Rocket Companies' $1.75 billion acquisition of Redfin is poised to reshape the homebuying industry, merging one of the largest online brokerages with a mortgage giant. The deal, expected to close by the third quarter, could redefine how consumers purchase properties, but industry insiders say it also raises concerns about competition and the role of mortgage brokers.
Rocket has historically struggled to gain traction in the purchase loan market, a challenge Bill Dallas, former president of Finance of America, likens to "salmon fighting up the stream."
While other lenders count on purchases for 75% to 85% of their volume, Rocket has been refinance-heavy.
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"This acquisition allows them to say, 'Hey, this is a good time to swim the other way.' They can now get closer to the transaction," he said.
Mortgage industry stakeholders say the news is "a bombshell" and a "seminal moment" that may signal a turning point for Rocket being able to surpass
Predictions have circulated about how the acquisition will impact the homebuying experience for borrowers, the future evolution of the industry, and whether the broker community will benefit from the deal.
How the Redfin deal could divide homebuyers into two markets
Mortgage stakeholders predict that this deal will split homebuyers into two distinct groups: those who prefer an all-in-one, bundled experience and those who opt for the more traditional method of shopping for individual providers for each service.
In the bundled model, companies like Rocket integrate real estate, mortgage, title and closing services under one roof. The traditional buyers will largely continue to select independent agents and lenders.
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Greg Schwartz, CEO of Tomo and former Zillow executive, compared Rocket's strategy to Comcast's bundling model: "You can get everything in one place, but it may come at a higher cost."
"Rocket now has mortgage, real estate, title, closing and the personal finance application, and I wouldn't be surprised if they launch their own insurance business…both companies are insourcing stuff," Schwartz said.
In Schwartz's opinion, the traditional method of homebuying will continue to exist because "folks will continue to come to us if they want to save a few bucks a month." Meanwhile, the bundler service will likely push homebuying costs up in part because there is "much more marketing spend behind these organizations."
Dallas agreed, arguing the bundling of services does not result in cost savings, "but it's good press," he added.
Rocket said it expects a borrower purchasing a median-priced home, costing about $430,000,
A Rocket spokesperson declined to provide additional information regarding how the acquisition would save money for borrowers.
Benefit for the mortgage broker community in question
Rocket Mortgage has actively grown its broker channel as a means to strengthen its edge in competing for purchase origination opportunities.
As of the third quarter of 2024,
The deal, which would potentially cause Redfin real estate agents to send all of their clients directly to Rocket loan officers, has sparked skepticism among mortgage brokers. "Rocket Companies does not have the best interest of the broker in mind with this acquisition," one mortgage broker wrote in an industry discussion forum.
Randy Howell, owner of Arizona-based brokerage Mortgage Power Inc., shares similar sentiments, saying brokers "are mere pawns to be discarded at will" by Rocket.
"Rocket will attempt to entice the broker channel to return to them through incentives to provide buyer leads [and] there will be some brokers desperate for the business that will get in line to participate," he wrote in an email. "However, in my opinion, it is a foolish move for any broker or broker loan originator that plans to remain in business beyond 2025."
"The mortgage broker that retains a relationship with Rocket is naïve at this point. Near-term gains will be washed away quickly as Rocket swallows the market," he added.
However, other stakeholders associated with the broker channel see the development through a different lens.
Brendan McKay, chief advocacy officer at the Broker Action Coalition, says he's "cautiously optimistic" about how the merger will impact the broker community.
McKay said there are bright spots that make him believe that Rocket is "taking their involvement with the wholesale channel and local originators more seriously," including the
"That being said, the conglomerate is getting a little bigger, which is always going to make me a little nervous, but I'm going to wait and see what the results are," McKay said.
Others, such as Ramon Walker, CEO of brokerage Client Direct Mortgage, are hopeful about the union and the opportunities that will be created for the broker community.
"Rocket genuinely sees the broker community as advantageous because they are a labor force out in communities across America," he said. "Rocket has now bought a Main Street-level company. They're entrepreneurs who operate in every neighborhood. And we brokers are in every neighborhood..."
"It just makes perfect sense for them to utilize this large labor force and try to convert purchase business," he added. "Because they've said it time and time again, they've been unsuccessful at converting purchase business at the level needed to be successful."
A Rocket spokesperson said the megalender is committed to providing "the best service to our clients through choice and personalization - and that will continue after Redfin joins Rocket."
"We will ensure homebuyers are connected with the right agents for them in their community. In the same vein, when we identify someone who needs home financing, we can introduce them to one of our mortgage broker partners, Rocket's loan officers or mortgage bankers – whatever works best for the client," the spokesperson added.
More consolidation on the horizon
Some industry experts argue that shifting political and regulatory conditions have paved the way for Rocket's acquisition of Redfin.
Dallas suggested that regulatory rollbacks under a Trump administration could make deals like this more feasible.
"President Trump coming into office and the throttling of regulations has enabled the [Rocket and Redfin] deal to look appealing because there's zero chance it would have been done before," said Dallas. "This is exactly what the government didn't want to happen in Section 8 of Dodd-Frank and in all the RESPA changes we made in the Settlement Procedures Act. It was really about disclosing the relationship and unbundling it."
Former Zillow executive Schwartz said his concern is "since there is no regulator right now, such as the Consumer Financial Protection Bureau, these types of acquisitions could create RESPA risk."
"If I were a shareholder, I'd be worried about that," he added.
Critics like Mortgage Power's Howell, worry that consolidation in the field only has downsides for the consumer and industry alike.
"Small real estate and mortgage companies will be shuttered, consumer choice will be diminished, and prices will undoubtedly rise for services," he said.
The Rocket-Redfin deal may mark the beginning of a broader wave of consolidation in the housing industry. In March alone,
