Opendoor is slashing nearly a fifth of its workforce.
The San Francisco-based iBuyer is laying off approximately 18 percent of its employees, chief executive officer Eric Wu announced in a blog post on Wednesday. The cuts include around 550 people across the company’s departments.
Affected employees will receive at least 10 weeks of severance pay, three months of health insurance beginning after healthcare benefits expire at November’s end and job transition support. Prior to the layoffs, Opendoor also scaled back on more than 830 positions by reducing third party resourcing.
“The reality is, we’re navigating one of the most challenging real estate markets in 40 years and need to adjust our business,” Wu said in the post.
Rising mortgage rates and a weakened housing market have set off a series of cuts in recent months at at mortgage, proptech and brokerage companies.
Trouble began brewing for Opendoor in recent weeks, when analyst Mike DelPrete noted that the fast-changing market meant the iBuyer to sell homes at a loss for the first time. A Bloomberg analysis of Yipitdata showed the company lost money on 42 percent of its sales in August.
Read more
Residential
New York
Zillow reports $880M loss on failed home-flipping business
Residential
New York
And then there were two: Opendoor, Offerpad sniff iBuying opportunities
Opendoor’s flip premium — the difference between the price at which the company buys a home and what it sells for — had never fallen below 1 percent. After peaking near 12 percent earlier this year, the premium in September fell just below 0 percent.
The announcement comes one year after Zillow shuttered its own iBuying business and cut 25 percent of staff, leaving Opendoor and Offerpad to fill the void left by the former iBuying giant’s exodus.
Opendoor cut prices and offered incentives to buyers and their agents to offload thousands of homes in the third quarter, according to Insider. The concessions are an attempt to ditch inventory at a small loss now, rather than take a bigger hit later if the housing market craters.
Opendoor is set to report third quarter earnings on Thursday. Analyst estimates compiled by Bloomberg anticipate the company will post $171 million in losses.