In the most drastic cuts seen in residential brokerage since the pandemic began, Redfin said Tuesday that it would furlough 41 percent of its agent workforce.
In addition to the furloughs, the Seattle-based discount firm, an outlier in the brokerage industry for employing salaried brokers, said it plans to reduce its staff by 7 percent, or roughly 236, according to a regulatory filing. Citing the impact of Covid-19 on the housing market, CEO Glenn Kelman said in a blog post that the furloughs would ensure agents still have access to health care over the summer — and will allow them to collect unemployment benefits.
“Of the field folks leaving, we estimate about 75 percent live in states that will allow them to earn more from unemployment insurance than from Redfin,” he wrote.
Redfin said it would temporarily reduce staff salaries between 10 and 15 percent, and it will cancel bonuses for 2020.
Redfin had 3,377 total employees as of December 31, according to company financials. However, it is unclear how many agents will be impacted by the changes. Redfin says it has 1,526 “lead” agents, but whether that figure accounts for all of its brokers is unclear.
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Redfin pulls plug on iBuying program
Last month, Kelman said he would give up his own salary to reduce expenses during the pandemic. Redfin gave agents a raise to make up for fewer deals. The company said Tuesday that those raises would remain in effect for remaining agents.
Redfin agents earned a median salary of $97,166 in 2017, compared to median pay of $43,625 at competing companies, according to the most recent data available.
The new cuts come less than a week after Redfin sold a $110 million stake to venture capital firm Durable Capital, led by Henry Ellenbogen, a T. Rowe Price alum and longtime investor in Redfin. The deal gave Durable a roughly 4.9 percent stake in the efirm.
In the blog post, Kelman offered an impassioned apology to agents and staff impacted by the cuts.
“I can’t imagine the grief we’ve caused you,” he wrote. “I’m sorry we let you down. We’ll fight like wild animals to bring everyone on furlough back.”
Kelman stressed that although the company’s short-term prospects are “glum,” its long-term position is strong.
“Housing isn’t a fad or a luxury good,” he said. “Demand for a basic need like shelter can only be deferred, and only for so long.”
In February, before the pandemic hit, Redfin reported $780 million in 2019 revenue, up 60 percent year-over-year. Losses, however, had nearly doubled to $81 million, largely due to the cost associated with its instant home-buying program.
Redfin was the first iBuyer to suspend its home purchases in mid-March, but others quickly followed suit.
The brokerage business, as a whole, has had to make major cuts and layoffs.
Last month, Compass cut 15 percent of its staff, or roughly 375 people. Realogy, parent firm of Sotheby’s International Realty, Corcoran Group and Coldwell Banker, has enacted across-the-board cuts as well. And in New York City, a wave of layoffs, furloughs and marketing cuts hit some of the city’s biggest residential brokerages. Douglas Elliman laid off 100 people on Friday.