It looks like RentPath will be sold after all. After a deal to be acquired by CoStar Group fell through due to antitrust objections from the federal government, real estate brokerage and listings portal Redfin has scooped up the Atlanta-based rental platform.
Seattle-based Redfin has agreed to pay $608 million in cash to acquire RentPath, though the deal still requires sign-off by the Federal Trade Commission and a bankruptcy court. It’s only the second acquisition Redfin has made since its founding in 2004.
Despite RentPath’s baggage, namely a $650 million bankruptcy restructuring, Redfin sees big traffic and lead-generation potential with the pending acquisition.
“Over time, RentPath can bolster Redfin’s traffic, by drawing a younger audience of renters to Redfin.com, but also by increasing our stature among homebuyers and renters as one of North America’s premier real estate sites,” the company said in a statement Friday. “Redfin’s brand will get bigger. We’ll show up higher for Internet searches on Phoenix housing or St. Louis real estate.”
RentPath, which owns the portals Rent.com and ApartmentGuide.com, saw a significant uptick in traffic during 2020, Redfin CEO Glenn Kelman said in its statement. “RentPath has more than 20,000 apartment buildings on its rental websites, and grew its traffic more than 25% last year. We can almost double that audience, as one in five of Redfin.com’s 40+ million monthly visitors also wants to see homes for rent. Together with RentPath, we can create an online destination for every North American to find a home.”
In today’s low-inventory environment, complicated by external factors such as forbearance and foreclosure moratoriums, it’s crucial for real estate agents and brokers to be proactive in order to grow their business.
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Redfin drew an average of more than 40 million monthly visitors in 2020, while RentPath’s properties saw 13 million visitors in December 2020. The real estate tech company believes there is synchronicity in acquiring RentPath.
“We estimate that 10 million of Redfin’s 40+ million monthly online visitors may also be interested in renting a home,” the company said.
Redfin is playing catch-up with Zillow, which said last week in its earnings call that it had more than 200 million unique visitors in the fourth quarter and has a rental platform.
Rental listings from RentPath should be displayed on Redfin.com in late 2022, the company said.
Redfin said it will prioritize customer acquisition when the deal for RentPath closes. They plan to pilot a program for property managers to pay only for a signed lease.
“Since signing up new customers, not just revenue, is our first priority, we won’t be able to forecast RentPath’s financial performance until the two companies can work out our sales strategy a few months after the merger closes,” Redfin said. “And of course, our long-term project isn’t just to get bigger but to make real estate better for the people buying, selling and now renting homes.”
The company said it isn’t going to be hiring real estate agents to represent agents in 2021. “It’s common for real estate agents to represent renters in only a few North American cities, and we still have thousands of agents to hire for buying and selling homes in 2021,” Redfin said in a statement.
RentPath reeled in $194 million in revenue in the 12 months that ended on Sept. 30, 2020. Redfin, which also operates a brokerage as well as an iBuyer, brought in $875 million in revenue during the same period.
CoStar, which itself has been making waves in the residential data space of late, agreed to pay $587.5 million to acquire RentPath back in February 2020. The deal fell apart after the FTC filed a lawsuit in fall 2020 expressing concern about CoStar having a monopoly on the rental space.