860 Executives Being Laid Off By Redfin Amidst Slow Housing Market

Seattle-based Redfin Corp, the real estate brokerage, which operates in 95 markets, primarily the U.S. and Canada, is laying off more than 860 executives, or about 13 percent of its workforce, amid a downturn in the real estate sector, company officials said.

On Wednesday, company spokeswoman Angela Cherry said it notified 862 employees at 8 a.m. that day, confirming the Mortgage Professional America layoffs. 

A spokesperson confirmed that 264 of the laid-off employees have joined the company headquarters known as RedfinNow. Another 218 employees are being relieved of their duties but are being assigned other roles within the company.

“We need to simplify our business if we want to thrive in the housing crisis that may last at least until 2023,” Cherry told MPA. “We are closing the RedfinNow iBuying business because maintaining profitability with rising interest rates will shamefully decrease housing stock.”

It’s a volume issue, the spokesperson suggested. “We are laying off employees outside of RedfinNow because we expect to sell fewer homes while maintaining market share. None of this makes the layoff any less painful,” Cherry added. “The people who left Redfin were wonderful and dedicated colleagues. 

We give them a few months of severance pay and health insurance and hope to hire them again someday. 

Approximately 20% of employees with eliminated roles will be offered other roles. Building a caring culture in a cyclical business is difficult, but it’s still our goal.”

Also Wednesday, Redfin CEO Glenn Kelman posted a warning on the company’s website. “We still need a home service agent for our concierge services to update our brokerage client list, but it will be much less as the team spends most of their time fixing up RedfinNow homes,” said he.

In a memo to employees, Kelman confirmed that last weekend’s job losses represented 13 percent of the workforce.

“Since April 30, the number of people working here has decreased by 27%. We also eliminated the roles of 218 employees who may choose to continue in other roles at Redfin in the future. “If all these employees leave, it will be down 16% in November and 29% in April,” he said.

While warning of layoffs, Kelman offers a bleak outlook for the housing market through next year. “Dismissal is scary but inevitable,” he wrote. “We plan to increase our market share, but this market could be 30% smaller in 2023 than in 2021. 

June dispositions were expected to meet our expectations to sell fewer homes in 2022. “This resignation suggests that the decline will continue through at least 2023.”

Kelman thanked the affected employees and wrote, “Thank you to all the employees who put their trust in Redfin,” as a note about benefits after the layoffs. “sorry. 

You don’t have enough sales to continue paying. The severance package remains the same. Depending on Redfin’s mission, we have 10-15 weeks of pay and 3 months of health insurance.”

The CEO explained the reason for the layoffs: “…meaning a huge amount of money and a risk to currently unknown profits.” We’ve invested hundreds of millions of dollars in homes we don’t want to own now. 

Even before overhead, RedfinNow’s real estate sector could lose between $22 million and $26 million in 2022. Our acquisition costs are low compared to others, but our losses are more than we can afford.

Kelman adds that, for now, less will be more. “Everyone, including me, should mourn RedfinNow and other projects that are now closing. They laugh at us because they think we can be successful. 

But after encouraging yourself to limit yourself for too long, you have to recognize that even if you have the money to do more, doing less and doing it well can make you happier and more successful. 

Better to focus on our core business. We give people 1% of their home price at a high price, not a low price, and we support people on the go – from mobile apps to agents to leads.”