Real estate tech company Redfin Corp. (Nasdaq: RDFN) is laying off about 862 employees, or 13% of its staff, the company disclosed Monday in a filing with the Securities and Exchange Commission.
The filing also noted the Seattle-based company is shuttering its home-flipping service RedfinNow, in which Redfin buys homes directly from consumers, does renovations and sells them for a profit.
The company has been facing headwinds amid rising interest rates and decreased homebuying competition.
"To every departing employee who put your faith in Redfin, thank you. I’m sorry that we don’t have enough sales to keep paying you," Redfin CEO Glenn Kelman wrote in an all-staff email posted on Redfin's blog. "The share gains we could attribute to iBuying have become less certain as we rolled it out more broadly, especially now that our offers are so low. ... 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."
According to the filing, Redfin through attrition and layoffs has now cut its headcount by 27% since April. The company is also eliminating about 218 roles but offering those employees the chance to take a new role with the company.
Kelman said in his email that, if those employees all turned down the new roles, the November layoff would reduce headcount by 16% and the reduction since April would be 29%. He added that laid-off employees will get 10 to 15 weeks of severance pay depending on tenure and three months of health care coverage.
Redfin expects to sustain charges of roughly between $21 million and $23 million, mostly in the next two quarters, with $19 million to $20 million tied to termination benefits.
The company said in the SEC filing that it will still renovate and sell homes it is contractually obligated to buy. It had about $265 million in homes inventory at the end of October with an additional $92 million under contract to sell. Inventory is expected to be under $85 million by the end of January, and the company should finish liquidating RedfinNow in the second quarter of next year.
Redfin already faced a major round of layoffs this year when the company let go of about 470 employees in June. Seattle-based Redfin competitor Zillow Group Inc., meanwhile, announced in November 2021 it was shuttering its own home-flipping business, Zillow Offers, and laying off about 25% of its headcount in a move that would take several quarters. Zillow laid off another 300 workers last month.
Redfin launched in 2006 and went public in 2017. In addition to RedfinNow and its brokered listings, Redfin offers a service for high-end homes called Redfin Premier.
"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," Kelman wrote in the email. "We’ll show our true colors today by caring for those who are leaving. I won’t pretend it isn’t heartbreaking."
