saying, ‘that was awesome.’ There are many ups and downs ahead, but since signing the agreement in January, we’ve only felt better about it, and how much value it can deliver for our customers and shareholders alike.”
With the transaction complete, Redfin is winding down its Redfin Mortgage business, and integrating all lending operations under Bay Equity. Over the next few weeks, 52 Redfin Mortgage employees will migrate to the Bay Equity team.