Joe Rath: Rocket Redfin integration gains momentum one year after $1.75B deal

Nearly a year after Rocket Companies closed its acquisition of Redfin in an all-stock transaction valued at $1.75 billion in equity, Joe Rath, the former Redfin senior director of operations and current head of industry relations at Rocket, says that things “could not have gone better” with the integration of the two firms. 

“We have our swagger back. It feels so good to be building things again,” Rath said. “At Redfin, it wasn’t for lack of want, it was more for lack of resources, but we stopped innovating at some point, and I think that is the biggest difference between a year ago and now, is that we are part of this larger homeownership platform and building and innovating again.” 

Back to building

One of the things Rath is most excited about is how Redfin, with the support of Rocket, has been able to play with the idea of what it means for a home to come to market. 

“We have been able to think about the existing structure of how homes come to market today, where being on the market has almost become synonymous with being on the MLS, and we just view things differently. There are these would-be sellers on the sidelines,” he said. “We surveyed them and found that three-quarters of prospective sellers would move today if friction disappeared, and 58% say moving feels riskier than staying put. So, there’s this market that exists on the sidelines, and we’re fascinated by that group and how we can help them come onto a platform to actually test that market out.” 

This, he said, is what led to Rocket’s partnership with Compass International Holdings to display the firm’s coming soon listings on Redfin, as well as the launch of Redfin Early Access. 

The flywheel in full effect

While Rath has enjoyed innovating around these products and partnerships, he said he has also enjoyed exploring the flywheel effect Redfin is now part of as a portion of a company that includes everything from home search to mortgage origination and mortgage servicing. 

“The housing transaction was split across a dozen separate industries, so what buyers and sellers think of and call ‘moving’, we call it a lot of different things and costs begin to multiply through all of these handoffs and the consumers were basically stuck,” Rath said. 

This is why Rath believes more and more firms are creating “vertical stacks,” because they are enabling companies to solve these challenges in ways the “horizontal” companies never could.

“We had all of these horizontal layers and companies. That was failing consumers, and I think that is why the consumers and the dollars are flocking to this idea of an ecosystem. We have this infrastructure with portals, MLSs and associations that were all building toll roads and not highways, and I think over time that friction has been slower to be removed than in other industries, but if we work together we can help solve this.” 

Over the next decade, Rath said he feels the companies that will be rewarded will be those that remove steps and costs for consumers. 

More opportunities for agents

In addition to creating a smoother and more cost-effective transaction for consumers, Rath also said this vertical business model also offers benefits for real estate professionals. 

“If it’s a consumer we transacted with in the past and we service their loan, we have a data advantage that allows us to see their behavior maybe 12 to 15 years later when that homeowner goes onto Redfin and begins looking for a home,” he said. “Our agents can see that behavior in real time and then reach out and see if they can help them.”

As an industry and as a company, Rath believes real estate professionals could do a much better job of becoming part of a homeowner’s or family’s conversation around moving much earlier on in the process, opening up the conversation about what a possible move would look like. 

Looking ahead, Rath said he wants to continue building and innovating at Redfin and for the company to continue telling its story to the public in ways they were previously unable to.

“This was the first year we saw a Super Bowl commercial featuring Redfin, and we sponsored the Cleveland Cavaliers playoff run in the Eastern Conference Finals. To see Redfin plastered all over Rocket Arena was a surreal experience for me,” Rath said. “Like I said, we have our swagger back, and I want to see more of that over the next year.”