Buying a home is among the most consequential transactions most Americans will ever face. It is also among the most stressful. From working with a broker to negotiate a price, to securing a mortgage and title insurance, the process is riddled with middlemen, endless paperwork, and a cascade of nagging closing fees that ensure buyers remain within arm’s reach of the Maalox.
With tech having transformed nearly every industry in our lives the past decade, it’s fair to wonder why home buying remains frozen in the carbon copy paper world of the 1970s. Well much-needed innovation is now on the table with the proposed merger of Rocket Cos., the nation’s largest mortgage lender, with Redfin, the techy real estate brokerage, and Mr. Cooper Group, a major Texas-based mortgage servicer. The deal will bring complementary parts of the homebuying process under one roof, simplifying the process and delivering cost savings for buyers.
Rocket’s move to integrate Redfin’s real estate search and brokerage capabilities with its own end-to-end mortgage platform – and now with Mr. Cooper’s loan-servicing infrastructure – opens the door for even greater opportunity within the industry to establish a seamless, unified homebuying journey. For consumers, that means fewer surprises, fewer delays, and thousands of dollars in savings.
Closing costs in the U.S. average around 3% to 5% of a home’s purchase price, according to Bank of America. On a $400,000 home, that comes out to about $12,000 to $20,000. That is a substantial burden for working- and middle-class Americans. Worse yet, it is mostly unnecessary. Overlapping paperwork. Redundant verifications. Fees for moving information from one silo to another.
It is a problem that has made its way to the upper echelon of the Trump administration, with Bill Pulte, Trump’s director of the Federal Housing Finance Agency, taking to X recently to ask, “Why are closing costs so high?”
By unifying the buyer journey – from browsing homes to making offers, securing financing, and closing the deal – Rocket’s model could eliminate many of those costs. With integrated technology and data sharing, tasks that once took weeks and multiple parties can now be done instantly and internally. Those benefits will pass through to the consumer. Rocket’s CEO expects that the company will be able to cut closing costs in half.
This past month housing inventory hit a five-year high, which ordinarily would spur an increase in home sales. But due to high costs, sales actually dipped slightly. An efficient, streamlined process that leaves more money in consumers’ pockets could do much to change this.
Given the clear consumer benefits of Rocket’s vision, it was striking to see a group of Democratic Senators – spearheaded by Sens. Elizabeth Warren and Cory Booker – question the deal and whether it falls afoul of antitrust laws. The politicians argued that the deal could reduce choices for consumers and ultimately push home prices even higher than they already are.
This is a clear example of the kind of misguided thinking that led the Biden administration’s antitrust enforcers to block nearly every proposed merger of the past four years. All consolidation is bad consolidation, their thinking goes, regardless whether consumers turn out winners in the end.
This merger is not about cutting corners. It’s about cutting waste and building efficiencies of scale that hopefully change industry standards. Rocket is a company that has been around the housing sector for decades and earned a reputation as a company on the cutting edge of introducing technology like artificial intelligence to help streamline the homebuying process. To suggest higher costs will arise from this proposed merger underscores how little Senator Warren and her acolytes understand business.
Buying a home will never be as easy as buying a book, but it shouldn’t feel like a root canal, either. By bringing more of the process – search, brokerage, financing, and servicing – under one roof, Rocket is offering a glimpse of a better way forward with a consumer first mindset.
For Americans who are tired of delays, fine print, and sticker shock, these mergers are not a threat. Rocket’s move to shake up the homebuying process is a long-overdue promise.
