Rocket Companies is buying Redfin in a move that can reinvent the real estate purchase funnel by bulking up the first party data used to train AI models.
Under terms of the all-stock deal, Rocket will acquire Redfin for $12.50 a share, or $1.75 billion. The plan is that Rocket will benefit from Redfin's nearly 50 million monthly visitors. Those leads at the top of the funnel can feed Rocket's mortgage business as well as other consumer services.
On the surface, Rocket and Redfin can combine forces and lower costs of real estate purchases. But you may want to look at the Rocket-Redfin deal through a data and AI lens.
We've previously chronicled Rocket's master plan and AI efforts. The company is built on first-party data and ongoing purchase signals that feed its AI models.
- Rocket Companies’ genAI strategy: Playing both the short and the long game
- Rocket Companies’ strategy: Generative AI transformation in turbulent market
- Enterprises leading with AI plan next genAI, agentic AI phases
To look at Rocket's acquisition of Redfin in a different way consider that the company is paying $437.5 million per petabyte of consumer data. In a statement, Rocket CEO Varun Krishna said the purchase of Redfin is about creating a unified search and financing process in real estate. "Together, we will improve the experience by connecting traditionally disparate steps of the search and financing process with leading technology that removes friction, reduces costs and increases value to American homebuyers," he said
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"The companies with the most data will win, and no industry is safe from the disruption or the opportunity that AI creates," said Krishna. "As commoditization and disintermediation accelerate, access to scaled proprietary data is what separates industry leaders from the rest."
Redfin is also well positioned with its brokerage services since real estate compensation has been revamped. Glenn Kelman, CEO of Redfin, will continue to run that business and noted that "we want a customer to be able to check her phone and find out what she can afford, see which homes are right, schedule a tour and get a prequalified loan in minutes."
The ultimate goal for both companies is to create an AI-driven real estate buying experience. To deliver that experience, it takes data.
A few key figures:
- The combined companies will have more than 14 petabytes of data with information about homebuyers, sellers, agents and a repository of more than 100 million properties.
- This data repository will generate revenue across search, real estate brokerage, mortgage origination, title and servicing.
- Rocket expects the combined company to save more than $200 million in annual expenses by 2027. Rationalizing operations will represent $140 million of that total with another $60 million coming from revenue synergies.
- Redfin facilitated 61,000 home transactions in 2024.
Krishna said the goal of Rocket and Redfin are to disrupt real estate. Speaking on a conference call, he said:
"For far too long, the home ownership process has been outdated and disconnected. Home search, brokerage, mortgage title closing, servicing all exist in separate ecosystems, forcing consumers to piece together a complex and frustrating journey. This disjointed system creates confusion, adds friction and drives up transaction fees totaling roughly 10% of a home's cost, and yet this inefficient, costly experience is still the accepted norm."
Krishna said the aim is to leverage the data from the combined companies to create a virtuous cycle that will boost efficiency and enable Rocket to pass along savings to consumers. "Rocket and Redfin sit at the crossroads of technology and human connection. We empower our team members with AI driven tools to help them provide the best client service in the industry. AI eliminates paperwork and administrative work, allowing agents and loan officers to focus more time on advising clients," said Krishna.
For instance, Rocket's AI has enabled loan officers to serve 54% more clients per team member than the previous years. Rocket also doubled its automation rates for appraisal and asset verification in 2024, and saved more than 1 million hours equating to $40 million in savings with AI.
In fiscal 2024, Rocket reported net income of $636 million on revenue of $5.1 billion, up 34% from the previous year amid an uncertain real estate market.
Krishna said that the combined company will ramp its investment in data and AI. "We want to invest deeply in data, in AI, and we see this deal as really accelerating both," he said.
