The cuts amount to 13% of the company's workforce
Seattle-based Redfin Corp., which operates a residential real estate brokerage in 95 markets primarily in the US and Canada, is laying off more than 860 of its staffers representing 13% of its workforce amid a housing industry downturn, company officials confirmed.
Company spokesperson Angela Cherry confirmed the imminent layoffs to Mortgage Professional America on Wednesday, noting that they involve 862 workers who were notified the same day starting at 8 a.m. The spokesperson confirmed that 264 of those workers to be laid off are connected to the company’s home-flipping business called RedfinNow. Another 218 staffers will have their roles eliminated, she added, although they will be offered other roles within the company.
“To prosper in a housing downturn that could last at least through 2023, we have to simplify our business,” Cherry told MPA. “We’re closing our iBuying business, RedfinNow, because maintaining a profit with rising interest rates would make our offers on homes insultingly low.”
It’s a matter of volume, the spokesperson suggested: “We’re laying off employees beyond RedfinNow because we expect to sell fewer homes, even as we keep taking market share. None of this makes a layoff any less heartbreaking,” Cherry added. “The people leaving Redfin have been brilliant, loyal colleagues. We will give then several months of severance pay and health insurance, and hope we can one day employ them again. Of the employees in an eliminated role, about 20% are being offered other roles. It’s hard to build a caring culture in a cyclical business, but that’s still our goal.”
Read more: Redfin halts iBuying program in response to COVID-19
Also on Wednesday, Redfin CEO Glenn Kelman posted a notice alerting to the layoffs on the company website. “We’ll still need home services employees for our concierge service to fix up brokerage customers’ listings,” he noted, “but since the group spent most of its time renovating RedfinNow homes, it will get much smaller.”
In his note to workers, Kelman confirmed the job cuts represent 13% of the total workforce after previous furloughs: “With this layoff, the number of employees at Redfin, including those at Rent and Bay Equity will decline by 13%,” he wrote.
“Since April 30, the number of people working here has fallen 27%. We’ve also eliminated the roles of 218 employees who can choose over the next few days to stay at Redfin in another role. If all of those employees were to leave, the reduction would be 16% in November and 29% since April.”
In alerting workers to the layoff, Kelman made dire predictions related to the housing market through next year: “A layoff is awful, but we can’t avoid it,” he wrote. “We plan to keep increasing our share of the market, but that market in 2023 is likely to be 30% smaller than it was in 2021. The June layoff was a response to our expectations that we’d sell fewer homes in 2022. This layoff assumes the downturn will last at least through 2023.”
Read next: Redfin: Homeowners and sellers call for policies that make homes affordable
Kelman ended by thanking affected worker while alerting them to post-layoff benefits: “To every departing employee who put your faith in Redfin, thank you,” Kelman wrote. “I’m sorry that we don’t have enough sales to keep paying you. The severance pay is the same as before: 10 to 15 weeks of pay, depending on Redfin tenure, and healthcare coverage for three months.”
The CEO explained the reason for the layoffs, predicated on the fact that iBuying “…is a staggering amount of money and risk for a now-uncertain benefit. We’ve tied up hundreds of millions of dollars in houses that you yourself wouldn’t want to own right now. Even before its overhead expenses, the RedfinNow properties segment will likely lose $22-$26 million in 2022. However small our buying iBuying loss may be compared to others, the loss is still larger than we could afford to bear again.”
For now, Kelman added, less is more: “All of us, myself included, have to grieve for RedfinNow and other projects now ending. We’ll be ridiculed for thinking they could’ve succeeded. But having strained ourselves to the limit for a long time, we have to acknowledge that, even if we had the money to do more, we’ll be happier and more successful doing less, and doing it well. It will be good to focus on our original calling: getting people a higher, not a lower, price for their homes at a 1% fee, and supporting people through their entire move – from the mobile application to the agent to the leader to the title specialist.”
