Subsequent Events

3 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Closing of Acquisition of Bay Equity—On April 1, 2022, we completed our acquisition (the "Bay Equity Acquisition") of Bay Equity LLC (“Bay Equity”), and Bay Equity became one of our wholly owned subsidiaries. Bay Equity is a full-service mortgage lender that is licensed in 49 states (including the District of Columbia) and employs more than 1,100 people. We acquired Bay Equity to expand our mortgage business.

The Bay Equity Acquisition was made pursuant to a merger agreement, dated as of January 10, 2022 (the “Merger Agreement”), among Redfin Corporation, Ruby Merger Sub LLC, one of our wholly owned subsidiaries (“Merger Sub”), BE Holdco, LLC, which held all of the equity interests of Bay Equity (“BE Holdco”), and Brett McGovern, as representative of the members of BE Holdco. Pursuant to the Merger Agreement, Merger Sub merged with and into BE Holdco, and BE Holdco continued as the surviving entity and became a wholly owned subsidiary of Redfin Corporation.

The purchase price for the Bay Equity Acquisition is estimated to be $137,818 (the "Estimated Purchase Price"), which represents a $72,500 premium over Bay Equity’s tangible book value as of February 28, 2022. The final purchase price, which will be determined by June 30, 2022, unless there are any disputes, will be subject to adjustment based on the tangible book value of Bay Equity as of April 1, 2022, as well as certain other transaction-related adjustments.

We paid all of the Estimated Purchase Price in cash. As contemplated by the Merger Agreement, we deposited $2,000 of the Estimated Purchase Price into an escrow account to satisfy potential purchase price adjustments and $20,066 of the Estimated Purchase Price into an escrow account to satisfy potential indemnification claims. The balance of the purchase price adjustment escrow amount, if any, after deducting any purchase price adjustment owed to us, will be released to BE Holdco’s former owners after the final purchase price has been determined. The balance of the indemnification escrow amount, if any, after deducting indemnification amounts payable to us, will be released to BE Holdco’s former owners on October 1, 2024 and in accordance with the Merger Agreement.

Settlement of Lawsuit Alleging Violations of the Fair Housing Act—On April 29, 2022, we settled the lawsuit brought by ten housing organizations alleging that certain of our business policies and practices violate certain provisions of the FHA. See Note 8 for more information regarding this lawsuit. As part of the settlement, we will make two payments to the ten organizations: (1) an aggregate of $3,000 by May 29, 2022 and (2) an aggregate of $1,000 by April 29, 2023. The latter payment will be dedicated to fund programs devoted to expanding home ownership opportunities. In addition to the financial payments, we also agreed to certain changes to our business practices, including expanding our brokerage services to lower-priced homes in certain markets, designating a fair housing compliance officer, revamping our fair housing training, and expanding our diversity recruiting efforts.